How Global Uncertainty Is Reshaping Expansion into Australia and New Zealand
Global uncertainty is not stopping international expansion, but it is changing how businesses enter new markets. Economic volatility, workforce shortages, evolving immigration policies, shifting trade relationships, and ongoing supply chain disruption have contributed to a more cautious business environment. While organisations continue to pursue growth opportunities, many are taking a more measured approach to where they invest, how they hire, and how they establish operations in new markets. For businesses looking beyond their home market, Australia and New Zealand continue to stand out as attractive destinations. Both countries offer stable economies, established legal systems, skilled workforces, and strong long-term growth opportunities. However, as many businesses discover, successful expansion requires more than identifying commercial potential. The practical realities of employing people, managing payroll, navigating visa requirements, and maintaining employment compliance can quickly become some of the most complex aspects of international growth. Key Takeaways • Global uncertainty is causing businesses to take a more measured approach to international expansion. • Australia and New Zealand remain attractive expansion markets due to their stability, skilled workforces, and established legal systems. • Workforce mobility, visa sponsorship, and access to talent are becoming increasingly important strategic considerations. • Businesses are placing greater emphasis on employment compliance, payroll management, and local expertise. • Flexible expansion models such as Employer of Record (EOR) arrangements are helping organisations reduce complexity while entering new markets. Why Australia and New Zealand Remain Attractive Expansion Markets Despite broader economic and geopolitical uncertainty, Australia and New Zealand continue to attract international businesses across a wide range of industries. Both countries offer highly skilled workforces, established legal systems, and strong demand across sectors including technology, healthcare, engineering, construction, mining, and professional services. They also provide businesses with access to mature economies, transparent regulatory environments, and strategic opportunities throughout the Asia-Pacific region. For many organisations, this combination of stability and opportunity makes Australia and New Zealand attractive destinations for market entry, employee relocation, and long-term business expansion. However, stable markets do not necessarily mean simple markets. As businesses expand internationally, they are often required to navigate employment frameworks, payroll obligations, tax requirements, and workforce regulations that differ significantly from those in their home country. How Is Global Uncertainty Changing International Expansion Decisions? While international expansion remains a priority for many organisations, global uncertainty is influencing how those decisions are made. Businesses are increasingly focused on balancing growth opportunities with operational risk. Rather than committing immediately to large-scale infrastructure investments or entity establishment, many organisations are taking a more phased approach to entering new markets. This shift is being driven by a combination of factors, including economic uncertainty, rising operational costs, changing workforce dynamics, and the need to remain agile as market conditions evolve. As a result, businesses are placing greater emphasis on flexibility, scalability, and understanding local market requirements before making long-term commitments. How Is Global Uncertainty Affecting Workforce Mobility and Access to Talent? Access to talent remains one of the most significant drivers of international expansion. However, ongoing skills shortages across many industries, combined with changing workforce expectations and increased competition for talent, are making workforce planning more complex. For many organisations, workforce mobility has become a strategic consideration rather than simply a recruitment activity. Businesses are increasingly looking beyond their domestic markets to access specialist skills, relocate key employees, and build teams that support long-term growth objectives. This trend is particularly relevant in Australia and New Zealand, where skilled migration continues to play an important role across sectors experiencing talent shortages. As businesses navigate uncertainty, the ability to access and mobilise talent efficiently is becoming an increasingly important factor in expansion planning. Why Is Visa Planning Becoming a Strategic Expansion Consideration? Historically, visa planning was often viewed as a process that followed expansion decisions. Today, it is becoming an increasingly important part of expansion strategy itself. Businesses looking to relocate employees or hire overseas talent into Australia and New Zealand must consider visa eligibility requirements, sponsorship obligations, processing timeframes, and ongoing compliance responsibilities. These factors can directly influence hiring plans, project timelines, and operational readiness. As immigration frameworks continue to evolve, organisations are recognising the importance of understanding visa pathways earlier in the expansion process. As Fran Davies, Founder and Director of ANZPEO, explains: “We’re seeing businesses take a much more measured approach to expansion than they were a few years ago. The focus isn’t necessarily on slowing growth, but on ensuring the right employment structures, workforce planning, and local expertise are in place before entering a new market.” What Operational Risks Do Businesses Need to Consider When Expanding? Periods of uncertainty often place greater pressure on businesses to minimise risk and avoid costly mistakes. For organisations expanding into Australia and New Zealand, this means paying closer attention to the employment and compliance obligations that sit behind successful market entry. For overseas businesses unfamiliar with these systems, it is often the ongoing legal employment obligations, payroll requirements, workforce administration responsibilities, and compliance requirements that become underestimated. Employment contracts, payroll compliance, visa sponsorship obligations, onboarding processes, superannuation, PAYG, PAYE, KiwiSaver, and ongoing workforce administration all require local knowledge and ongoing management. For international businesses without an established presence in a market, this can create significant pressure internally across HR, payroll, finance, and operational teams, particularly when local requirements are being managed remotely. Understanding these obligations early can help businesses reduce risk, maintain compliance, and establish stronger foundations for growth. Why Are More Businesses Turning to Flexible Expansion Models? As global uncertainty continues to influence expansion strategies, businesses are increasingly looking for ways to maintain flexibility while entering new markets. This has led many organisations to explore expansion models that allow them to hire employees, test new markets, and establish a local presence without immediately committing to entity establishment or large operational structures. For businesses expanding into Australia and New Zealand, this approach can provide greater agility while reducing some of the administrative complexity associated with international growth. One model receiving increased attention is the
New Zealand Skilled Migrant Category Changes: What Employers Need to Know
Australia PEO and New Zealand PEO have officially launched as ANZPEO, bringing together our Employer of Record, payroll, HR and visa expertise under one regional brand across Australia and New Zealand.
