This could mean higher unemployment rate in coming months, EMA warns
Requests for restructuring and redundancy support increased by "nearly 50%" in the year to November, with a strong uptick recorded in the past four months, according to the Employers and Manufacturers Association (EMA).
Alan McDonald, EMA head of advocacy, said this is likely due to strong inflationary measures hiking the costs of doing business, as well as rising interest rates that are dampening consumer demand.
"As a result, many business owners have few options and are being forced to look at how they can reduce costs, including their staffing costs. This is reflected in the strong uptick in requests for support that we have seen since August," he said in a statement.
"Unfortunately, this means that people are now starting to lose their jobs and we would expect to see the unemployment rate increase over the next few months as the economic slowdown begins to bite."
GDP slows down
New Zealand's economy contracted 0.3% as gross domestic product declined 0.7% in the September 2023 quarter, according to data from Stats NZ.
Amid the slowdown, the EMA said it would need the government to support businesses in succeeding through a policy that rebuilds confidence and encourages investment.
"Businesses will be looking to the new government to move quickly, focus on the economy and make doing business in New Zealand easier," McDonald said. "This includes supporting efforts to bring inflation down, cutting red tape, and reducing the costs of doing business."
In a statement, the government said the latest Stats NZ data confirms that the country needs "urgent economic repair."
"That's why the coalition government is moving quickly – reducing costs on business, restoring confidence in the fight to beat inflation, and eliminating wasteful spending," Finance Minister Nicola Willis said.
The government's move to pass legislation that will restore the Reserve Bank's focus on inflation, end the Ute Tax, and repeal Fair Pay Agreement is part of its plan to restore economic confidence, the minister added.
"Overcoming these economic conditions won't be easy. The government will continue to take swift action to rebuild the economy in the interests of all New Zealanders."
