Workers cautious ahead of slump

Workers are confident about their job security, but see any chances of a pay rise or new job opportunities fading in the face of an economic downturn.

The quarterly Westpac McDermott Miller Employment Confidence Index, released today, shows a drop in worker optimism.

It has been calculated at 123.7 for the March quarter, down from 127.2 in December last year.

Any number over 100 shows there are more optimists than pessimists, while any number under 100 shows more pessimists.

A slowing economy affecting the labour market was now becoming increasingly evident, said the index authors, with the latest figure the fifth consecutive and largest quarterly decline yet seen.

"While most New Zealanders consider jobs plentiful, if less well paid, than this time last year, they are increasingly pessimistic about job opportunities over the year ahead," said Richard Miller, managing director of consultancy McDermott Miller.

Westpac chief economist Brendan O'Donovan said that while workers remained optimistic, they were "clearly becoming less so".

Workers' perception of their earnings had not improved, despite official data showing that wage growth had been "robust" up until the end of last year.

Thirty-six per cent of respondents said they were earning more than they were a year ago - down from the 44 per cent who said this in December.

"This is at odds with reported wage growth of 5.4 per cent for the year to December 2005."

A net 20 per cent of workers expect there to be fewer jobs available in a year's time.

"Generally, employees anticipate a slowdown in the economy. They seem to be battening down the hatches and are less likely to give up secure employment," said Miller.

Declining employment confidence was likely over the coming year.

O'Donovan said having a strong labour market at the same time the economy was slowing meant that workers may feel that this downturn was not as bad as previous recessions.

The economy had entered this current slow patch with a shortage, rather than a surplus, of labour.

"As a result, even as activity slows, labour hoarding may increase and layoffs will be the exception rather than the rule," he said.

"However, the trade-off is likely to be slower wage growth."

Figures released in February showed the unemployment rate was as low as it has ever been.