New Zealand SME jobs recover but workers remain uneasy about pay

Employment Hero has released its first Annual Jobs Report focused on New Zealand's small-to-medium enterprise (SME) sector, offering a detailed look at recent trends in employment, wages, and workforce sentiment.

The report draws on aggregated and anonymised real-time data from more than 350,000 businesses and 2.5 million employees worldwide, and is informed by a YouGov survey of 3,635 workers. Its findings highlight both recovery and ongoing challenges facing the local jobs market.

Gradual recovery

According to the report, SME employment in New Zealand has begun to stabilise following a slowdown in 2024. Over the first half of 2025, annual employment growth averaged approximately 1%, rising to 2.4% in July. Wage growth was recorded at 3.9% year on year, and total hours worked grew by 1.2% over the same period.

The report also notes the increasing significance of flexible staffing. Youth employment, in particular, has expanded as businesses seek to balance productivity and cost pressures with operational demands. This is leading to more entry points into work, especially for younger people, though many of these roles remain casual or offer lower pay.

"We're seeing early signs of balance return to New Zealand's SME jobs market. Youth hiring and steady wages are creating more entry points into work, and businesses are using flexible staffing to manage demand while staying focused on productivity and costs. Our dataset captures both sides of the employment marketplace in real time, so leaders can see where pressure is building from casual pay growth and capability gaps to regional capacity and where momentum is emerging, from South Island job creation to stronger pathways for younger workers," said Employment Hero spokesperson and NZ Country Manager, Neil Webster.

Mixed worker sentiment

Despite improvements in employment indicators, the report notes persistent unease among workers. More than half of New Zealanders (55%) believe conditions for employees are getting worse, while just 17% perceive improvement. While 58% of respondents received a pay rise in the previous 12 months, many still experience wage stagnation, and the associated pressures on cost of living remain acute.

This lack of worker confidence mirrors global findings from Australia, the United Kingdom, and Canada, all of which report rising employment but ongoing concerns about job security. In New Zealand, 53% of respondents said they lacked confidence in finding new employment within three months should they lose their current job.

Casual work up, pay lags

Data shows a recent increase in casual employment, which rose 0.74% in July 2025. However, average hourly pay for casual workers fell by 1.3% over the same period. By comparison, full-time and part-time workers received pay increases of 4.6% and 5.7%, respectively. The report concludes that while casual work is absorbing labour market pressures, it does not shield workers from inflation or insecurity.

Youth opportunities and challenges

Sustained growth in under-18 hiring is seen as part of a broader global trend of greater job mobility and pragmatism among younger generations. These roles, however, are primarily in casual or lower-paid segments, which raises concerns about long-term job quality and stability for youth workers.

Regional differences

The report identifies significant regional disparities in employment growth. The South Island, and Otago in particular, has seen some of the strongest SME job creation. Otago registered a 19.4% increase, making it the country's fastest-growing region for SME employment this year. In contrast, the North Island recorded just 0.6% growth. South Island expansion has been driven by gains in tourism, agriculture, and targeted regional investment.

Persistent lack of confidence

Job security is now a higher priority for 62% of New Zealand employees, above the 57% reported in Australia. Concerns are especially pronounced among older workers, with 64% of over-55s uncertain they could quickly secure new employment. Interestingly, workers who had changed jobs in the past 12 months were 33% more likely to express optimism regarding their prospects, suggesting that labour mobility can improve sentiment.

Skills development pressures

The report also highlights the challenges SMEs face in training and upskilling staff. Just over half (52%) of employees feel their employer offers good opportunities for development, with older workers least likely to agree. Employment Hero says this echoes global findings that, despite their economic significance, smaller businesses often lack the resources to provide consistent training pathways for their staff.

Economist perspective

The report concludes with commentary from Independent Economist, Saul Eslake, who notes the transition from sharp contraction towards modest and steady improvements in employment conditions for the remainder of 2025 and beyond.

"The sharp slowdown that began in early 2024 has largely run its course. We're likely to see a modest pick up in the second half of 2025, enough to help stabilise unemployment after it reached a nine-year high in the June quarter. Looking into 2026, I would expect incremental improvement rather than a surge, with steady headcount, gradual gains in hours, and wage growth at more sustainable rates than the peaks of recent years. If operating costs continue to ease and capability investment lifts, SMEs will be better placed to convert flexible hours into more permanent roles. The main risks are softer external demand and weather-related disruptions, particularly for agriculture-exposed regions," said Saul Eslake.