New Zealand SME Job Market Steadies As Report Reveals South Island Powering Ahead

New Zealand’s SMEs showing early signs of stability, with employment growth in the South Island outpacing the North, according to Employment Hero’s Annual Jobs Report 2025.

Employment Hero today released its 2025 Annual Jobs Report, Work in Motion: a snapshot of the world of work. The report draws on aggregated, anonymised real-time  insights from more than 350,000 small businesses and 2 million employees in Australia, New Zealand, and the UK, alongside a YouGov survey of 3,635 workers across all four markets, the report charts a global workforce navigating a world fraught with conflict and unease, but also immense opportunity for growth and reinvention.

The report suggests the sharp slowdown that gripped the labour market in New Zealand last year has given way to tentative momentum. Employment averaged about 1% year-on-year for much of 2025, climbing to 2.4% in July. Wages rose 3.9% over the year, while hours worked lifted 1.2%.

“Findings point to a gradual rebalancing. Youth hiring and steady wages are creating more entry points into work, and businesses are using flexible staffing to manage demand while staying focused on productivity and costs,” said Ben Thompson, Co-founder and CEO of Employment Hero.

South Island drives gains

The South Island led national growth with employment up 5.4% compared with just 0.6% in the North. Otago stood out, posting a 19.4% increase, underpinned by tourism recovery, agriculture and regional investment.

Casualisation cushions demand but pressures persist

Casual roles absorbed much of July’s growth, rising 0.74%. Yet average hourly pay for casual workers fell 1.3%, even as full-time and part-time wages rose 4.6% and 5.7% respectively. Analysts warn this shift highlights the reliance on flexible labour without fully shielding workers from inflationary pressures.

Confidence remains weak

Despite modest improvements, worker sentiment remains subdued. More than half of New Zealanders (55%) believe employee conditions are deteriorating, while just 17% see improvement. Job insecurity looms large: 53% of workers say they would not feel confident finding a new role within three months if they lost their job. Older workers in particular feel vulnerable, with 64% of over-55s doubting their re-employment prospects.

Training and capability gaps

The report also found that only 52% of employees believe their employer provides adequate training and upskilling. Older workers were the least likely to agree, pointing to capability gaps that could limit retention and productivity.

Expert outlook

Independent economist Saul Eslake said the slowdown that began in early 2024 has largely run its course. “We’re likely to see a modest pick up in the second half of 2025, enough to help stabilise unemployment after it reached a nine-year high in the June quarter,” he said. Eslake expects incremental improvements into 2026, with steady headcount, gradual gains in hours and more sustainable wage growth.

While global employment growth remains stronger in Australia (+5.8%) and the UK (+2.6%), New Zealand’s 2.4% gain underscores a cautious recovery. For now, small and medium businesses are balancing flexibility with cost control, even as workers prize job security above ambition.