Introducing ANZPEO: One Name, One Website, One Clearer Identity Across Australia and New Zealand
Australia PEO and New Zealand PEO have officially launched as ANZPEO, bringing together our Employer of Record, payroll, HR and visa expertise under one regional brand across Australia and New Zealand.
Expanding into Australia and New Zealand: Where businesses most often underestimate what’s involved
Expanding into Australia or New Zealand can take several different paths. Some businesses choose to set up a local entity. Others explore remote hiring models. Increasingly, many look to Employer of Record (EOR) or Professional Employer Organisation (PEO) solutions to enter the market more quickly and with less administrative burden. At the centre of each approach is the same challenge: employment. Businesses know there are laws, obligations and compliance requirements involved in hiring overseas, and that processes need to be followed. What is less clear is how those laws actually work in practice, and how they apply to real employment situations day to day. This is where businesses tend to underestimate what is involved. Working with a locally based, on-the-ground EOR provider often brings these realities into focus early. It helps uncover the practical considerations that are not always obvious at the outset, particularly across two distinct employment markets like Australia and New Zealand. Understanding the rules is only the starting point Employment frameworks across Australia and New Zealand are well documented. It is relatively easy to find information on minimum standards, contracts and employer obligations. The complexity starts earlier than many expect, during the initial setup phase. How employees are engaged, how contracts are structured, how payroll is established and how obligations are defined from the beginning all have a direct impact on compliance. Decisions made at this stage set the foundation for everything that follows. Once employees are in place, the focus shifts to how those rules are applied in real situations. Day-to-day employment decisions rely on process, timing, documentation and an understanding of how regulators and mediators interpret actions in each market. As Fran Davies explains: “Most businesses we speak to understand there are compliance requirements. Where they often need support is in how those requirements are applied in real situations, particularly when decisions need to be made quickly.” Where underestimation tends to show up In practice, the gaps appear in common business scenarios rather than unusual ones. Managing employee performance within local frameworks If employee performance issues arise they need to be managed carefully. In Australia and New Zealand, managing those situations requires a structured and well documented approach. Steps need to be followed in the right order, with clear communication and fair process. In New Zealand, expectations around fairness and employee protection can be particularly strong, which increases the importance of handling these situations carefully. Without local guidance, businesses can move too quickly or miss critical steps, which can lead to disputes. Handling redundancy and restructuring correctly Redundancy processes are another area where detail matters. Employers need to consider consultation requirements, timing, documentation and how decisions are communicated. These elements are closely linked to employment compliance and employer responsibility. Even when a business understands that redundancy must be handled carefully, the practical execution can still create risk if not managed correctly. Having access to locally based expertise helps ensure these processes are managed in line with each market’s expectations, with the right steps taken at the right time. Meeting payroll expectations and supporting employees locally Payroll is often viewed as an operational task, but it carries significant compliance responsibility. This includes managing: Employee entitlements and leave Superannuation in Australia and KiwiSaver in New Zealand Local variations such as salary sacrifice or novated arrangements Ongoing payroll accuracy across different employment conditions Employees also expect timely, clear responses when they have questions about their pay or benefits. Providing that level of support requires local knowledge, responsive on-the-ground support, and the correct processes in place. Treating Australia and New Zealand as one market Australia and New Zealand are often approached as a combined expansion opportunity. In reality, each market has its own employment framework, expectations and regulatory approach. Australia operates within a more structured system, while New Zealand can involve more interpretation in areas such as dispute resolution. Managing both markets successfully requires an understanding of how these differences affect day-to-day employment decisions. As Fran notes: “Each market has its own expectations. Having a clear understanding of how employment works in practice across both countries makes a significant difference as a business grows.” What this means for expanding businesses The impact of underestimating these areas often traces back to decisions made during the initial setup phase. When employment structures, contracts or payroll are not set up correctly from the outset, issues rarely stay contained. As the business grows or more complex situations arise, those early decisions often need to be revisited. This can lead to rework, increased costs and duplicated effort. Internal teams may also find themselves managing unfamiliar processes while trying to maintain day to day operations. Over time, this reduces efficiency and makes it harder to manage employee matters with confidence across Australia and New Zealand. Building the right foundation from the start