Local insights report: March/April 2023

Focus on impacts of extreme weather events

Top regional insights

The Auckland Anniversary weekend flood was the largest insurance weather event in Aotearoa’s history. Initial estimates suggest the cost facing Auckland Council to return its assets to previous service levels could be $900 million – $1.2 billion.

Over 84,000 insurance claims have been received (appx. 48,000 for the first event as of 1 March and 36,000 for the second as of 8 March 2023) and have topped $1 billion across the region.

Many hundreds of workers were affected by the flooding and cyclone. Since their smaller communities were dispersed across the region with no large workplace closures, there is concern that the need for their ongoing issues and support may be lost as the region returns to business as usual.

Businesses dependent on seasonal summer revenue have been particularly hard hit. In the words of one business owner, “After 2 years of COVID, this is the nail in the coffin. We are a seasonal business needing to make money in summer to survive winter, but we are way down.” (Restaurant Association NZ member survey).

Following both the late-January floods and Cyclone Gabrielle, West Auckland has the highest number of red-stickered properties in New Zealand. Across the Auckland region, over 600 properties are red-stickered and more than 2000 are yellow-stickered. Although a small proportion of the region’s dwelling stock, this represents significant additional work for the residential construction industry.

Immediate impacts

Workers: Given existing labour market constraints across the construction sector, meeting immediate building demand will require reprioritisation of projects. To ensure we can get the right people and resources into the places that need it the most, the industry has emphasized that workers and materials will need to be diverted from other areas and other tasks to help with recovery efforts. A lack of acceptable housing is limiting people's capacity to participate in the labour market, as present and incoming workers struggle to find suitable housing near work prospects, affecting labour supply. The Māori, Pacific and migrant workforce and whānau have been disproportionally affected by the adverse weather events, especially in the West and South. Auckland Council Property Assessment data has enabled us to identify areas highly impacted by flooding, in areas of higher deprivation such as Rānui, Mount Roskill and Māngere.

Businesses: The extreme weather events had an immediate impact on the hospitality sector. For example, in a Restaurant Association NZ survey completed in February, members detailed the effect of Cyclone Gabrielle on their businesses. 96% of survey respondents stated their businesses had been impacted by the cyclone, for example through damage, cancellations of people

Top labour market challenges

Workforce

• Many Aucklanders have lost working hours as part of the economic disruption caused by the late-January floods and Cyclone Gabrielle.
  
  
• Auckland has the largest workforce currently struggling to find accommodation due to widespread damage to residential buildings. As at 8 March 2023, a total of 1005 displaced households had contacted Temporary Accommodation Services in Auckland seeking somewhere to stay.
  
  
• Emergency services, repair workers, and essential service providers continue to be crucial to the recovery effort.

Small business

• Many businesses in the Auckland hospitality sector sustained minor damage and were able to re-open quickly, however some will be on a longer journey to open again. Staff were unable to work because of workplace closures due to the impact of weather events. For those who have closed for remediation, some employers have organised for staff to work elsewhere until premises are up and running again.
  
  
• Disruption to the transport of materials crucial to the functioning of commercial activities has also had an economic impact. The RSLG has received intel from industry that businesses have had to close (incurring job losses), and events were cancelled because crucial materials were not able to get through.
  
  
• The extreme weather events have compounded existing economic challenges for businesses. Businesses are now grappling with the cost impacts of 2 severe weather events, and the continuation of a tight labour market.

Top sectoral challenges

Construction

• The building sector is concerned about competition for workforce skills given the additional demand for remediation work across all the New Zealand regions that have been severely impacted by Cyclone Gabrielle.
• The sector is already stretched to capacity with long-standing labour shortages. Builders are starting to see other projects becoming delayed as remediation work takes priority.
• There is an increasing number of construction firms going into receivership and laying off workers. There needs to be a mechanism of immediately being able to facilitate these redundant workers (including migrant workers) into the skill gaps that exist in the region.

Horticulture

• Crop losses will have flow on labour market impacts. Vegetable growers in Pukekohe are reporting crop losses of up to 30%. The Pukekohe horticulture hub contributes $261 million in annual GDP and employs more than 1,600 workers, so the flow on labour market impacts will be felt across the region in terms of increased costs, worker displacement and job losses.

Hospitality

• Flooding has resulted in some business shutdowns and difficulties in workers being able to access workplaces, on top of long-standing staff shortages.
  
  
• Hospitality businesses need strong summer trading to get through winter. Many businesses were just re-opening after a Christmas break and the timing of the weather events meant the loss of anticipated revenue from Auckland anniversary weekend events and Valentine’s Day.

Regional workforce plan actions

In its 2022 Regional Workforce Plan (RWP), the RSLG identified the need to mitigate the impacts of climate change on the workforce and economy, and proposed actions for businesses and employees.

These included working with industry to better understand the skills needed to improve infrastructure to withstand extreme weather events, and supporting the workforce transition to a climate focused, low-carbon economy and workforce. These actions are now more relevant than ever for the region, given the extreme weather events earlier this year in Auckland. Key actions are outlined below. 

Green skills and jobs actions

Action

The RSLG advocates for working with industry to support workforce upskilling in green skills, preparing the workforce for transition to the circular economy to effectively manage climate change impacts.

Progress

The RSLG is working closely with Tātaki Auckland Unlimited and Climate Connect Aotearoa to understand climate-related risks and opportunities to help us to prepare the workforce for the transition. Te Tāruke-ā-Tāwhiri: Auckland’s Climate Plan, that is being supported by Tātaki Auckland Unlimited, aims to reduce greenhouse gas emissions by 50% by 2030 and reach net zero by 2050. The RSLG is working together with Tātaki Auckland Unlimited to better understand the need to embed equity, te ao Māori, and a strong rangatahi voice in the plan, as well as supporting workforce enablement.

For a complete list and more details go to Green skills actions

Future-ready resilient workforce actions 

Action

The RSLG encourages small and medium enterprise (SME) activation mentoring and support for rangatahi to ensure resilience. To this end the Group also recognises the critical function of the region’s social services and volunteers in supporting the region’s wellbeing/resilience, especially in the aftermath of the pandemic.

Progress

The RSLG has connected businesses and key stakeholders with the First Steps NZ workforce wellbeing programme, which provides resources and access to professional wellbeing providers. The RSLG has supported the Business Support Helpline as part of the recovery efforts by the Employers and Manufacturers Association (EMA) for business owners who have been affected by the severe weather conditions.

For a complete list and more details go to Resilient workforce actions