New Zealand’s small and medium businesses are still hiring but a surge in casual roles and stagnant wages paint a more complicated picture for employers heading into winter, according to Employment Hero data.
Employment Hero’s April Jobs Report reveals employment grew 8.8 per cent year-on-year and 0.5 per cent month-on-month. However, beneath that headline – drawn from payroll data across over 2000 New Zealand SMEs – sits a more complicated story. Wages grew just 0.4 per cent year-on-year, the slowest pace in more than a year, while casual roles skyrocketed over the same period.
The data points to a two-speed dynamic playing out across the country’s small business landscape. Employers are adding headcount but favouring flexible arrangements over permanent commitments. Workers are finding jobs to a certain extent, but not meaningful pay rises. And a boom in youth employment, while positive on the surface, masks a more complex labour market reality.
“These incremental gains over the last few months indicate SMEs are hiring but taking a cautious approach given the continued economic uncertainty,” says Neil Webster, Employment Hero General Manager NZ.
Official Employment Data Tells Only Part Of The Story
Stats NZ’s latest survey puts the national unemployment rate at 5.3 per cent in the March quarter. That figure captures the broad labour market, but it skews toward larger employers and can smooth over the nuances of SME workforce behaviour.
Because the data is drawn from payroll records and employment activity, Employment Hero’s Jobs Report can pick up shifts in trends because SMEs tend to be on the sharp edge of macro economic effects.
The standout figure from April’s report is a 20.2 per cent year-on-year increase in casual employment.
This could be interpreted as a response to uncertainty. Many employers may be hedging on hiring as the conflict in the Middle East makes economic conditions fragile and demand difficult to forecast. Casual contracts allow businesses to scale labour up or down without the fixed cost of permanent hires.
Businesses may also be asking existing staff to work to cover gaps. There has been an increase in average hours worked, up 2.2 per cent year-on-year and 2.1 per cent higher than the figure three months ago.
“Not only are we seeing employment growth, but with average hours worked also increasing it means employees have the opportunity to take home more in their pay packet,” Webster says.
There was a significant uptick in hours worked by casual employees – 8.4 per cent year-on-year and 1.9 higher than three months ago. “This means casual workers are getting extra hours during the week, which is great news for the likes of students, whose living costs continue to bite.”
Wages Slide Further Behind The Cost Of Living
Year-on-year wage growth of 0.4 per cent is the lowest recorded in the Jobs Report in 13 months. It marks a sharp decline from the 5.4 per cent year-on-year growth recorded in April of last year.
A month-on-month rebound of 0.8 per cent – after 3 months of negative or stagnant results – is positive, but set against an annual inflation rate of 3.1 per cent, workers are experiencing a real-term pay cut. The median hourly rate is $35.60.
Regionally, Auckland is a stand-out, with wage growth across the city’s SME base of 1.4 per cent year-on-year. Canterbury, Wellington and Waikato all recorded negative figures, suggesting the cost squeeze may be hitting harder outside the country’s largest employment market.
For SME owners who cannot afford to offer significant pay rises, the risk is a slow loss of talent if workers seek better-paying opportunities elsewhere. Non-monetary benefits, like flexibility, and clearer career pathways become critical incentives when base pay is flat.
Young Workers Reveal A Data Paradox
Stats NZ data for March has young Kiwis over-represented in unemployment statistics: of 15-24-year-olds engaged in the labour market, 14.4 per cent are unemployed, up from 13.3 per cent in the December quarter. But among Employment Hero’s SME customers, jobs for 18-to-24-year-olds have grown by 12.0 per cent year-on-year.
While appearing contradictory on the surface, the trends stem from the way different datasets define “employment” and which specific segments of the economy they capture. SMEs are generally underrepresented in government statistics and often behave differently from large corporations during downturns. When bigger firms freeze hiring or conduct layoffs, smaller businesses still need staff but face tighter budgets. Many may be replacing departing mid-level employees with younger workers who command lower salaries.
Webster says the year-on-year figure is also likely to be driven by a swing towards hiring casual workers. “For example, SMEs in New Zealand are heavily represented in hospitality, retail and trades sectors. These sectors may be having a ‘micro-boom’ in hiring young people which isn’t happening in the corporate or manufacturing sectors,” he says.
He says many younger workers prefer casual or contract roles, while businesses benefit from operational flexibility. “It’s still a little fragile out there, there is no denying it,” says Webster. “However, SMEs are working through it, sticking to their knitting, and keeping on going.”
