The Market

by Heather Barker Vermeer

last updated 27/05/2024

Heather Barker Vermeer joined Franchise New Zealand as Editor in 2024.

Declining job market could be good news for franchising

by Heather Barker Vermeer

last updated 27/05/2024

Heather Barker Vermeer joined Franchise New Zealand as Editor in 2024.

Figures released this week show a significant dip in the jobs market in Aotearoa - but what does this mean for franchise opportunities across the country?

Quarterly change in NZ jobs index by region.Source: RCSA Jan-Mar 2024.

New Zealand’s Jobs Index has plummeted 17.0% in the past three months according to the latest Jobs Report published by the Recruitment, Consulting & Staffing Association. The RCSA report for January to March reveals a staggering 42.3% decline in job postings in the past year.

'It’s been exceptionally tough for businesses since the end of Covid,' says RCSA New Zealand Chair Jon Ives. 'People are hurting, discretionary spending has dropped, belts are being tightened, particularly in the public sector, and the flow on effect has been brutal.'  

RCSA’s report found an unprecedented fall in demand for nonprofessional workers. Each occupation type measured saw major dips in the past three months: 

• Ads for service and community workers dropped a massive 30.7%.  
• The demand for labourers, drivers and operators decreased by 25.7%.  
• Job postings for clerical and administrative workers fell 18.9%  
• Positions for sale workers slumped 8.2%  

'The reality is that employers are pulling back from adding new staff wherever it can be avoided. There is too much uncertainty swirling within New Zealand and also internationally, and certainty has always been the key to better times ahead,' says Ives.

Impact for franchises

So, how could this news impact the franchise sector across Aotearoa? Franchise observer Simon Lord says, 'Growing unemployment means that the staff shortages suffered by many industries in the franchise sector should be over.

'It’s only just over a year since cafés and restaurants, for example, were having to close for two or three days a week, or operate on shortened hours, because they couldn’t get staff. Business owners were getting burned out from working all hours trying to do the extra work themselves, given that their costs had not decreased – landlords, for example, still charge rent for seven days a week even if tenants are only able to trade for five.'

The founding editor of Franchise New Zealand media is optimistic about the knock-on effect for the franchise sector. He says, 'The upward pressure on wage costs over and above minimum wage increases will also reduce, helping to restore franchisee profitability. Although retail and other sales will be affected by reduced job availability, it will help bring inflation down.

'It’s worth noting that at such times, traditionally, high-end eating out is impacted more than low end. People trade down: they will go to a café for a treat meal rather than a restaurant, or buy fast food rather than going to a café. It will be interesting to see if there is an impact on costly home delivery services.'

Unemployment could boost franchise enquiries

RCSA Chair Ives points towards deepening decline in the jobs market in the coming months. 'It’s highly probable that we will see unemployment rise in the months ahead as was scripted from the RBNZ, and hopefully inflation continues to fall away. Job vacancies are a good indicator when it comes to employment, and currently job security will be exceptionally high on employees’ radars as we move through this period.'  

Unsurprisingly, demand for all types of work declined in the first quarter of 2024. Flexible postings fell 19.6% while permanent roles dipped 16.4%. The more significant fall in flexible ads indicates employers are trending towards locking talent in as New Zealand continues to battle skills shortages.

The past three months saw declines that exceeded 20% in five sectors, including health care, with public administration being one of the worst areas hit, according to the report published on 24 April. Vacancies have now fallen in four consecutive quarters bringing the cumulative decline to 66.7%.

'It’s not surprising with severe hiring cutbacks in the public sector,' says Mr Ives. 'We have also seen some major government projects sidelined and the belt tightening has and will continue to have an impact nationally.'

'The only professions where demand grew over the last three months were in mining, construction and utilities, financial and insurance services and, a little surprisingly, in the technology professionals sector where job ads increased 4.4% - although this is off the back of a shocking 60.5% decline.  

'Job ads have dropped across all regions (see graph, above). It seems nowhere is immune, but Kiwis are strong and generally optimistic. We will ride out this cycle as we have done in the past and will do again – particularly with a more favourable outlook indicated for late 2024.'

Simon Lord points out, 'In the past, we have traditionally seen a reduced number of job and career opportunities increase interest in franchise opportunities. We are already seeing enquiries increase via our website, so it’s good news for franchisors looking to expand – especially those who are able to offer low-investment, part-time or appealing lifestyle opportunities. It may also stimulate further interest in opportunities outside the main centres, where housing costs are lower and traffic is less of a hassle.'

The RCSA’s latest Jobs Report can be accessed in full here.  

What is the RCSA?

The RCSA is the peak industry body for recruitment and staffing in Australia and New Zealand. It promotes and facilitates professional practice in recruitment and staffing, representing over 2,000 recruitment specialists on both sides of the Tasman. RCSA sets benchmarks for industry standards through representation, education, research and advisory support to member businesses and professionals who are bound by the RCSA Code for Professional Conduct. The organisation is a proud member of the World Employment Confederation, the voice of the employment industry globally, representing labour market enablers across 50 countries. 

Heather Barker Vermeer joined Franchise New Zealand as Editor in 2024.

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