Hospitality and retail are among businesses in Northland that will have to be creative if they are to survive in tough economic conditions.
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Even though the country is forecasted to narrowly miss a recession, the economic climate is likely to remain challenging, particularly through the winter.
While economists are optimistic about current employment, they say bosses will have
to get innovative to stay financially viable.
Advocate reporter Imran Ali takes a look at the Northland jobs most at risk.
Jobs in the construction sector aren’t as safe as many think, with a leading economist warning the present situation may change later this year as consents fall and the backlog of current work is cleared.
“With interest rates rapidly increasing, house prices falling as a result, and building costs still high, the drivers of stronger building activity are being eroded quickly,” Infometrics principal economist Brad Olsen warned.
But for now, he said the retail sector was the most at risk.
“Household budgets are coming under more pressure, with more money going to mortgage repayments as mortgage rates rise, leaving less money for other spending.
“That reduced spending over time means that retailers won’t be seeing the same level of sales, and there will be more intense competition for the smaller slice of the household spending pie than before.”
Despite all of these challenges, Olsen said the current employment momentum remained upbeat in Northland.
According to the latest Infometrics Quarterly Economic Monitor for Northland, employment rose 2.6 per cent in the March 2023 quarter – slightly ahead of the national average – resulting in an annual increase of 2.4 per cent over the 12 months to March this year.
Figures show 74,036 Northlanders were in paid employment at the end of the March quarter, compared with 72,297 in the same quarter last year.
Infometrics data shows substantial employment growth continued in several corporate and public sector industries, with increases in professional and administrative services, as well as government, health and education roles.
“Rapidly rising net migration has enabled a larger supply of workers, although future job intentions remain restrained, with job ads holding at lower levels.”
Restaurateur Lloyd Rooney owns five restaurants in Northland and as an added incentive to ease the pressure of finding suitable accommodation, he lets nine houses he owns to his employees.
Three houses are in Whangārei, three in Waipū Cove and three in Mangawhai.
He and Michael Fraser run restaurants at Whangārei’s Town Basin, at Waipu Cove and Mangawhai.
“We are using social media more and have this week started specials every day of the week between now until October/November to try … to remind people that we are there,” Rooney said.
Special curry night, date night on Friday and free children’s meals on Sundays were some of the specials on offer.
“A lack of staff is a huge problem for the hospitality sector in New Zealand and so we try to alleviate the pressure by offering accommodation to our staff. We also try and get transient backpackers who have good experience but they need a place to stay when they arrive.”
Rooney said the accommodation was meant to be short-term only and staff were encouraged to find long-term rental places.
This winter would be hard for all businesses, he said, with interest rates rising and the slowdown of the economy beginning to affect every aspect of people’s lives.
The key for small to medium-term businesses in particular was to watch their cash flow and to rein in costs, he said.
NorthChamber president Tim Robinson said that, as in any challenging situation, there were opportunities for businesses that could respond to changing circumstances and there were companies that benefited from proposed infrastructure investments, such as Culham Engineering.
On the flip side, and with the lingering effects of Covid and bad weather, tourism and education businesses continued to struggle.
Robinson said business conditions remained challenging, and businesses did not have much hope the Budget and the election would offer much to improve those conditions.
“Rather, businesses will continue to make investment and staffing decisions based on their particular situation. For some, this will mean growth, for others possibly retrenchment but in either situation it is with one eye on long-term sustainability and a reflection of their own market needs.”
Whangārei-based Direction Recruitment director Paula Kalkhoven said she was still seeing a lot of interest in civil construction jobs and professional services such as project managers.
There was a shortage of Class 4 and 5 drivers, in particular, general labourers and qualified accountants.
Professor Jonathan Elms, director of research at Massey Business School, said customer-facing small businesses, hospitality and tourism sectors would have to sell their businesses more creatively to stay open.
“Imagination in terms of rejigging their business and just being a lot more nimble and creative with things like self-service, where customers do their own ordering online. Those things take some of the pressure points out of the business.”
New Zealand as a whole was at full employment but it was incredibly difficult to retain talent, he said, coupled with a shortage of seasonal workers.