New temporary work visa settings should be welcome relief.
Though international trade and domestic infrastructure are clearly big issues facing businesses at the moment, there's no doubt getting access to skilled labour continues to be challenging.
The good news is the Government is at least listening, as evidenced last week in the changes announced to the temporary migrant work visa scheme.
Some close attention is needed in terms of the detail of the new settings but most business groups from the outset have welcomed the move.
There's also a sense of relief the coalition appears to have shied away from pre-election promises to cut down on net migration - remember New Zealand First wanted it slashed by more than 80 per cent.
In fact, by May this year — some 18 months after the election — the annual net migration number had bounced back to near record levels.
"To be fair, I think the Government has recognised the issue," Alan McDonald, Employers and Manufacturers Association (EMA) general manager of advocacy, told the Herald at the time. "They recognised the scale of the problem ... they've listened to employers."
That said, as the Mood of the Boardroom survey shows, the problems caused by skill shortages aren't getting any better.
A healthy number of firms (38 per cent) still expect to increase staff levels in the next 12 months, but they do cite labour issues as among their biggest concerns.
Labour shortages featured as the biggest single domestic concern for survey respondents' own businesses — showing up as 6.83 on a scale of one to 10. Immigration restrictions and employment law changes are on the same side of the ledger, as is labour productivity, skills and wage increases.
In short, sourcing and retaining staff is for many chief executives the key issue keeping them awake at night.
So last week's announcement by Immigration Minister Iain Lees-Galloway around employer-assisted temporary work visa settings should be welcome relief, particularly for those in the agricultural and horticulture space.
The changes, which start coming into effect in 2020, include the introduction of a new employer-led visa framework, negotiating and introducing sector agreements to plan for future workforce needs and reinstating the ability for lower-paid workers to bring their families to New Zealand.
At the same time the new visa system replacing six categories will require employers to be accredited, increasing the expectation on employers to employ and train more New Zealanders.
The plans also include replacing the existing skills band with monetary thresholds aligned to the median wage, and the higher-paid jobs skill shortages list will be replaced with open access to the regions.
Lees-Galloway said the changes would assist between 25,000-30,000 businesses to fill shortages.
Canterbury Employers' Chamber of Commerce chief executive Leeann Watson said three-year visas and renewals provide continuity and confidence to both employers and workers. "This is a much more effective solution to ensure employers in genuine need are able to access the skills and attributes they need."
It is indeed a good sign that the Government is addressing these issues, although many firms would argue that it's not nearly enough to offset employment law policies, which have driven up costs and compliance.
Meanwhile, despite general uncertainty about economic risks, businesses are remarkably upbeat about their own prospects, albeit tainted by uncertainty.
Two-thirds of respondents to the Mood of the Boardroom survey reported they expect revenue growth over the next 12 months with around 52 per cent expecting profit growth.
This follows the recent listed company reporting season, which resulted in actual profit growth slightly better than expectations and post-result revisions showing a slight upward bias at the revenue line, according to Forsyth Barr research.
However, there were a number of downgrades at the bottom line, Forsyth Barr notes, with earnings per share revisions for the 2020 financial year finishing with just six upgrades versus 16 downgrades from those that gave earnings guidance. Financial year 2021 revisions were also net negative with 11 upgrades and 17 downgrades.
Most listed company results reflected solid earnings, some dividend growth and strong balance sheets.
However, fund managers said when it came to companies' outlook statements, the future was clouded with uncertainty, particularly on the international front.
It all pointed to a gradual economic slowdown, something that showed up in last week's GDP figure as well.
Fonterra's woes and its losses on Chinese investments in particular are being closely watched by the wider business community, the Mood of the Boardroom survey showed.
Asked whether this demonstrates New Zealand and companies have too many eggs in the China basket, around 54 per cent said yes, 30 per cent said no and 16 per cent were unsure.
Generally there does seem to be a strong sense of caution among businesses with companies looking at global trends, including trade relations, and what they might mean for the economy.
Firms are experiencing tighter margins and are finding it increasingly difficult to pass on higher costs.
A seemingly entrenched lack of confidence in the Government is adding to that uncertain outlook.