Public service workforce shrinks amid reduced public spending

The public service workforce has decreased by 0.6% in the first quarter of 2024 amid government measures to reduce public spending.

As of March 31, there are 65,283 full-time employees (FTE) in public service, according to figures released by the Public Service Commission (PSC). This is a decline from the 65,699 FTEs in December 2023.

However, compared to June 2023, the March 31 figure represents an increase of 3.4%, rising from 63,117 FTEs, according to the commission.

Budget impact on workforce

The government attributed the increase to the full impact of Budget 2024 not yet being realised.

"I expect to see the impact of the Budget start to flow through in the coming months and continue into the next financial year with further decreases," Public Service Minister Nicola Willis said in a statement.

"Our ongoing savings and efficiency drive will continue to put downward pressure on the size of the workforce, which is likely to see a further reduction in FTEs."

The New Zealand government previously asked ministries and agencies to cut their spending by 6.5% or 7.5% in a bid to reduce annual public service expenditure. The request has resulted to numerous agencies, such as Ministry of Business, Innovation, and Employment, to implement job cuts.

"These are tough decisions and I feel for anyone losing their job, but the government simply had to reduce public spending because it was living beyond its means," Willis said.

Spending on contractors, consultants

Meanwhile, the PSC data also revealed that spending on contractors and consultants dropped to 8.5%, its lowest level since 2018.

Spending totalled $700.5 million in the nine months to March 2024, according to the PSC data. This includes $249.8 million capital expenditure, and $450.7 million operating expenditure.

"I am anticipating a further decrease in the annual spend by the end of this financial year. The government's expectation is for this decrease to continue," Willis said.