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NZ labour market the worst since 1970s – economist

A year-and-a-half into the Covid-19 pandemic, New Zealand businesses are finding it the most difficult to find workers since the 1970s, according to Infometrics principal economist Brad Olsen.

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Infometrics principal economist Brad Olsen says employees are trying hard to hold onto their current workers. Source: Breakfast

"Businesses are still really finding it quite difficult to find workers, businesses themselves reporting the most difficult period in fact to find both skilled and unskilled workers on record since at least the 70s," Olsen told Breakfast this morning.

"Probably more interestingly we're seeing the largest levels of job churn since 1973. What that's highlighting is it's not only difficult for businesses to find a new worker but they're having to hold on real tight to their current workers and that's meaning that wages are becoming a much more important issue.

"I think it's important to remember that we've lost all of our migrant labour that we'd normally be able to bring in, that's quite a large talent pool for a number of businesses, particularly in some of those more skilled roles."

Olsen said people who might have previously struggled to get a job or were less suitable are now being pressed into action.

"A lot of those expectations of possibly double-digit unemployment were ahead of the Government coming through with such a large wage subsidy which supported a lot more jobs, a lot more activity than we might have first expected," he said.

Unemployment in New Zealand is currently at 4.7 per cent.

A barista making a coffee. Source: istock.com

This means workers may be in a position to push for more money, AUT professor of management Jarrod Haar, also on Breakfast, said.

"We've got to remember that not all industries will be equal, so if your boss is screaming for employees, advertising and not getting many candidates in, you're in a position of strength," he said.

"If they are getting flooded with good candidates your ability to negotiate is probably minor."

However, Haar said employees could "test the market" by applying for other jobs.

"In the US, for example, they're talking about this 'the great job turn over', people just after lockdown sick of the job and 'I wanna make change'."

But not all industries are equal.

Olsen said the strongest job growth has been in healthcare and construction, with both growing over six per cent per annum.

Meanwhile, among the hardest hit are the hospitality and service sector, with employers struggling to fill roles.