Graphic / NZME
If 2022 were to bear a moniker it would be the Year of the Employee.
News columns have been filled with stories of workers switching jobs for pay increases, as epitomised by a recruiter who earlier this year declared that ‘$90k is the new $70k’.
Workers have also benefited from a tight labour market, which forced employers to cough up more cash to hold on to essential or talented staff members.
On top of this, we’ve also seen workers hold on to the workplace flexibility they were given during the height of the pandemic. Covid has taught workers there was a different way to work - and they’re not ready to go back to the status quo that existed before.
This all points to a power balance weighted in favour of workers but there are signs that the pendulum could be swinging the other way.
Jason Ennor, the chief executive of human resources platform MyHR, says we’re emerging from a period of enormous employee power.
“We’re either a candidate-rich market or a candidate-poor market,” Ennor explained.
“When it’s a candidate-poor market employees have all the power around defining terms, asking for pay levels and choosing the jobs they value.
“In a candidate-rich market employers have more choice.”
New Zealand has been in the throes of a critical labour shortage as lockdowns and tight regulations held up getting migrant workers into the country.
“As a small country we’re heavily reliant on an immigrant workforce and that just evaporated over Covid,” Ennor said.
Dubbed “brain drain”, New Zealand has spent much of the year playing catch up, and July was the 17th month in a row more people left the country than arrived.
However, there are signs “brain drain” could be stabilising as New Zealand made a small net migration gain for the month of August with 7851 migrant arrivals and 7804 departures.
On an annual basis, New Zealand recorded a net loss of 11,000 people in the year to August, according to Stats NZ.
And in September, the Government green-lighted a new Recognised Seasonal Employer (RSE) cap allowing for an additional 3000 workers into the country – taking our total of annual available workers from participating Pacific countries to 19,000 – and providing much-needed relief for the horticulture and wine sector.
“Employers are now catching up with the accreditation visa requirements,” Ennor said.
“I think it will level out and there will be more workers available in the market which will put a little bit of power back on the employer.
“It won’t last forever, I’m telling employers not to panic.”
International workers remain wary of the possibility that New Zealand could again impose strict regulations that could see them trapped away from their families, but Ennor said that New Zealand remains a desirable place.
As those concerns ease, migrants are likely to return to the country. But this will only address one part of the challenge facing employers.
The increased cost of employing staff in this country isn’t going anywhere, anytime soon.
General inflationary pressure on wages, changes in legislation like the fair pay agreement, changes to sick leave next year and the introduction of income insurance have all combined to pile pressure on the bottom line.
The added problem is that New Zealand businesses aren’t only competing with each other. We’re now playing in a global marketplace and face increased pressure from the likes of Australia.
Ennor says much of the focus has been placed on professionals, including software developers, CEOs, marketers, sales people and digital marketers, but the problems run far deeper than this.
“They’re actually targeting nurses, baristas, chefs, good retail managers, teachers, aged care workers … it’s across the board going ‘come to Australia, earn twice as much and have a better lifestyle’, and that’s kind of their pitch.”
On the flip side of this equation, there are signs that workers in the UK could be looking for some alternative options.
“As people get frustrated with the political landscape and the post-Brexit life I think we might see some interest coming from the UK,” Ennor says.
This global tug-of-war for talent could end up playing a big role in defining how things pan out for employers in 2023.
Whatever happens from a talent perspective, you can rest assured that working conditions will remain flexible.
“The 9am-5pm is outdated,” says Professor of Human Resource Management at AUT, Jarrod Haar.
“Technology allows us to break the time requirements and the location requirements,” he said.
Haar said allowing employees to work from home was “critical”.
“In this super-tight labour market, employers not allowing work from home or flexible options are going to be less attractive places to work, and likely to lose staff while there are other options available.
“Work from home signals trust and no one wants to work for a manager or organisation that they feel doesn’t trust them.
“I believe that working from home will be the norm, at least two days a week.”
Workers are now well versed in the benefits of remote and flexible working, which include improved work-life balance, reduction in stress and saving time and money on commuting.
A national survey earlier this year – the 2022 Workplace Wellbeing Survey – of more than 1200 workers found 78 per cent of respondents considered flexible hours or hybrid work arrangements most important when changing jobs.
Ennor of MyHR said it was about structuring a workplace that allows for that flexibility.
“The employers really winning are the ones that are actually listening to their staff,” he said.
