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Today FM announced redundancies last week. Pictured are hosts Duncan Garner and Tova O’Brien.
March was a tough month for redundanciesis it the start of something bigger?
The run of high-profile job losses started with technology company Xero announcing it would be cutting up to 800 jobs across the company to “realign the business and provide a better balance of growth and profitability”.
It would not say what proportion of those cuts would be in New Zealand.
Two weeks later, The Warehouse Group announced its earnings were down by 60.9% in its first half of the trading year and the group would axe up to 340 roles in its Auckland support office. It had initially proposed to cut 190 jobs in January.
Sky TV then announced six days later it would make 170 staff redundant. The company said the changes would cut its operating costs by $6 million a year from its next financial year starting in July.
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Then just last week Today FM was suddenly pulled from air and staff were told up to 50 people could lose their jobs after the board at MediaWorks shut down the station just one year after it started.
Global tech giants Google and Meta reported earlier this month they would slash 12,000 and 10,000 jobs respectively.
ANZ economist Miles Workman said redundancies were the “most painful part” of efforts by central banks, including the Reserve Bank, to get inflation under control.
But too much fiscal and monetary stimulus during the pandemic had pushed the economy into unsustainable territory, and the Reserve Bank was between a rock and a hard place, he said.
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“When the economy is starting from an unemployment rate that’s near a record low which is an unsustainable level from a wage cost, and therefore inflation, perspective, then there’s only one way to go from there,” he said.
ANZ was forecasting the unemployment rate would lift from 3.4% to 5.4% by the end of 2024.
“It’s going to be a tough experience for some, but failure to get inflation down and the labour market back into sustainable territory risks a significantly worse scenario for the long-run health of the New Zealand economy compared to the current relatively controlled downturn.”
Infometrics chief forecaster Gareth Kiernan said there had been a definite change in business sentiment over the last six months in terms of demand for workers and willingness to take on additional staff.
“What we’re seeing now are some businesses starting to actively reduce their staff numbers.
“With the softening economic outlook, businesses are turning their attention to trimming costs and, in some cases, this will result in staff numbers being cut – particularly where relatively expensive staff were taken on over the last two or three years.”
Job losses seemed to be fairly limited to the industries under most pressure from the early stages of the economic slowdown, but Kiernan expected the losses to spread more widely between mid-2023 and mid-2024.
“However, with the unemployment rate pushing up from 3.4% currently to about 5% by the middle of next year, the softening in the labour market will be reasonably mild.”
By comparison, the unemployment rate rose from 3.4% to 6.6% between December 2007 and December 2009 when the Global Financial Crisis hit.
“A significant part of the coming lift in unemployment will be job growth failing to keep pace with the number of potential workers, rather than people losing their jobs,” he said.
