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Home / Business / Business Reports

Mood of the Boardroom: Labour shortages dominate CEO concern

Duncan Bridgeman
By Duncan Bridgeman
NZME Business Managing Editor·NZ Herald·
24 Sep, 2022 12:00 AM5 mins to read

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Taupo is a good example. The Great Lake was bursting at the seams last weekend with a junior rugby festival attracting 2000 kids, their parents and an entourage of rugby lovers. Photo / Supplied

Taupo is a good example. The Great Lake was bursting at the seams last weekend with a junior rugby festival attracting 2000 kids, their parents and an entourage of rugby lovers. Photo / Supplied

Go anywhere in New Zealand right now — big city or small town — and immediately you notice the labour shortage crisis. Hotels, shops, cafes — they are all crying out for staff.

The same goes for farms, small businesses and service providers.

Taupo is a good example. The Great Lake was bursting at the seams last weekend with a junior rugby festival attracting 2000 kids, their parents and an entourage of rugby lovers. It was a great occasion and could have been even better were the hotels and restaurants not so stretched.

One resort had been forced to make unavailable almost half its rooms because it couldn't find enough workers. It's understood one team had to split up and stay at different locations as a result.

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And like everywhere else in the country, several tourist attractions, restaurants and bars had signs on the window urging customers to be patient due to the lack of workers.

This is by no means new, especially in the Covid era, but the issue has come through strongly in this year's Mood of the Boardroom survey with labour shortages and immigration restrictions cited as the biggest domestic issues affecting business confidence at the moment.

The survey shows skills and labour shortages as the biggest single domestic concern when CEOs were asked to rate issues affecting confidence.

On a scale of 1 to 10, with 1 reflecting no concern and 10 being extremely concerned, the rating was 9 for skills and labour shortages. Immigration restrictions was next at 8.52, just above the level and quality of Government spending at 8.51 out of 10. No surprise then that when asked which issues are the most likely to keep CEOs awake at night, 83 per cent went with sourcing and retaining skilled staff. That was a big jump on last year when it was 71 per cent.

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And there doesn't seem to be much light at the end of the tunnel.

Asked whether the Government's move to bring in an extra 12,000 working holidaymakers would help address labour shortages, just 26.5 per cent said yes; 45 per cent said no.

The survey probed further, asking how difficult it was to find or retain workers as a result of current immigration restrictions and their management by Immigration New Zealand.

Some 38 per cent said "very difficult" while 30 per cent said "slightly less difficult". More than half of respondents said employee churn was increasing (55.5 per cent), with 6 per cent saying it was "off the scale". Two-thirds (67 per cent) said they were investing in automation as a result of tight labour conditions.

Sourcing staff has been the biggest issue for businesses since the pandemic hit and is a source of constant stress and disruption. Many are taking it upon themselves to try to solve the longer-term problem with some 73.5 per cent of those surveyed saying they had increased investment in training and skill development.

That's partly what the Government wants with its plan to reset immigration by reducing the number of migrants coming into the country.

Even as border restrictions have eased Labour has declared it doesn't want a return to pre-pandemic reliance on immigrant labour.

But the problem is that now is a very difficult time for most businesses to adjust to the rebalancing. Two and a half years of covid restrictions have drained the strength of many business owners and unemployment is at a near-record low.

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The economy is still trucking along, as recent GDP figures showed, with economic growth bouncing back sharply in the second quarter of the year with a rise of 1.7 per cent — up from a 0.2 per cent contraction in the Omicron-affected first quarter.

That means no let-up on interest rate hikes over the next few months. In general, business leaders are less optimistic than they were a year ago and much of that is to do with the labour shortage and inflation.

Asked to rate the general business situation in their industry on a scale of 1 to 5, with 5 being much more optimistic, the CEOs gave a weighted average rating of 2.68. That compares with 3.2 a year ago. The survey showed CEOs are slightly more optimistic about the New Zealand economy (1.87 out of 5) than the global economy (1.83 out of 5).

Inflation is also a pinch point for many, with survey respondents giving it and the cost of living crisis a rating of 8.36 out of 10 in terms of impact on the NZ business confidence.

Asked if they thought the country was past peak inflation, 49.53 per cent said no and 30.84 per cent said yes.

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