New Zealand’s state-sector job cuts cast more gloom on recession-hit economy

The government’s ongoing public-sector job cuts have resulted in the worst-ever employment market, recruiters say

Amid a technical recession, New Zealand’s unemployment rate could rise to 5 per cent by the end of the year, according to economists

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The New Zealand’s new conservative coalition government has made good on its 100-day action plan, reducing public-sector expenditure by 6.5 per cent. Photo: Bloomberg

Published: 8:00am, 15 Apr 2024Updated: 4:31pm, 15 Apr 2024

When communication specialist Katie Howe moved to Wellington from Canberra two years ago, she was excited by the prospect of expanding her business in a new market.

But instead of a vibrant market full of opportunities in New Zealand’s capital, the founder of Jacaranda Communications found businesses spooked by government policy changes, including substantial public-sector job cuts.

Indeed, Wellington is in the throes of a job-axing blitz. The new conservative coalition government has made good on its 100-day action plan since winning the election in October, tightening its purse strings as it reduced public-sector expenditure by 6.5 per cent.

The slashing frenzy reached a fever pitch in recent weeks, so much so that the local media has started keeping a running tally of job cuts – now about 2,000 across various ministries, with more to come.

These moves have put workers on edge and added more pressure to falling job vacancies. While a cooler job market could arguably slow down inflation, it is rattling an already jittery economy, experts say. New Zealand entered a technical recession in the final quarter of last year.

Howe does not work in the public sector, but still says the job cuts are sending ripples through private industry.

“After Covid, one recession, two recessions, another graduating year of students entering the employment market, after a government contracting freeze last September, it’s just too many compacted issues all at once,” she said.