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Pay rates on the rise thanks to head hunting of skilled workers to fill vacancies.
With the struggle to find skilled workers only getting rougher, recruiters and employers alike are turning to poaching and headhunting in a desperate move to fill empty positions. Incentives are being paid to staff in order to encourage them to help recruit new employees, with Go Bus paying $500 to $1000, and Transit paying a $300 finder’s fee for the recruitment of urban bus drivers.
The border remaining closed to international talent and an unemployment rate at 3.4 percent, some employers are significantly increasing current salaries for existing workers to try and lower the risk of losing their experienced workers to more well-paid offers.
In addition to many existing employees enjoying an increased salary and finders’ fees in excess of a thousand dollars for helping with recruitment of new workers, some workplaces are offering major sigh on bonusses.
The shortage in bus drivers has resulted in decreasing bus services in Christchurch, and Go Bus has been warned by Environment Canterbury that recruiting hard for drivers in the existing public transport network of drivers would only move the problem around rather than lessen it.
Hamilton Jet employs 450 staff, most of whom are in Christchurch, however it is struggling to find sufficient skilled workers to fill roles due to an increase in orders. Hamilton Jet has seen orders increase significantly - but they’re 20 workers short and as a result their delivery times have been extended from 6 to 12 months. Their managing director Ben Reed has moved some office-based engineers onto the factory floor to help that team while management offers significantly higher pay as a way of sweetening the deal for new workers.
Nigel Piper, operations director of Go Bus, has said that they have agreed to avoid target drivers from other bus operations but has stated that the finder’s fees are not a new method in their recruitment system – payments which are on offer in Christchurch and other centres around the country.
“We’re not saying go out and pinch a driver ... we’ve been doing it for years as a legitimate recruitment tool.”
Finders’ fees are certainly not restricted to bus driving, Ben Pearson at Beyond Recruitment has seen these fees go up to $5000 in some industries, and that they are being used as a way of filling vacancies.
“We’re also seeing more sign-on bonuses to bind new staff for a period, usually a year, and they seem to average around $10,000, but may be higher.”
While poaching has not previously been part of the New Zealand recruitment techniques – certainly not to this extent – it is changing and becoming the norm. International competition is growing, and Pearson notes that “quite aggressive approaches” originating from Australian recruitment agencies are worsening the situation for New Zealand employers.
This is exacerbated by overseas employers who can afford larger pay checks while utilizing remote kiwi workers. For example, Pearson related the story of an American software company who tracked down a South Island IT worker brought them on board with a 50 per cent pay rise.
“It’s quite a different level to the old, ‘hey come and work for us for five grand more,’ it’s a new game now.”
Consultancy firms have seen that Australian law and accounting firms are targeting New Zealand-qualified lawyers and accountants specifically. These trends are creating a concern that once borders open there could be a skilled exodus across the ocean to bigger and more remunerative positions.
“We have anecdotal feedback that people almost have no choice because of the salaries on offer and the cost of living increases, it’s almost a choice they have to make for lifestyle reasons.”
With the potential for a mid level positional vacuum, those returning to New Zealand with more senior than those who left - they are not likely to want to fill those mid level positions.
Stats NZ shows that 38,000 jobs were filled in the September quarter, which is nearly 2% higher than the previous quarter with the Seek job site reporting that applications per job advertisement reached record lows in November 2021.
The shortage is worst in information tech, engineering, and the construction industry but it is broader than these specific industries. HR, security, and even administrative staff with sufficient skills and experience are very difficult to source.
“Leadership positions are probably the easiest to fill at the moment because there’s always a latent population that’s looking to step up, but for the real doer roles, there’s a shortage across the board.”
Robert Walters recruitment consultancy survey spoke to 863 clients, their responses showed that while many businesses are granting large pay rises this year 2022, many employees are expecting larger ones.
Most workers are confident and willing to move if their current position does not satisfy their needs – in the tech sector nearly to 70 per cent said they were looking for a new job and a pay rise in the coming 12 months.
Robert Walters New Zealand says that head hunters are targeting mid-level employees, and saying that people in the $80,000 to $200,000 salary bracket can expect a 10% rise.
The public service has grown by nearly 14% to 61,100, with much of that increase being due to our response to the pandemic. Salaries in this area have increased 3.7%, while private sector pay increases have averaged 4.4%.
While private sector wages are generally higher; public sector wages are currently higher for drivers, clerical workers, and office administrators.
The chief exec of Canterbury Employers Chamber of Commerce, Leeann Watson, says that small businesses are finding it difficult to compete with government departments when it comes to skilled workers who they both need. The Canterbury Employers Chamber of Commerce itself has seen two of its own staff to the public sector. The public service has hired over 400 new policy analysts while and Employers and Manufacturers Association chief executive has been trying to hire one for some time without success as in some cases departments are paying significantly above market rates – “$40,000 or $50,000 above private sector.”
Over the past year the public service has employed an extra 442 policy analysts, Brett O’Riley has been trying to hire one for months. O’Riley says he has managed to hold on to some of his staff by offering them pay rises – a pattern we are seeing repeated again and again.