Addressing these challenges comes down to having the right structure in place early. For many businesses, this is where an Employer of Record (EOR) or Professional Employer Organisation (PEO) model plays an important role. It provides a framework to: Engage employees without establishing a local entity Manage employment compliance and obligations locally Ensure payroll accuracy and correct entitlements Support visa sponsorship and workforce mobility Provide consistent HR and workforce support It also creates a clear point of accountability, which simplifies decision making and allows businesses to focus on growth rather than navigating unfamiliar employment requirements. Final thought Expanding into Australia and New Zealand brings strong opportunities for growth, with several pathways available depending on how a business chooses to enter the market. Whichever approach is taken, the businesses that navigate it well focus on getting employment set up correctly from the beginning, with a clear understanding of how local requirements apply in practice across both markets. For those choosing an
Permanent vs. contractor: hiring remotely in New Zealand
In New Zealand, there are distinct differences between an employee and a contractor in terms of their legal status, rights, and responsibilities. It’s important to correctly classify individuals as either employees or contractors to ensure compliance with labour laws and taxation regulations. Here’s an overview of the key differences: Employee: Employment Relationship: An employee is someone who works under a contract of service, which establishes an employer-employee relationship. This relationship involves a degree of control and direction from the employer over the work performed. Rights and Protections: Employees in New Zealand are entitled to various employment rights and protections, including minimum wage, paid holidays, sick leave, parental leave, and redundancy protections. Taxation: Employers are responsible for deducting income tax and other relevant deductions from an employee’s wages, which are then paid to the New Zealand Inland Revenue Department (IRD). ACC Levies: Employees are covered by the Accident Compensation Corporation (ACC) scheme, which provides compensation for work-related injuries. Contractor: Contract for Services: A contractor is someone who works under a contract for services, often referred to as an independent contractor or self-employed individual. Contractors typically provide their services to clients or customers. Control and Independence: Contractors generally have more autonomy and control over how they perform their work. They may negotiate their terms and conditions with the contracting party. No Employment Rights: Contractors do not have the same employment rights and protections as employees. They are not entitled to benefits like minimum wage, paid leave, or redundancy pay. Taxation: Contractors are responsible for their own tax obligations, including income tax and Goods and Services Tax (GST) if applicable. They invoice their clients and manage their own tax affairs with the IRD. ACC Levies: Contractors are often required to have their own ACC cover, as they are not automatically covered by an employer’s ACC scheme. What are the legal consequences of misclassifying workers? Misclassifying workers in New Zealand can have several legal consequences, as it involves non-compliance with employment and taxation laws. The New Zealand government takes these matters seriously to ensure that workers receive the appropriate rights, protections, and entitlements. Here are some potential legal consequences of misclassifying workers: Penalties and Fines: Businesses may be subject to penalties and fines imposed by government agencies such as the Ministry of Business, Innovation and Employment (MBIE) and the Inland Revenue Department (IRD). These fines can vary based on the severity of the misclassification. Back Payments and Remedies: If an employee has been misclassified as a contractor and has not received the appropriate employment rights and entitlements (e.g., minimum wage, holiday pay, sick leave), the employer may be required to make back payments to the worker. Unpaid Tax Obligations: Misclassifying workers can result in employers failing to deduct and pay the correct amount of income tax and other deductions on behalf of employees. This can lead to tax liability for both the employer and the employee, as well as potential penalties for not meeting tax obligations. Loss of Employment Rights Claims: If a worker who has been misclassified as a contractor discovers the misclassification, they may take legal action to claim their employment rights and benefits. This could result in the employer being held liable for providing those rights retroactively. Reputational Damage: Being found in violation of employment and tax laws can damage an employer’s reputation, affecting relationships with employees, clients, and the broader community. Increased Scrutiny: Government agencies may increase their scrutiny of an employer’s practices if they suspect misclassification, leading to audits and investigations, which can be time-consuming and costly for the employer. It’s important for employers to understand the legal requirements for classifying workers correctly and to seek legal advice if there is any uncertainty. If an employer is unsure about whether a worker should be classified as an employee or a contractor, it’s recommended to consult with experts or relevant government agencies to ensure compliance with New Zealand’s employment and taxation laws. Employee vs contractor when hiring New Zealand workers from overseas Hiring an overseas worker as a permanent employee in New Zealand offers several advantages that contribute to the success and stability of your expanding business. Firstly, permanent