“There will definitely be a levelling out of the hybrid working model but I think we are settling into a slightly new reality which I think is a good thing.”
But there are risks to not getting the work-from-home balance right, Haar explains.
He encouraged people to be seen and come into the office.
“The average in New Zealand is around two days a week work from home. Those working more than that do run the risk of not being ‘seen’ – even if they are doing their job,” he said.
He said the social connections are important for everyone too.
“Working from home does have the risk of blurring boundaries where work, family and life never separate and workers can fail to switch off.
“My advice for early risers and workers is to cook dinner when working from home and make that the end of the work day.”
Haar said it was important to disconnect at the end of a work-from-home day.
“No computers later.”
“That is another potential danger: it encourages you to keep working after hours and technology really aids this.”
On the flip side, hybrid workers are saving an average $250 per week, or $13,000 per year, according to a Cisco survey of 1026 New Zealanders.
Lidya Paljk, head of customer service and call centre at Tribe Recruitment, said most organisations they’ve engaged with offer flexible arrangements.
“It is incredibly important for businesses to offer flexible working arrangements,” she said.
“Organisations that don’t have a flexible working policy in place may need to make an exception for top talent which can have an impact on culture.”
Paljk said remote work was even being offered to those in another region to secure talent.
“In an era where talent is scarce, we have even noticed employers are recruiting talent in the regions which may mean they are fully remote, or offering flexibility to staff to work from other parts of the world if they wish to take extended time overseas,” she said.
“For those living in the main centres such as Auckland, employers are offering flexible working hours, so employees miss peak commute times.”
But Paljk said they have clients who are starting to experience the accumulative impact on culture of not having people in the office enough to connect.
“Poor behaviours are also going undetected, as they’re somewhat hidden,” she said.
“The reality is however, without good people practices – KPIs, performance processes and measures, regular reviews, and effective leadership, the problem areas don’t differ, be it in the office or remote.”
In 1926, Ford Motor Company founder Henry Ford instituted an eight-hour workday for some of his employees.
The “eight-hour day movement” had its origins as early as the 16th century, but Ford’s groundbreaking change was one of the first by a major company.
Since that revolutionary moment nearly a century ago very little has changed. But there’s now a growing movement that’s challenging that notion and asking where a four-day week could take off on a larger scale.
“The evidence is building and definitely there is enough already to suggest it can work,” said AUT’s Haar.
“But managers and owners need to have a high level of trust and that is probably holding back many organisations – including Kiwi ones – to embrace it.
“In the next few years, it might still be boutique. But, as it gains more adoption, it might change and become the norm.”
Haar said there could be some pushback from businesses at the idea of paying staff their full wage for a day’s less work, but this would be countered by productivity gains.
“My research showed not only was productivity maintained, but teams were more helpful, more creative, and gave better customer service. All things that aid firm performance.
“Firms will win. It is a win-win situation for employees and employers.”
New Zealand has a productivity problem – working longer and producing less.
Figures from the Productivity Commission in May last year show New Zealanders produce $68 output per hour compared with $85 output per hour in other OECD countries.
And all this while working 34.2 hours per week compared with 31.9 hours per week in other OECD countries.
“New Zealanders are working harder rather than smarter, this makes improving living standards even more difficult,” said Productivity Commission chair Dr Ganesh Nana.
For now, the four-day work week continues to be trialled by some companies, while a couple of notable headline grabbers have made it policy.
Last week global consumer goods company Unilever announced it would continue with its four-day working week for all New Zealand staff following encouraging results from its 18-month-long trial.
Unilever reported improvements in individual wellbeing, including stress dropping 33 per cent; feelings of strength and vigour at work increasing 15 per cent; and work/life conflict falling 67 per cent.
And New Zealand-based businessman, and founder of financial trust firm Perpetual Guardian, Andrew Barnes made global headlines in 2018 when he made the four-day working week policy at his company after trialling it earlier that year.
The eight-week trial found stress lowered from 45 per cent pre-trial to 38 per cent post-trial.
Work-life balance also significantly improved at the firm to 78 per cent post trial, up from 54 per cent.
One challenge New Zealand will face in the coming decade is the upskilling of our workforce as advances in artificial intelligence (AI) threaten workers’ jobs.
“It’s the ability to automate all of those routine admin tasks and then raise the bar on what becomes routine,” said Ennor of MyHR.
Customer service and experience, banking and financial services, logistics and transportation, healthcare, retail, cybersecurity and marketing are industries that will mostly be impacted by AI.
