'$90k the new $70k': NZ workers have 20,000 incentives to quit

Brian* wore his best suit for the job interview.

He knew it would provoke a few jibes from colleagues at his current workplace, but glancing in the mirror, he thought he looked pretty smooth.

During a meeting with his would-be new employer, they hashed out the details of the role, with both sides trying to decide whether he'd be a cultural fit.

He was, and it didn't take long for them to confirm they'd email him an offer. When it arrived, he did a double-take when he saw the employment contract.

The annual salary they were offering was $20,000 more than he was currently getting.

After thinking over the offer for about five minutes, he decided to tell his current employer he would be resigning. But things didn't go to plan: his employer left the meeting and almost immediately came back with a counter-offer that matched what the other company was offering.

Brian eventually accepted the counter-offer and stayed with his employer.

When he called the executive who had tried to head-hunt him, he was expecting an angry response about time-wasting. But there was no acid in his response.

The executive chuckled and replied: "Well, at least we helped you realise what you're worth."

With unemployment at a record low and immigration still stifled, the labour market has shifted the balance in favour of employees willing to question what they're actually worth.

Depending on how you view the world, this is either a good or a bad thing. Supporters of the Government like to point out that record low unemployment is fantastic for workers, while critics counter that the lack of available staff is stifling opportunities for business growth.

As the football writer Gabriele Marcotti often opines: It doesn't have to be one or the other; two things can be right at the same time.

This strange state of the economy right now means workers like Brian are increasingly likely to test their worth in a competitive marketplace.

Brian's story also shows that workers often find it more palatable to put on their fancy suit and head into a job interview at a different company, rather than go through the awkwardness of asking the boss for a pay rise.

This may reflect New Zealanders' reluctance to talk about money, but it may also be a sign that labour relations are so uncomfortable that workers don't want to even bother with the prospect of being told "there are no plans for raises in the budget this year".

'$90k is the new $70k'

A survey of 335 businesses conducted by the Employers & Manufacturers Association in May found that 38 per cent of employers with vacancies had been advertising for more than six months.

Every single business that was looking for staff told the EMA they were struggling to find people to do the jobs required. "We are eventually finding people, but we are having to resort to head-hunters and poaching staff from other companies," said one respondent.

"Advertising for roles is just not getting the level of response required to find the right people."

To see the real-world impact of the recruitment battle now raging throughout the country, look no further than Air New Zealand.

As the airline looks to quickly build back to more than 10,000 staff (compared to 12,500 before the pandemic), it has had to loosen the purse strings a little more than before.

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The national carrier is paying a bonus of up to $1400 to entice people to work for its airports division. This follows bonuses of $2400 that Air New Zealand paid to staff over the past year.

Dangling these shiny trinkets in front of prospective employees is critical at a time when the airline faces growing criticism from customers facing long waiting times when calling its contact centre.

This week, headlines shamed Air New Zealand after customers told the media stories of having to wait four to six hours for assistance in rebooking flights that couldn't be changed online. One customer went as far as driving to an airport to make the change in person. None of this is ideal for an organisation that has always been desperate to protect its brand perceptions.

The airline has already boosted its customer service team by 170 staff in the past year but is still looking for another 70 employees to fill positions in the department.

But given current economic conditions, workers who may once have been happy in a certain salary band are now expecting more.

Barry Williamson, a recruitment specialist at agency Marsden Inch, says that in his experience, "$90K is the new $70k".

"Money will always be the main motivator, particularly when there is so much media comment about the opportunity to increase salaries," Williamson says.

The money aspect, however, tends to be influenced by the job applicant's age and experience level.

"The younger the employee, the greater is the emphasis placed on money, whereas a more senior employee, already earning a larger salary, would be more likely to be influenced by retention opportunities that are lifestyle-based," the recruiter says.

Williamson warns against chasing those bigger salaries at a time when employers are desperate to get certain jobs done.

"Anyone with a brain should realise that large salary increases come with an expectation of greater productivity and revenue generation," he says.

Agreeing to that salary bump means also accepting the added responsibilities that might come with that extra $20,000.

"The issue, though, is that this 'revolving chairs' activity only increases the costs to business, as the pool remains the same, but salary overheads continue to increase," says Williamson.

"One has to hope that this is a short term situation, as the outcome is mediocrity being paid more for the same outcomes."

Have I got an incentive for you

The prospect of headhunters circling and poaching good staff has led some companies to take the initiative and try holding on to the workers they have – leading to a golden age of workplace incentives.

Rather than waiting for staff to hunt down better pay elsewhere, Trade Me has responded to inflationary pressure by offering its staff a $3500 salary boost.

The company's chief people officer, Annie Brown, says the increase is to help staff cope with rising day-to-day living costs.

The salary increase is in addition to the usual pay reviews the company conducts with staff.

New Zealand logistics firm Mainfreight has also been rewarding its team in monetary terms.

In its most recent financial year the company paid a discretionary bonus totalling $94.2 million to its team, more than double the amount it paid the previous year.

These financial boosts may seem as though they're giving staff a little bit extra to spend on themselves, but in most cases, workers will still be worse off than they were last year.

Annual inflation hit 6.9 per cent by April and ASB economists believe it is likely to be more than 7 per cent for the year to June - a forecast that follows the latest food price data, which showed grocery prices increased by 7.4 per cent between May 2021 and May this year.

But this isn't only about money. Some companies are also capitalising on the trend towards flexibility and rethinking the workplace in innovative ways.