employees ensure a lasting commitment to your company’s growth. Their long-term engagement fosters a sense of loyalty, dedication, and alignment with your organisational goals. This commitment facilitates the establishment of a cohesive team and a consistent company culture, crucial for sustained success. Secondly, permanent employees benefit from comprehensive employment protections. New Zealand’s labor laws guarantee them rights such as minimum wage, paid leave, and job security. By offering these benefits, you not only comply with legal obligations but also enhance the overall well-being and satisfaction of your employees, resulting in improved morale, productivity, and a positive reputation. Additionally, hiring permanent workers facilitates effective skill development within your organisation. These employees are more likely to invest in professional growth, contributing to a skilled and adaptable workforce that can drive innovation and competitiveness. Moreover, permanent employees contribute to a stable workforce, reducing the need for continuous recruitment and training, which can be time-consuming and expensive. Lastly, the longer engagement duration of permanent employees allows for deeper integration into your business’s operations, ensuring better collaboration, knowledge retention, and efficient execution of tasks. Are you ready to expand your business into New Zealand by hiring permanent workers remotely? Contact ANZPEO today.
How much does it cost to recruit and employ workers in New Zealand?
The cost of hiring workers in a different jurisdiction can blow out, particularly if you’re not familiar will local employment law. It’s no different for global companies warning to hire in New Zealand, when unfamiliarity with local employment law can lull them into a false sense of security when it comes to hidden recruitment and employment costs. What are the average salaries for skilled workers in New Zealand? Particularly when New Zealand is currently experiencing economic pressure in the wake of the COVID crisis, employers are responsible for ensuring their workers get paid a fair salary for their work. This responsibility is only amplified by the fact that the country is struggling with one of its worst labour shortages in history. One’s level of qualification in New Zealand will have a big impact on how much one should be paid, with a bachelor’s degree to earn up to 40% over the average income. The higher the qualification and the more experience a professional has, the more they’ll generally be paid. However, this all depends on the demand for their skills and how well they negotiate their salary with you as their employer. Below are the average salaries for various skilled roles in New Zealand: Role Base salary HR Managers NZD 90,000 to NZD 140,000 per year (Trade Me Jobs) Software Developer NZD 77,000 per year (Payscale) Software Engineer NZD 90,000 per year (Glassdoor) Team Leader NZD 75,000 per year (Payscale) Senior Project Manager NZD 140,000 to NZD 200,000 per year (Trade Me Jobs) Program director (12+ years’ exp.) NZD 180,000 per year (Payscale) Accountant NZD 50,000 to NZD 90,000 per year (Trade Me Jobs) Accounting supervisor NZD 77,000 per year (Payscale) How do the average salaries for New Zealand skilled workers compare to that of the United Kingdom and the United States? According to data from the Organisation for Economic Co-operation and Development (OECD), the average annual salary for a skilled worker in New Zealand in 2021 was approximately NZD $79,000 (USD $50,000). This is lower than the average salaries for skilled workers in the United States and the United Kingdom. As of 2021, the average annual salary for a skilled worker in the United States was approximately USD $68,000 (NZD $107,000), while in the United Kingdom, the average salary was around GBP £35,000 (equivalent to approximately NZD $76,000). How much does it cost to recruit, hire and employ skilled workers in New Zealand? International businesses wanting to hire workers in New Zealand must be aware of various hidden costs associated with employment. These can include: KiwiSaver contributions: As an employer, you are required to make KiwiSaver contributions for your employees, which are currently set at 3% of their gross salary or wages. This cost can add up over time and should be factored into your employment costs. ACC levies: You must also pay ACC (Accident Compensation Corporation) levies to cover the cost of workplace injuries. The amount of the levy depends on the industry and the level of risk associated with the job. This cost can be significant for some industries, particularly those that are high-risk. Training and development: You may need to provide training and development opportunities for your employees to ensure they are performing to the best of their abilities. This can include on-the-job training, attending conferences or workshops, or completing online courses. Payroll processing software: You may need to use payroll software or engage a payroll service provider to manage your employees’ pay and tax obligations. Fringe benefits: Offering additional employee benefits, such as health insurance, wellness programs, or employee assistance programs, can help attract and retain staff. Time and resources spent on recruitment: Finding the right candidate for a job can be a time-consuming and costly process. This can include the cost of job advertising, recruitment agencies, and the time spent on interviewing and onboarding new employees. Compliance and legal requirements: Employers in New Zealand need to comply with a range of legal and regulatory requirements, including employment agreements, minimum wage laws, health and safety regulations, and employment tax laws. Failing to comply with these requirements can result in penalties and legal costs. It’s