“Anything manual that can be automated will be and that’s already happening,” Ennor said.
Academics have stayed largely away from predicting how many jobs will be lost, rather focusing on what jobs AI will create.
This was explored as part of a University of Otago and New Zealand Law Foundation-funded report last year: The Impact of Artificial Intelligence on Jobs and Work in New Zealand.
It said the most obvious new jobs will be in the development and deployment of the new AI systems and in testing and overseeing AI systems to make sure they behave as they should.
But while those jobs will require skilled AI engineers, it highlighted new job categories that weren’t about engineering - content authoring and training data preparation, requiring a mixture of technical and humanities skills.
Paljk at Tribe Recruitment said with AI or Chatbots being implemented to resolve easy or frequently asked questions in customer service roles, workers are needing to lift their knowledge and capability.
“From what’s happening in the market we see AI to help employees to do more and remove mundane routine work. In return AI will create new advanced roles for employees allowing them to upskill and grow.”
But research suggests employers aren’t doing enough to ready their workforce for such changes.
Research commissioned by Skills Consulting Group of 1448 employees found while employees are keen to learn, most businesses and organisations are not providing the right training to recruit and retain people.
According to the research, 47 per cent of employees want problem-solving skills; 43 per cent want leadership skills; and 42 per cent want to upskill in the areas of team management and critical thinking.
But only around 20 per cent of employers currently offer the relevant training.
Gwyn Thomas, Director at Skills Consulting Group, said this was an issue that desperately needs to be solved.
“Employees want to be taught smart human skills, such as critical thinking, communication and problem solving – skills that will take them to their next horizon in their career,” he said.
“We’ve been so wrapped up in automation, digital hacks and AI shortcuts, we’ve forgotten what makes a good workplace tick - the people.
“We desperately need to offer smart skills training to improve engagement, employee retention and satisfaction – both at work and home.”
It may not be too long before AI is taking your next McDonald’s order.
Last year McDonald’s replaced human drive-through workers with Siri-like voice activation AI technology at 10 locations in Chicago in a world-first trial.
The system was said to be able to handle about 80 per cent of orders that come through and fills them with about 85 per cent accuracy.
AUT’s Haar said AI will spread and capture many roles in all industries.
“But these will remain the simple roles – at least to start.”
Multiple lockdowns and work-from-home orders sent workers scurrying home during the pandemic only for it to become difficult to pry them away again from their laptops, sweatpants work attire and home office setups.
So are we looking at a future of ghost CBDs, deserted, the bustle relegated to a distant memory?
“When looking back to the initial outbreak of the pandemic, there were many headlines proclaiming this was the end of the office, however this couldn’t be further from the truth,” says Gavin Read, head of research at real estate consultancy JLL New Zealand.
“The forced lockdowns have not by design, but by necessity, assisted in creating better clarity for the office, and it being a critical ingredient for corporates to attract and retain talent.”
According to JLL Asia-Pacific’s recent HR Perspectives survey, 56 per cent of employers intend to refit or redesign their office space in the next 12 months to better cater to the workforce of the future.
The survey of 240 senior HR professionals found the primary purpose of office space in their organisations would be for collaboration, face-to-face meetings, and creativity and innovation.
“In late 2019, prime CBD office size was ~370,000sq m. This has now increased to ~420,000sq m across Premium and Grade A properties,” Read said.
“Many occupiers [are] re-thinking their workplaces to ensure they meet employee needs such as more space between workstations and larger collaborative areas.
“Office space will continue to evolve to ensure that each occupier is providing the highest quality spaces for their staff.
“Another key ingredient in the return to the office will be the ease of travel for employees to get to their workplaces and this will need to be supported by both local and central government initiatives.”
In June, the Herald reported on Auckland’s ghost office towers after a vacancy study by JLL found three big tower blocks - the ex-Chorus House on Wyndham St, Shortland & Fort and ANZ Centre on Albert St – were between 22 per cent to 59 per cent empty.
QBE Centre (38 per cent empty) and Citigroup Centre (23 per cent empty) were also mentioned in the report.
But things might be starting to change.
“For prime CBD office properties, we have seen vacancies reduce to 9.8 per cent, (down 3.5 per cent) in the last six months, clearly emphasising the demand from occupiers for better office spaces, with this ‘flight to quality’ expected to continue well into 2023,” Read said.
The office won’t disappear anytime soon, but the offices of the future might look slightly different from what they once did.
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