Kiwibank’s latest economic insights paint a fascinating picture of the labour market in 2025. While we’re now seeing positive tailwinds – interest rate cuts, stabilised inflation, and a recovering housing market – hiring confidence is still catching up.

Unemployment is expected to tick up to 5.3% in early 2025, but the real momentum is likely to build in the second half of the year, as you may have already heard.

Reading through Kiwibank’s latest forecasts, the key standout for me was just how much of a gap there was between wage growth and the recent cost of living crisis.

As Kiwibank notes, anyone who has changed jobs in the past couple of years has likely seen a reasonable salary increase, yet it hasn’t translated into greater financial comfort. However, with the gap between wage growth and inflation starting to dissipate, employees will have more say in their expectations – from salary negotiations to workplace flexibility.

And if we are to see an OCR level at 3% mid-year, confidence across the board is likely to be much greater than today, with the tailwinds becoming even stronger.

At the same time, we’re still feeling the effects of the 2024 brain drain, with many professionals heading overseas for new opportunities. This trend will continue, which means local competition for top talent will only increase.

Businesses that wait too long to invest in their workforce may find themselves struggling to secure the best people.

It really is a turning point, but it’s like an oceanliner having just rightsized, only to then navigate a few icebergs on the way to finally seeing the port in the distance – and although it feels closer by the day, there is some way to travel to reach the destination.

Its a critical time for NZ business to get ahead of the curve, companies that proactively engage top talent now will have the advantage before hiring confidence returns in force across the market. As we know, the best people are always in demand – especially in a market still navigating recovery.

To read Kiwibank’s latest market insights, the links are pasted in the comments below.

Happy hiring everyone. Thanks Kiwibank for great insights!