important for employers to be aware of these hidden costs and to factor them into their employment costs when budgeting for new hires. To put this into perspective, we’ll use a fictional gaming company, Intuit Gaming, as an example. Intuit Gaming are on the hunt for an Advanced Game Developer to join their team in Auckland. Below is what Intuit Gaming can expect to pay for discretionary, upfront costs. Discretionary Costs Recruitment – costs associated with sourcing suitable candidates, from advertising costs, agency fees and loss of revenue while interviewing $1,500 Set up and training – from office furniture, to computer hardware/software and internal training and development $5,000 TOTAL $6,500 Intuit Gaming eventually employed Jessica, an experience game developer based in Auckland. Jessica is on a gross annual salary of $150,000. She works full-time from Intuit Gaming’s head office in Auckland for 40 hours per week, making her hourly rate $72.12. As her employer, Intuit Gaming can expect to pay the below in monthly fixed costs to employ Jessica. Monthly Fixed Costs Salary – estimated monthly salary contributions $12,501 ACC – Accident Compensation Corporation as a monthly cost $23 Public Liability Insurance – discretionary insurance to protect employers against the financial liability of their employees’ actions. E.g. if your employee damages someone else’s property. $49 KiwiSaver – a minimum 3% retirement fund contribution is to be made for each employer $375 TOTAL True annual cost to employ Jessica $12,938 $155,256 How can a professional employer organisation (PEO) help reduce the cost of employing skilled workers in New Zealand? A Professional Employer Organisation (PEO) provides human resources (HR) services to other companies. The primary function of a PEO is to manage various HR-related functions for a client company, including payroll, employee benefits, workers’ compensation insurance, and other HR-related administrative tasks. When it comes to assisting overseas companies in employing skilled
EOR vs. PEO: which is better for expansion into New Zealand?
Payroll processing is a critical aspect of any organisation, but for international businesses that wish to expand into New Zealand without a legal entity, a whole new set of complications is introduced into the payroll mix. In New Zealand, there are two primary options for payroll processing for international businesses employing in the country; EOR (Employer of Record) and PEO (Professional Employer Organization). There are valid use cases for both options, and whichever you pick will largely depend on your organisation’s unique needs and circumstances. But before we dive deeper into what is the better option for your international business, let’s look at what each solution entails. What is an Employer of Record (EOR)? Definition: An Employer of Record assumes full legal responsibility as the employer of record for your organisation’s workers. An Employer of Record (EOR) is a third-party service provider that assumes the legal responsibility for employment-related activities on behalf of your organisation. This means that the EOR becomes the official employer of record for the organisation’s workers and takes on responsibilities such as payroll processing, tax withholding, benefits administration, and regulatory compliance. Your employee gets paid their salary like this: you, the client, pay the EOR, ANZPEO, your workers’ salary, and we pay that salary to the relevant worker. This way, we remain your workers’ legal employer, and your organisation doesn’t need to establish a legal entity to do business in the country. What types of businesses suit an EOR arrangement? Employers of Record are particularly useful for organisations that are expanding into new markets, such as foreign countries. In these cases, the EOR takes on legal responsibility as the organisation’s workers and can help them comply with local laws and regulations, navigate complex tax requirements, and ensure that they meet their legal obligations as employers. What is a Professional Employer Organisation (PEO)? Definition: Your organisation enters into a co-employment arrangement with the PEO, sharing some employment-related responsibilities. A Professional Employer Organisation (PEO) is a third-party service provider offering businesses comprehensive HR solutions. A PEO works by entering into a co-employment agreement with a client company and sharing some of the employer’s responsibilities with them. It’s important to understand that a PEO can also be an Employer of Record in taking on responsibility as the legal employer of your workers’ and offering all of the standard services of payroll processing, tax withholding, benefits administration and regulatory compliance. But PEOs also offer additional HR services that EORs do not, such as risk management and payroll services. This allows businesses to access a range of services through a single provider, saving time and money on administrative tasks. What types of businesses suit a PEO arrangement? PEOs are particularly useful for small and medium-sized businesses that want to outsource some or all of their HR functions to an external provider. By partnering with a PEO, businesses can reduce their administrative burden, streamline HR operations, and improve employee management. Overall, a PEO can be a valuable partner for businesses looking to outsource some of their HR functions while retaining control over their workforce. With a PEO, businesses can focus on their core operations, improve their HR capabilities, and ensure compliance with regulatory requirements. What are the main differences between an EOR vs PEO? Employer of Record (EOR) companies offer a range of services that are similar to those provided by Professional Employer Organisations (PEOs), including payroll processing, benefits