Kiwi entrepreneurs increasingly pessimistic, fighting multiple battles, new survey finds

New Zealand employers are growing more pessimistic, amid labor shortages, inflation and the end of the pandemic, new research shows.

A shortage of skilled workers compounded by inflationary pressures and rising costs of everything.
wages, logistics, goods, services and equipment is proving to be a constant headache.

Research from the Entrepreneurs’ Organization’s latest State of New Zealand Entrepreneurship Report shows that there is growing pessimism in a traditionally optimistic group.

Staff retention and recruitment are among the top concerns for companies, but so is the threat of layoffs if a recession hits and business shrinks, and the reality of companies being forced at a record pace to pass on rising costs.

Entrepreneurs were naturally optimistic, Richard Conway of the Employers’ Organization (EO) told the Herald.

“But half of the people we talked to are worried about or not expecting massive growth in the next year or two and I think that’s the looming recession that we’re hearing about and a lot of different factors like staffing,” he said.

“It is one of the least optimistic moments in recent years.”

Just under half of the business owners in the report said they were considering expanding next year and believed revenue and headcount would increase.

Much of the pessimism among businessmen could be related to certain sectors, including construction, tourism and hospitality, Conway said.

This is the fourth year that EO has been contacted with this investigation. Compared to the same report last year, New Zealand entrepreneurs were now split 50/50 on pessimism and optimism on the current business environment and future prospects.

Conway said businessmen believed a recession in New Zealand was likely, but at least not deep.

“There is the idea that there is still a lot of capital and a lot will depend on what happens with the [election] next year and factors beyond our control. But most people expect there to be some kind of recession in the future.”

The report summed up New Zealand business today as “short on time, money and manpower”.

He warned that commercial development fell by the wayside when resources were stretched to the limit.

“While rising costs were our biggest challenge last quarter, we now face the wrath of resignations, migration and poor hiring potential that have outweighed money issues.

“Without our people, we simply cannot deliver on our promises and the small teams left to fill the gaps are feeling the strain,” the report describes.

People were stressed about wage inflation and rising costs because many had to raise their own prices, perpetuating the cycle of price gouging.

“On the other hand, in businesses that are relevant right now, there’s a lot of demand. For example, in digital marketing right now, there’s a lot of demand because everyone wants to be online after what’s happened in the last few years.”

The report also outlined current market conditions and the possibility of a recession meant New Zealand businesses were feeling the pressure.

“Business is scarce. With no room for additional resources to fuel development, that invaluable growth mindset of our leaders and the teams they lead has been stifled.”

Despite the pessimism, Conway said there has been a shift in appreciation among employers for quality people.

In recent weeks, despite the challenges of salary inflation, recruitment efforts have increased in line with international trends, he said.

“The time to recruit is much shorter now than it was just a couple of months ago. There are more people coming into the market.”

EO also noted an influx of new young entrepreneurs in the past 12 months, which it attributed to a mix of those who lost or left their jobs during the height of the pandemic.

“We see a lot of new ideas and new people coming through the ranks. It’s encouraging to see.”

EO has a membership of over 100 entrepreneurs in New Zealand.