Simon Bennett: The real factors driving changes in the New Zealand labour market

COMMENT:

We need to better understand the key drivers shaping the workforce so we can harness labour productivity more efficiently in the New Zealand economy, writes Simon Bennett.

I am tired of hearing the over-use of the terms "gig economy" and "the future of work", which confuse the debate around the best way to adapt to changes in the New Zealand labour market.

It seems many observers are struggling to accept what is "the now of work" and are holding onto outdated and limited views of what constitutes a "good job".

The reality in New Zealand is that forms of "non-standard work" (self-employed, casual, fixed-term, temporary and seasonal) collectively remain a significant portion of our workforce, steadily increasingly along with the overall employment rate - with greater flexibility enabling better workforce participation.

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Importantly, the New Zealand Productivity Commission, in its comprehensive analysis of local and overseas labour market data, states there is no evidence that platform-mediated gig work is cannibalising traditional employment relationships, but rather it is more often used for supplementary and short-term income.

So why do alternative forms of employment continue to be sought? Simply put, it is personal choice and circumstance which drive people's desire to have work that is flexible for their needs. We know from the data that fulltime workers are staying in jobs for shorter periods and many others are choosing "stints of work", some for days at a time; and others weeks or months.

Interestingly, Statistics New Zealand reported (Survey of Working Life: 2018) that half of those employed as temporary workers did not want a permanent job. They also found no difference in job satisfaction levels between permanent and temporary employees.

So it was worrying that recently the PSA Union were reported in the media as referring to the temporary workforce as "a second-class workforce", which is both demeaning and ignores the reality of the labour market.

As a large provider of contractors and temps across many sectors, AWF Madison understands that the motivations of candidates for contingent work and permanent work are quite different.

In fact, they are so different that many of our recruiters specialise in either permanent or contingent workers. We value our contingent workforce as much as we value the permanent candidates we deal with.

People want good jobs, but individuals place different value on different aspects of jobs and are often more concerned about income security than job security.

There is a lot written about the changing types of work and that a large percentage of jobs from 10 years ago no longer exist and that many more will not exist in another 10. The dialogue tends to focus on the re-training required for the workers and little about the needs of businesses.

The reality is these changes mean businesses not only have seasonal demands from a workflow perspective but can also require significant transformations of their workforce over time. This is driving businesses to seek contingent workers, either individually or often large teams for weeks and months at a time. Let's not forget it is the consumer that is driving this demand with changing expectations of businesses and government agencies alike.

It is positive for the both the job market and overall labour productivity that we have mechanisms that allow workers and employers to connect with each other and that the contingent labour market can operate. This is also a global trend among most of New Zealand's trading partners that we compete with.

Of course, this shift in how we work is not without its challenges. Employers have to adapt induction, training and onboarding processes for this "in and out"-type workforce and accept that a proportion of these workers are not seeking a permanent job and have the freedom to move on at short notice.

The workers themselves must take more ownership for their income security and ensure they can balance the books and be ready for time without work and be responsible for their ongoing personal development.

For the foreseeable future, banks, unions and other stakeholders have to find a way to remain relevant to, and support workers who can't provide a payslip from a fulltime role which normally would have provided them with deductions and other entitlements. This relevance is likely to be found in supporting contingent workers' desire to be flexible and recognising this as a long-term viable way to structure a career or working life.

Sadly, there are rogue employers with bad practices who bring unwarranted headlines of "exploitation" upon good employers as well. We need to find a way to ensure these workers are protected but without reducing the level of flexibility required by businesses and the freedoms sought by most individuals.

It is widely acknowledged that New Zealand's labour productivity is poor; it has lagged behind the OECD average for many years. In order to address this and boost our economic growth, the Productivity Commission identifies a more dynamic and flexible labour market as critical to promoting innovation and job creation.

It is, however, currently a challenge for employers to embrace flexibility opportunities and balance these with worker rights within a legislative framework that is not well-suited for growing numbers of contingent workers.

New solutions are required, and these can't be found in the past where collective bargaining power could drive certain job outcomes.

We need to shift the view that the permanent job is the only good job and embrace more flexible forms of employment in order to secure better outcomes for the New Zealand labour market.

• Simon Bennett is the CEO of AWF Madison.