administration, and employment management. However, the key difference between EORs and PEOs is that EORs do not establish a co-employment relationship with the employees. Instead, the EOR becomes the legal employer of the workers, with a single employment agreement that is managed by the EOR. The EOR then enters into a services agreement with the client company. EOR vs PEO: what is needed for international expansion? One of the key advantages of using an Employer of Record (EOR) is that it can enable businesses to operate in countries or jurisdictions where they don’t have an established legal entity. This is a service that traditional Professional Employer Organisations (PEOs) are not able to provide unless they also offer Employer of Record services. As a result, many multinational companies are turning to EORs to facilitate their international expansion efforts. With an EOR, businesses can quickly and easily hire local workers in a new market with minimal risk. An EOR arrangement can also be particularly useful when expanding into another country through an acquisition. In cross-border M&A carve-out deals, for example, the buyer may not acquire the legal entity. In these cases, an EOR can be used to transfer the acquired employees, either on a temporary or permanent basis, while the buyer establishes a local legal entity. These deals are often time-sensitive, so the speed and flexibility provided by an EOR can be critical. In addition to their versatility, EOR providers also offer detailed knowledge about the New Zealand’s local employment laws in their countries of operation. This expertise enables their clients to comply with local regulations wherever they operate, which can be especially important given the potential fines and reputational damage associated with non-compliance. As a result, EORs are often a key part of a company’s risk- and brand-management strategies. Are you expanding your business into the New Zealand market? Speak to ANZPEO about how our Employer of Record services in New Zealand can help.
Are your payroll budgets matching inflation?
Payroll budgets help business owners understand the total cost of their employees and encompass all the indirect costs of employing staff full-time, such as leave entitlements, workers’ compensation and payroll tax. Having a concise payroll budget also highlights areas of potential cost savings. There is much to consider when budgeting for salaries. But in 2023, there are seemingly more considerations than usual; a threatened recession, ever-increasing cost of living and rising inflation are all playing a significant role in how companies create their payroll budgets. Yet one recent study by Mercer has revealed that over 50% of New Zealand businesses haven’t identified whether or not inflation will play/has played a part in payroll budgeting. Only one-quarter of New Zealand businesses plan to factor inflation into their budgets. The majority of businesses plan to set salary increase budgets by just 3%, which is the same as the previous year. Employers can expect a challenging employment market in 2023. We’ve spoken in detail about the challenges of the current employment market in New Zealand, as the country faces widespread competition over skilled workers, matched with high inflation forecasts. Workers having to maintain a standard of living in these challenging times have been forced to shop around for higher-paying jobs. And yet many experts are concerned that 2023 will bring heightened economic challenges after New Zealand’s inflation rate failed to improve in the December quarter. Last week, Statistics New Zealand data showed the annual consumer price index (CPI) increased by 7.2% in the 12 months to December 2022. This comes after a 7.2% annual increase in the September 2022 quarter and a 7.3% annual increase in the June 2022 quarter. Despite these figures being lower than the projected 7.5% increase forecasted by the Reserve Bank of New Zealand, it far exceeds the target of 1-3%. While it appears inflation isn’t getting worse, we are yet to see any moderation. Infometrics senior economist Brad Olsen told Newshub “We know that food prices, for example, have advanced at their fastest rate on record, nearly going back 32-odd years. And again we are continuing to see very broad price pressures. “In the December quarter, 72 percent of all of the items measured in the CPI basket increased in price. That is the second-largest proportion of items increasing when you go back over the past decade and a half so there is still a lot of pricing pressure coming forward despite fuel prices pulling back and supply chains that are improving.” Increasing financial pressure will put pressure on households Employers have a duty of care to ensure their employees are paid fairly and in line with the current economic environment of the country. They should consider the impact these challenges will have on families and households both at present and in the future and should do what they can, within reason, to support their people. Supporting their workers in such a way will also maintain employee retention and satisfaction. Many companies have made a conscious effort to pay salaries that align with inflation by offering higher-than-normal increases compared to previous years. New Zealand auction site Trade Me raised the salary of each of their employees by $3,500 to account for the rising cost of living. The company’s CRO Annie Brown said, “Remuneration is critical in the current market. At Trade Me, we’ve invested in ensuring our pay and overall remuneration package is competitive and we review this constantly.” Similarly, Connetics, the contracting company tasked with facilitating New Zealand’s electricity distribution networks, said the company made a quick decision mid-last year to lock in their workers’ salaries