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Jean Bell

Fuel prices putting off job candidates as businesses feel inflation crunch

An Auckland recruiter says petrol prices have deterred candidates from taking on temp roles that require travelling. Photo: Lynn Grieveson

Employers are hesitant to take on full-time workers in the midst of ballooning costs

Job-seekers are pinching their pennies and turning down roles that require lengthy travel, as the crunch of inflation and rising costs causes ripples of uncertainty for employers and employees alike.

This comes as the much-awaited annual inflation rate was unveiled yesterday as 6.9 percent. It’s the highest increase in 30 years, but close to what economists were anticipating.

Tribe Recruit head of leadership search David Hammond says increasing inflation, together with the sustained impact of the pandemic, is chipping away at business confidence and making bosses hire more cautiously.

“Last year everybody was thinking we’re going to come out on the other side of Covid and everything would recover, but this tail of Covid is really long.”

Anecdotally speaking, he’s seeing more companies look to take on temp workers and extend their contracts as needed rather than taking on full-time workers due to dropping business confidence.

Tribe Recruit head of leadership search David Hammond says employers are hesitant to take on full-timers. Photo: Supplied

Not all recruiters are seeing this pattern, however. Some are seeing candidates turn down temp work as they weigh up whether it’s worth forking out more money on petrol just to get to work.

Frog Recruitment managing director Shannon Barlow says the number of full time roles on offer remains steady, but she’s noticing that candidates are being much more selective about what jobs they do take.

Workers are seeking stability and waiting to nab a full-time role instead of jumping into the first temp or contract job they’re offered.

The rising cost of living, particularly petrol, is narrowing the options that good candidates will consider.

“They’ve reconsidered after doing the maths, as they’re not sure how much better off they’ll be once petrol is factored in.” – Frog Recruitment managing director Shannon Barlow

For example, Barlow's worked with someone who lived in South Auckland and was looking at taking a customer service role, paying about $24 an hour, in the inner city suburb of Parnell.

It would be tricky to take public transport to the job and the candidate decided the role wasn’t worth the cost of getting there.

“They’ve reconsidered after doing the maths, as they’re not sure how much better off they’ll be once petrol is factored in,” she says.

“That reduces the talent further in a market short on candidates, because people aren’t willing to travel for a job at the moment, unless it's right next to a train station.”

AUT professor of human resource management Jarrod Haar says rising inflation and a tight labour market pushing up wages will likely act as a handbrake on companies hiring.

“One of the easiest ways to react will be to just go quiet in this crazy labour market, where organisations are struggling to get anybody anyway,” he says.

AUT professor of human resource management Jarrod Haar thinks employers will hit the handbrake on new hires. Photo: Supplied

“We’ll see inflation reduce risk taking as companies will sit tight for the next six months.”

While large organisations will wear the cost of inflation on the chin, he thinks small to medium sized businesses will suffer the most.

Inflation not to blame

Retail NZ chief executive Greg Harford doesn’t think there’s a direct relationship between inflation rates and business’ hiring intentions, but he does expect companies to reduce hiring over time.

However, he says the cost of employing staff is increasing significantly with the changes to the minimum wage, the increase in mandatory sick leave entitlements, the new Matariki public holiday, and the generally tight labour market.

“Retailers are looking to pass these additional costs onto consumers, but are also likely to reduce hiring over time as they seek to improve productivity in their businesses,” he says.

New Zealand Council of Trade Unions director of policy and economist Craig Renney says high rents could be disrupting worker's employment options. Photo: Supplied

New Zealand Council of Trade Unions director of policy and economist Craig Renney doesn’t think inflation is to blame for uncertainty in the labour market, but rather an economic system offering many people contract work that is low paid.

With rent prices feeding into the rising inflation, Renney says this might deter people from living close to their place of work and decreasing their employment options.

“High rents may put people off moving locations, which then means you don't have talent and skills flowing to areas where you need it.”

While some employers, particularly small business owners, might not be able to pay higher wages, he says there are many big companies, like those in the banking and grocery sector, that were making tidy profits last year and could afford to pay their staff more.

Fears to hire full-timers, despite labour shortage 

The unemployment rate is at an all-time low, dropping to 3.2 percent annually, according to StatsNZ, prompting a scramble to fill roles across a range of sectors and skill levels.

According to a Labour Market Conditions report prepared for BusinessNZ earlier this year, job ads across regions, industries, and income bands are 33 percent higher than before the Covid-19 pandemic.

Businesses are warned to brace themselves for intensifying labour shortages through to 2023, particularly with a lack of immigration combined with New Zealanders predicted to head overseas in droves.

BusinessNZ director of advocacy Catherine Beard says there’s no slack in the labour market, but businesses might be fearful to take on full-time workers in the midst of economic uncertainty.

“It’s probably a combination of the people available for full-time employment. Are they even of the right quality and calibre? If they’re not, you’re going to be looking at all your options.”

Inflation isn’t the only issue on the minds of business leaders, according to Beard.

Bosses will be grappling also with the ongoing impact of supply chain disruptions, the cost of fuel, rising minimum wages, and the impending changes under the Fair Pay Agreements.

She’d like to see the Government focus on allowing entry of immigrant workers across a variety of different skill levels to help ease the labour shortage.

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