NZ SMEs lift hours while wage growth softens in January

New Zealand small and medium-sized businesses increased hours worked in January while wage growth softened, according to Employment Hero's latest jobs data, as firms recalibrated staffing after the summer holiday period.

Employment Hero's January New Zealand Jobs Report showed the median total hourly rate slipped 0.5% month-on-month to $35.50, from $35.60 in December. Median hourly wages were still up 1.6% year-on-year.

Average hours worked rose 0.6% month-on-month to 136.3 hours, suggesting employers leaned on existing rosters rather than lifting pay early in the year.

The data was released on the same day the Reserve Bank held the Official Cash Rate. While the decision gave borrowers short-term certainty, labour market signals in the SME segment remained cautious.

Hours versus pay

January followed the usual December-to-January shift that reshapes trading conditions across many sectors. Employers often reduce staffing during the holiday shutdown, then rebuild rosters as customers return.

The January figures reflected businesses reopening and resetting shifts. They also underscored ongoing margin pressure, with payroll costs in focus as revenue visibility improves after the holiday slowdown.

"January's data paints a picture of employers cautiously re-engaging after the holiday period - increasing hours where needed, but holding the line on wages as margins remain tight. Rather than signalling a pullback, the numbers suggest a recalibration phase; businesses testing demand, managing payroll costs and delaying major pay adjustments until trading conditions become clearer later in the year," said Neil Webster, New Zealand General Manager, Employment Hero.

Industry shifts

Wage outcomes varied by industry. Retail, Hospitality & Tourism recorded a 3.6% year-on-year increase in median hourly wages, making it an outlier among major industries.

Hours worked told a different story: all major industries recorded year-on-year declines.

Construction & Trade Services posted a 2.2% year-on-year decline in hours worked, while Healthcare & Community Services recorded a 2.0% drop. The results point to a broad slowdown in labour utilisation, even as businesses normalised rosters after the seasonal break.

The split between wages and hours suggests some employers are adding shifts while controlling base pay. It also indicates businesses are not yet committing to higher ongoing labour costs while demand remains uncertain.

Workforce mix

Outcomes also diverged by employment type. Casual workers saw a 0.9% year-on-year decline in hourly rates, while part-time workers recorded a 3.3% increase and full-time workers a 3.4% increase.

This mix matters for SMEs because casual labour often absorbs the first adjustments when trading conditions change. Shifts in casual rates can also reflect changes in the type of work being offered, including the balance between entry-level shifts and more experienced staff taking on additional hours.

In contrast, continued year-on-year wage gains among part-time and full-time staff suggest ongoing roles still attract higher pay than a year ago, even as month-on-month changes moderated in January.

Regional picture

Wage growth differed by island. The South Island recorded 4.3% year-on-year median wage growth, compared with 1.3% in the North Island.

The gap points to uneven conditions across the country and suggests wage pressure is not uniform. That can affect hiring decisions and retention strategies, especially for businesses operating across multiple locations.

Rates and sentiment

The OCR hold reduced near-term uncertainty on borrowing costs, particularly for smaller firms with debt. Even so, January's labour data suggests many employers remain cautious about fixed-cost commitments.

Hours rose slightly month-on-month, signalling enough post-holiday demand to staff more shifts. The small decline in median hourly pay suggests firms kept a tight approach to wage settings at the start of the year.

As the year progresses, SMEs will watch for changes in consumer spending, cost inflation, and productivity. Those signals will shape whether January's pattern of modestly higher hours and softer wages persists into the March quarter.