Travel while you work

Over the past two years, many workers have taken stock of their relationship with work and are now looking for employers who can accommodate their shifting expectations and preferences.

"The companies we work with have developed a wide range of staff retention options," says Williamson. These range "from extended leave, to remote working internationally to counter the perennial 'OE', attractive maternity leave packages, additional leave opportunities, IVF assistance along with the fairly standard non-contract items like health and income insurance and gym subscriptions".

Workplace flexibility is becoming an imperative for many workers. Photo / Getty Images

Advertising company Publicis Groupe, which owns Saatchi & Saatchi among other agencies, has launched a policy allowing its staff to work remotely at any of the company's 100 global offices for up to six weeks a year.

A major motivation was to give immigrant staff the opportunity to reunite with family members abroad after long periods of separation during the pandemic.

"Since rolling out 'Work Your World', close to 200 people have taken advantage of this programme across Australia and New Zealand," says Publicis Groupe Australia New Zealand chief talent officer Pauly Grant.

"Many people have used 'Work Your World' to reunite with family or friends overseas, but others have taken the opportunity to work from another country as part of an extended holiday, or simply to experience working in a different environment."

The company has gone a step further by enabling staff members to do home swaps via an in-house technology platform that connects people from all over the world.

At a time when many young New Zealanders have itchy feet, having been confined within our border for two years, this type of innovative policy can also help provide the OE experience without losing staff to other countries.

While this option is only available to workers who are able to do their jobs remotely, as the pandemic showed, that applies to more of us than we realised.

Leave it all behind

Other companies are also rethinking the old structures that have always applied to leave.

Kiwibank chief people officer Charlotte Ward says the company has expanded leave benefits for more than 2000 permanent and fixed-term team members.

The company has introduced a wellbeing leave day that staff can take every quarter – even if they aren't sick.

"Wellbeing leave is a day our people can use to recharge, however they want to," says Ward.

"To ensure we are taking time for ourselves on a regular basis, the day needs to be used within the quarter it's allocated, so it's what we've labelled a 'use it, or lose it' benefit. We've told our people to look at it as a guilt-free day to use."

Beyond this, the company has also rethought sick leave, allowing staff as much time off as they need for legitimate reasons.

Kiwibank offers staff a quarterly wellbeing day to take even if they aren't ill. Photo / Getty Images

"Our extended supported leave is a simpler, more flexible kind of leave that encompasses traditional sick leave, compassionate leave, and domestic leave in one offer. It means people can take as much leave as they need when they need it," says Ward.

"Supported leave provides cover if you're sick or injured, suffer from a serious or ongoing illness that requires a bit more time off work than normal, if you need surgery followed by recovery time, or if you have dependants who rely on you for care if they're sick or injured, including family pets. It also covers leave for gender affirmation, menstruation and menopause."

Unions rising

The expectation of higher pay and better working conditions isn't restricted to white-collar workers looking to add a few dollars to their vacation funds.

Low-wage workers have also realised their worth in a market where there simply aren't enough workers to do the jobs at hand.

We've seen unions demand better working and pay conditions for workers who were previously at the mercy of employers who could get away with paying low wages because of the number of people available to do those jobs.

The call for fairer wages has been supported by AUT academic Dr David Williamson - from the university's School of Hospitality, Tourism & Events - who didn't mince his words in saying that "if your business cannot generate enough profit to pay decent wages to its staff then you shouldn't be in business".

Labour relations critics also know that current market conditions, weighted in favour of employees, will not last forever – meaning they have to fight for changes while the opportunity is there.

There are already signs of the economy turning. And the growing concern about the risk of a recession will ultimately flow into labour relations.

If business conditions deteriorate, then businesses will review staff levels.

The latest jobs listing data from Trade Me already provides some evidence of the market shifting.

Trade Me Jobs sales director Matt Tolich says the number of jobs listed on the site for the quarter ended June 2022 fell by 5 per cent year-on-year when compared with the same period in 2021.

"This is the first time we have seen a year-on-year drop in listings since 2020, but what we're really seeing now is the market finding its feet again," Tolich says.

"While a drop in listings might seem concerning to Kiwis looking for a new job, the number of roles advertised in Q2 was actually significantly higher than we were seeing pre-Covid."

There was also noteworthy movement among job-hunters, with the data showing a 3 per cent lift in the number of applications per job listed on the site – the second quarter in a row in which applications have increased.

"With high salaries and an abundance of listings, it's still a job-seekers' market, but we may see this change as we head into the second half of the year," says Tolich.

"A significant number of migrants will enter the country when the borders open up this month. This will no doubt shake up the market and hopefully, help fill those roles."

Australia's long shadow

Open borders may carry the promise of workers arriving, but the prospect of losing critical staff to Australia also grows every day.

Asked earlier about the risk of losing nurses to Australia, Health Minister Andrew Little warned that workers should proceed with caution given that they will not have the same rights as Australian workers.

That imbalance could be set to change after Prime Minister Jacinda Ardern and Australian leader Anthony Albanese pledged to work towards easing the pathway for New Zealanders working in Australia to have equal rights to those enjoyed by Australians working in New Zealand. The timeline for this has been set for Anzac Day 2023.

While this was widely celebrated as a win for New Zealanders working across the Tasman, there will be some nerves in the business community as they face the prospect of even more competition from Australian businesses looking to snare Kiwi talent.

So how much would Brian be worth if we also took Australia into account? Chances are he might have another 20,000 reasons to think about quitting.

*Name changed to respect a request for anonymity in exchange for sharing this anecdote.

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