until next year. Mark Lewis, head of People and Culture said, “We see a similar or smaller shift this year but still beyond what we had previously agreed through union negotiations, with an emphasis on critical roles and people for larger increases.” He explained that this is a similar direction to what the company took last year, when employees received a 5% increase in some roles and 10% increase to acknowledge good performance or for the purpose of retaining staff. Matching salaries to inflation will ensure lower employee turnover The Mercer study also found that a third of all organisations struggled with high staff turnover in 2022. This could be improved if companies were willing to incentivise people to stay, particularly in a volatile economic environment with record-low unemployment rates. Stephanie Love, Remuneration expert at Love HR told HRD that naturally, some companies may struggle to increase the salaries of their employees. Instead, they could introduce more creative solutions, such as: Offering one-off lump sum payments to staff Making sure there is pay equality across the board so that all employees are supported. Providing petrol and grocery vouchers to ease the cost-of-living burden Providing breakfast foods and/or regular company lunches at the office. Offering professional development for staff to hone their skills in their area of expertise. “Even if increasing remuneration budgets to allow for inflation is unrealistic, initiatives like providing your people with support for financial literacy can help relieve any financial burden,” says Love. Hire workers in New Zealand without establishing a physical entity. Speak to ANZPEO today.
Creating an Employee Value Proposition to captivate New Zealand skilled workers
Last month, we published an article about the current challenges many New Zealand businesses are facing in sourcing and hiring top talent. As the country experiences its lowest population growth in three decades, companies are staring down the barrel of widespread skills shortages, record-high wage growth and employment levels, and high demand for goods and services for years to come. Labour shortages have plunged New Zealand into a candidate-driven market, giving job seekers the upper hand in deciding what roles they consider going for and under what circumstances. Top skilled workers have the luxury of choice when it comes to negotiating better pay and company benefits like flexible working conditions and health insurance. Companies that wish to attract and retain top skilled workers in New Zealand must consider what it is they value most, and what they look for, in their ideal role. Recognising and acknowledging these values in job descriptions and interviews will ensure businesses attract the most suitable candidates to their open roles. What are candidates looking for in their ideal role in 2023? According to Randstad’s report 2022 Employer Brand Research, salary is no longer the biggest motivator when it comes to choosing a role or changing jobs. 62% of candidates say they want work-life balance in their next role, with 58% saying they want a better salary and benefits, followed by job security (56%), job training (53%) and work atmosphere (51%). Work-life balance is no longer a “nice to have” aspect of a role but an expectation and, in many cases, a requirement. As workers are expected to meet increasingly tight deadlines and hit targets, they’re working longer hours and taking on responsibilities outside their scope of work. Those with young families who want to return to work also want the flexibility to maintain family life. They’re wanting to get the work done in an arrangement that works for them. If it’s work-life balance that candidates are valuing in today’s market, then this will come at an advantage for New Zealand employers that are feeling the crunch from dwindling revenue in a challenging economy. Companies can now negotiate on terms other than salary. Companies that offer hybrid working conditions (part working from home, part working in office), fully remote conditions and/or flexible working hours can also cast the net wider in their hunt for candidates. Instead of limiting their search to the city they’re headquartered, they can look to regional towns and even overseas. How to create an Employee Value Proposition that will captivate New Zealand Skilled Workers So how do New Zealand businesses create an Employee Value Proposition (EVP) that will win over the right candidates? Understanding what candidates want from an employer, and acknowledging these values in their EVP, will help New Zealand businesses capture the attention of top skilled workers that will help meet their business needs. What is an Employee Value Proposition (EVP)? An EVP is a company statement that communicates the unique benefits of your company to prospective employees. It usually covers your company values and culture, as well as things like remuneration, benefits and company perks. It outlines why your organisation is the ideal place for your ideal candidates. According to Vervoe, companies that deliver on an EVP see a 70% decrease in employee turnover and an almost 30% increase in new hire commitment. Although your EVP communicates to candidates and employees what they’ll get in return for working at your organisation, it’s not the same thing as your employer brand, which encompasses the reputation the wider world, not just employees and potential employees, has for your organisation. Your EVP can be as short or as long as it needs to be, so long as it highlights all of the critical elements it needs to include and what’s most important to attract the right candidates. What to include in an Employee Value Proposition? For an EVP that captivates New Zealand workers in 2023, consider the following: Worklife balance: what factors within your