Local Insights Report: December 2022

Top regional insights

Workforce shortages remain a significant issue for all sectors. Employers continue to report difficulties in attracting and retaining skills required for roles.  This is not isolated to one industry. Industries that were carrying skill gaps prior to COVID and have a high reliance on migrant workforce are experiencing pronounced shortages. e.g., hospitality, health, construction, fish processing, transport, primary industry. Despite concerted efforts to recruit and retain staff, low labour market availability and COVID isolation requirements mean workforce constraints are significantly impacting in a range of ways on many regional businesses.  Some have been forced to reduce opening hours or reduce the provision of services.

Workforce constraints are especially being felt in the tourism and hospitality sectors across Nelson you a Tasman. The tourism sector is reporting having to reduce/reshape their usual offerings (e.g., one full day trip rather than two half day trips) to balance workforce shortages with maintaining profitability. Some are already receiving comments from disappointed customers at not being able to meet expectations, causing concern of reputational damage. Accommodation and hospitality venues are similarly reporting reducing their service offering due to staff shortages.  Some venues are only offering breakfast or dinner rather than both, while others are reducing their opening hours. Some motels have reported putting up ‘no vacancy’ signs to reduce the load on their workers.

Some iconic long standing Nelson hospitality business are facing closure. As the photo shows, businesses are having to make some hard decisions. This is especially tough at a time when we are approaching our peak visitor season and forward bookings are looking strong. There is likely to be a resulting impact on the regional economy.

Our tight labour market

Annual average unemployment in Nelson-Tasman was 3.1% in the year to September 2022, down from 3.5% in the previous 12 months. Nationally the underutilisation rate (a broader definition including both unemployment and those who are employed but want to work more) fell to 9.0%, its lowest level since 2006.  The number of filled jobs in Nelson Tasman increased by 1.5 percent (674 jobs) over the year to Oct 2022, while our Jobseeker benefit recipients decreased by 14.9 percent (-498 people) over the year.

Data provided by NRDA/Infometric

Top labour market opportunities

Employers are using a range of financial incentives to attract and retain workers.
Signing bonuses and referral incentives to attract talent are being offered by many of our region’s employers. Employers are also reporting offering higher wage rates, which are attracting more people into employment.

Some businesses are re-thinking their business models, so that they can offer flexibility in hours and conditions.  Businesses are reporting that this flexibility is enabling them to appeal to a broader base of workforce talent e.g., processing industries who now offer ‘school hour shifts’ are successfully attracting a new range of workers.

Other changes in conditions, such as a 4-day working week, and working from home for roles where that is possible, are increasing success in recruitment and retention. 

Some employers are providing the training for the skill sets they require, so workers can learn while they earn and the business benefits as their skills develop. This is particularly effective for employers who have the capacity to offer inhouse training. Other employers have created this opportunity to develop their workforce to meet the needs of their business, by building strong links with vocational education providers. This approach to building skills while you work has traditionally been focused on looking to attract younger workers e.g., the apprenticeship or internship models.  Now employers are needing to offer training to mid-career and older workers as well, given the issue of being unable to find workers who already have the required skill set.

Top labour market challenges

Workforce shortages continue at all levels of skill and experience. A tight labour market with unemployment and underutilisation at a near record low makes workforce supply a significant issue for most of our region’s employers.  Changes to immigration settings have not provided the bonus of workers that many SME and businesses had hoped, with employers describing the change as ‘too little too late’ for accessing migrant workers this summer.

Smaller businesses are concerned about retaining financial viability post COVID. Government loans, rental holidays, and bank loan arrangements for interest-only or payment breaks acknowledging hardship, are now ending. Businesses are facing rental or rates rises; most have workforces with increased wage expectations; and nearly all are seeing rising costs of the products or services they require to operate.  Combined with workforce shortages impacting on income from production and sales, there is increasing concern about financial viability, impacting on mental health and wellbeing. The Reserve Bank has noted the ongoing struggles of smaller businesses, of which there are many in our region, while mid-sized businesses have reported strong performances.

Rangatahi choosing to leave school without Level 2 NCEA for paid employment may limit their progress to higher skilled jobs in the future, creating the risk of low employment. The growth in filled jobs by those leaving school for paid employment without qualifications is an opportunity and a risk.  Recent national research released by TEC shows one in five school leavers only achieve NCEA​ Level 1 or less, potentially impacting on their ability to gain recognised skills and qualifications and limiting progress to higher paid roles. The RSLG is working collaboratively to identify ways to support access to ongoing training and development for our regions rangatahi, to mitigate the risks of life-long lower earning.

Visitor sector data

Total tourism expenditure in Nelson-Tasman decreased by 4.7% in the year to September 2022.  Decreases of 0.7% in Tasman District and 8.6% in Nelson City compares with an increase of 3.3% in New Zealand. Total tourism expenditure was approximately $282 million in Nelson-Tasman during the year to September 2022, which was down from $296 million a year ago.

Total guest nights in Nelson-Tasman decreased by 14.6% in the year to September 2022.  Decreases were 12.8% in Tasman District and 16.7% in Nelson City. This compares with decreases of 6.0% in New Zealand.  Visitors stayed a total of 1,157,400 nights in Nelson-Tasman during the year to September 2022, which was down from 1,356,000 a year ago.

NB In the year period to September we still had border restrictions and lockdowns impacting on both domestic and international tourism.  These decreases in tourism expenditure and bed nights have had a significant impact on the industry and our regional economy. 

Data provided by NRDA/Infometrics.

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