HR & Employment in 2025: Threats and priorities for employers

Published 16 January 2024 | 2 min read

As we step into 2025, New Zealand’s small and medium businesses are navigating a mixed bag of optimism and uncertainty. After a year marked by economic turbulence and labour market volatility, businesses are finally seeing a glimmer of hope.

Stats NZ reported the first increase in filled jobs since March 2024, with a modest 0.3% rise in November. Yet, this progress is tempered by persistent challenges: unemployment levels are expected to surpass 5%, and confidence in the labour market remains fragile.

The question is clear - how can we position for growth in a market still fraught with uncertainty?

NZ job market concerns

The optimism around job growth is tempered by stark realities. Over the past year, filled jobs have declined annually by 1.2%, equating to nearly 30,000 fewer positions. Construction and manufacturing, two critical industries, have borne significant losses, with job declines of 5.8% and 2.4%, respectively.

Regionally, Wellington led the decline in filled jobs with a 1.9% drop, while Auckland saw a loss of over 13,000 positions. Even as employment confidence rose slightly in the December quarter, it remains near the lowest levels seen since the 2020 Covid-19 lockdown.

Adding to this complexity is the Datacom survey highlighting economic uncertainty as the top concern for 77% of business leaders, followed by cybersecurity (29%) and workforce-related challenges (28%). This economic unease underscores the delicate balancing act businesses face—managing immediate threats while strategising for long-term success.

Outlook on 2025

Despite challenges, there are reasons for cautious optimism. An uptick in perceptions of job availability, as indicated by the Westpac-McDermott Miller Employment Confidence Index, suggests stabilisation may be on the horizon. Notably, the healthcare and social assistance sector continues to buck the trend, with a 2.9% increase in jobs over the past year.

However, these green shoots come amidst broader concerns. Job advertisements have stagnated at their lowest levels since 2013, and businesses remain reluctant to expand their workforce. Employment confidence remains uneven across regions, with Northland and Waikato reporting declines, contrasting with gains in major centres like Auckland and Christchurch.

Top 5 business concerns for NZ businesses:

The priorities for New Zealand businesses this year reflect a shift in focus:

1. Economic uncertainty (77%): Despite signs of stabilisation, macroeconomic concerns dominate, with rising costs and market unpredictability topping leaders’ agendas.
2. Cybersecurity (29%): Digital threats remain a significant risk as businesses continue their digital transformations.
3. Workforce challenges (28%): Recruiting and retaining skilled staff, while no longer the top focus, remains critical amidst ongoing skills shortages.
4. Budget constraints (26%): Tighter margins require businesses to adopt innovative cost management strategies.
5. Future workforce planning (25%): Preparing for technological advancements and demographic shifts is essential for long-term sustainability.
   Charting a Path Forward

To thrive in 2025, we need to encourage adaptability and change. Prioritising workplace productivity and growth, as identified by Datacom, offers a roadmap for resilience. Leaders should invest in technology and upskilling to mitigate workforce challenges while addressing economic uncertainty through strategic planning.

The rise in employment confidence, though modest, provides a foundation to build upon. With a clear focus on long-term goals, Kiwi businesses can navigate the complexities of today’s labour market and emerge stronger in the years to come.