New Zealand needs to boost its productivity growth and become more attractive and accessible as a workplace in order to fix its labour market woes, a recruitment agency says.
Commenting on new salary survey results from Robert Walters, Shay Peters, the company’s Australia and New Zealand chief executive, says the Government needs to find a way to attract new workers and keep existing talent in the country. Labour market churn causes a loss of institutional knowledge and has a negative impact on productivity, which is one of the “key levers” in growing the economy, Peters says.
Findings from the 2025 salary survey of more than 7500 people – 3136 in New Zealand and 4623 in Australia – published on Thursday paint a picture of a turbulent labour market. Sixty-seven percent of employees reported being open to relocating in the next 12 months, with 43 percent citing higher salaries as the main driver. Of the 67 percent open to relocating, 33 percent were prepared to do so within their country and 67 percent open to moving overseas.
A relatively low 62 percent of New Zealand businesses are likely to provide salary increases this year, while only 10 percent of respondents believe they are earning what they are worth and being paid fairly for the job they do.
Survey results showed 42 percent of New Zealand-based respondents would move to Australia for better pay and opportunities, while only 2 percent of those in Australia would move to NZ.
Peters says it is not only young New Zealanders who are leaving the country but Kiwis “at all levels” moving offshore.
“One of the key findings from the survey was that salary and career progression were the two most important factors that are motivating employees at the moment,” he says. The former is problematic for employers as the cost of business increases and they can’t afford to pay their workers more.
“Outside of that … they have to start looking at learning and development opportunities for their staff. They have to think about flexible working. They have to think about hybrid working opportunities, all of these things that are the motivators outside of core dollars,” Peters says.
The survey results have landed days after new Stats NZ data showed the country added close to 6000 jobs in November, with filled job numbers rising 0.3 percent compared to October. Annually, filled jobs were down by 29,895 or 1.2 percent compared to the same month in 2023. Unemployment sat at 4.8 percent in the September 2024 quarter and is expected to increase slightly above 5 percent in 2025 before stabilising.
Cameron Bagrie, of Bagrie Economics, says a big issue for New Zealand is that wage growth should be running in line with productivity growth and inflation – but it’s not.
“Productivity growth in New Zealand used to be 1.4 percent per year. It’s now 0.2 average for the past decade. It’s basically zippo. What does that mean in practice? It means, if productivity is basically zippo, your wages only move up in line with inflation, which gives you one hell of an economic incentive to go, you know, ply your trade overseas.
“Capital productivity, which is how we use our capital, plant, machinery, equipment, buildings, the roading network, all the three waters sort of stuff, it’s [been] a negative number for 30 years. We build stuff and then we mismanage it.”
In a paper published in May last year Treasury forecasted an improvement in productivity growth over the coming years towards its “long-run productivity growth assumption of 1 percent p.a”. The recovery in productivity growth is slower and productivity remains at lower levels than previously forecast, it noted.
Another key problem is the increased labour share of the “economic pie” having increased while corporate business share, which comes about through profitability, has decreased, Bagrie says. Firms that struggled to find staff in 2021 and 2022 held on to their workers in 2023 instead of responding to the economic alarm bells, and had to “aggressively cut costs” last year.
At the same time, according to Rosamund More, senior manager of legal at Robert Walters, there are currently “huge gaps” in the professional services industries where employers looking to hire skilled professionals from abroad are deterred because of long lead times for sponsorship.
“We’re hearing that law firms are taking nine months to a year to actually get lawyers on the ground when they want to sponsor them from overseas.
“It’s a shame, because there are actually, you know, English lawyers or Australian lawyers that want to move here for lifestyle purposes, but it’s just too difficult.”
Professional bodies often created more red tape, she says, in the form of lengthy processes workers need to go through in order to transfer their qualification to New Zealand.
Stuart Nash, Robert Walters’ commercial director, says successive governments – including his own – have held an “idealistic” view that letting people into New Zealand will rob Kiwis of opportunities.
“What we really need to do … is push forward an aspirational vision for people who are out there. I’m not talking about senior managers, I’m not talking about the ultra [high] net worth, I’m talking about senior middle managers who are looking at New Zealand, going, ‘The grass is greener’.”
