Employment confidence collapsed in December, with perceptions around job security and employment conditions reaching a four-year low, Westpac economist Donna Purdue said yesterday.
"To date, New Zealand workers have been insulated from the worst of the economic recession - pent-up demand for labour has meant that the downturn in the labour market has been relatively mild, while earnings growth has remained solid."
However, the latest Westpac-McDermott Miller employment confidence survey suggested the demand for workers had now been satisfied and that redundant workers would find it increasingly difficult to obtain work.
Westpac was forecasting unemployment to continue rising through 2009, peaking at close to 6%, with layoffs to be heavily concentrated in the retail, construction and finance sectors, she said.
The confidence index fell 17.2 points in December to a new survey low of 104.
An index above 100 indicates there are more optimists than pessimists, while a number below 100 indicates that pessimists outnumber optimists.
The survey was conducted between December 1 and 14.
Otago's index fell to 106.9 in December from 121.3 in September, but it was not the biggest fall.
That honour went to Nelson-Marlborough-Westland, which saw its index fall to 103.6 from 127.4.
Canterbury fell to 105.2 from 125.3 and Southland fell to 110.4 from 131.5.
Even with the 21-point fall, Southland was still the top-ranked province for employment confidence.
Ms Purdue said the most striking development in the December quarter had been the complete reversal of views around current employment.
A net 26% of respondents now believed that jobs were hard to come by compared with a net 25% saying jobs were plentiful in the September quarter and a net 57% saying they were plentiful in December 2007.
"From the employee perspective, the job market has clearly toughened up in recent months and the situation isn't expected to improve much over the coming year."
The one bright spot in the survey was that current earnings remained strong, she said.
A net 37.2% of respondents said they were earning more now than a year ago, up from a net 33.3% in September.
The prospect of tougher times ahead hit expectations about future earnings, with a net 37.1% of respondents saying they thought their earnings would be higher in a year's time compared with 45.7% in September.
In terms of earnings, the survey results remained consistent with Westpac's view that wage growth would remain firm in the near term but would moderate as the employment downturn lingered on, Ms Purdue said.
"Workers have so far been successful in their bid to win compensation for the spiralling cost of living. With inflation now retreating and unemployment rising, we expect wage growth to slow from mid-2009."