organisation promote a healthy work-life balance? Do you enable your employees to work from home part- or full-time? Do you allow them to choose their own working hours within reason? Part of Hubspot’s EVP encompasses a statement on how they offer unlimited vacation, fully remote work, a five-year sabbatical and parental leave, along with a raft of company perks. They promise to “help you be the best “you” that you can be”. Remuneration: outline how/if you can meet your employees’ salary expectations and include additional rewards such as bonuses, travel allowances and additional paid leave. Also, consider whether or not their salary will be increased periodically – say, by 5% every 12 months – and under what circumstances. Job security: Your EVP should encompass all the ways in which your organisation will protect its employees from layoffs, economic downfalls and other factors that could impact employment. Does your organisation prioritise future-minded leadership? Does it encourage learning and development or have a no-redundancy policy? Career development: include the opportunities you offer employees to further their careers, develop their skills and train them in new areas. This is where you’ll include learning and development efforts such as Professional Development Plans, mentoring and coaching, educational allowances and so on. Affiliation/reputation: skilled professionals don’t want to be associated with a weak brand, poor business performance or Corporate Social Responsibility record. In this section, consider factors like your corporate values, wider reputation, the quality of your product and/or service, growth objectives and position in the marketplace. How your organisation impacts its people and the wider community is a key consideration for candidates when choosing the roles they apply for. Company culture: address how your organisation contributes to a vibrant and positive culture. Include collaboration, leadership style and general approach to work. What are the social dynamics within your organisation? Is there a safe place for workers to express their opinions without fear of reprisal? For example, Netflix’s EVP says the company prioritises “people over process”, summing up its values in five statements;
New Zealand is seeking 75,000 skilled foreign workers
Good news for international employers seeking New Zealand work visas for their skilled workers; the New Zealand government has this week announced it’s seeking 75,000 skilled foreign workers in a bid to alleviate the pressures caused by nationwide labour shortages. For most of the COVID-19 pandemic in 2020 and 2021, the New Zealand government heavily restricted entry into the country to stave off widespread infection. As a result, the country now faces labour shortages that aim to be resolved with the addition of foreign workers. Since June 2022, 94,000 jobs have been open to skilled foreign workers, and 17,000 visas have been granted to skilled workers to work and live in New Zealand. “The global labour shortage is contributing to the labour shortage here… It is clear that the labour shortage persists not only here but also in the markets in which we compete,” New Zealand’s Prime Minister, Jacinta Ardern, said in a press conference during the week. “We must attract skilled workers to our shores with wages, our conditions and our security. We are therefore expanding our plan in discussions with companies, and industry groups make New Zealand the most attractive place in the world to live.” New Zealand’s immigration minister said the government wishes to take advantage of the relatively strong economic outlook of the country to attract skilled workers, despite growing and fierce global competition. It will add teachers, qualified teachers and crane operators to the list of accepted roles for “straight to residency” and “work to residency” visas. What jobs are green-listed for New Zealand work visas? Whether a skilled worker is eligible for a visa without having to complete a minimum of two years of work in a role or not will depend on where they sit in New Zealand’s qualifications framework. As such, there are two main visa types for international skilled workers; Tier 1 Straight to Residence or Tier 2 Work to Residence visas. Tier 1 “Straight to Residence” roles include anaesthetists, a number of specialist surgeons and engineers and clinical psychologists. Tier 2 “Work to Residence” roles include cattle farmers, mechanics, plumbers and podiatrists. For the complete list of green-listed roles and for more information about Straight to Residence and Work to Residence visas, go here. What roles have been added to the greenlist for New Zealand 2023? A number of Tier 1 roles have been added to the official greenlist as of 15th December 2022, including nurses and doctors. Additions for Work to Residency visas role inclusions focus on health, education and construction. For Tier 2 Work to Residence pathways, the following ten roles will be added to the official green list in March 2023. Civil construction supervisors Gasfitters Drainlayers Skilled crane operators Skilled civil machine operators Halal slaughterers Skilled motor mechanics Skilled telecommunications technicians All secondary school teachers (in addition to the specialisations already on the Green List) Primary school teachers The unemployment rate for New Zealand – a country with a population of 5.1 million – currently sits at 3.3 per cent, which is the lowest it’s been since 1986. How can ANZPEO help your business send existing employees to New Zealand without setting up a local entity? If you wish to send a skilled employee to work in New Zealand, ANZPEO can assist with registration and take on the responsibility of payroll. Contact ANZPEO today to see how we can help send your skilled professionals to live and work in New Zealand.