Employment confidence lifted slightly in the December 2010 quarter, rising 0.9 points to 103.5.
Westpac economist Donna Purdue said that confidence was slightly lower than the same time a year ago when the index was 104.3.
An index reading above 100 indicates there are more optimists than pessimists while a number below 100 indicates that pessimists outnumber optimists.
The survey was taken between December 1 and 14.
"The lift in confidence this quarter is encouraging, given that a strengthening labour market is a key part of our economic growth story through 2011.
"However, the devil is always in the detail and in that respect, there are some worrying developments this quarter," she said.
Since March 2009, employees' downbeat assessment of employment conditions had weighed heavily on the overall level of employment confidence.
The December quarter's results showed the situation had not changed, with employees assessing the labour market as in worse shape than three months ago and only a little better than 12 months ago, Ms Purdue said.
"The major issue for employees in the here and now is job availability."
In December, a net 63.4% of respondents said jobs were hard to get, up from a net 61.3% in September and close to the record high reached in September last year when a net 66.5% of respondents felt jobs were hard to get.
There was better news on the earnings front, with a net 21.4% of respondents saying they were earning more than a year ago.
That was unchanged from the September quarter but remained well above year-ago levels when only a net 15% said they were earning more, she said.
The negative sentiment towards the current job situation was difficult to reconcile with labour market developments over the past year.
Those developments showed unequivocally that the labour market had improved, with the number of employed growing by 1.8%, the trend rate of unemployment falling, under-employment - those in work but seeking more - dropping by 10% and the total actual hours worked per week rising 3%.
"Still, the indications are that the jobs market remains tough, and possibly even tougher than we thought.
"That suggests some downside risk to our employment growth forecasts through the latter stages of 2010."
The optimism of employees about the future had improved in the quarter.
The biggest influence was an increase in earnings expectations, with a net 40.3% of respondents saying they expected to be earning more in a year's time, up from a net 34.6% in September and a net 36.2% a year ago.
Only five of the 11 regions, including Otago, reported a rise in confidence in the December quarter.
The largest increase was in Waikato, making it the most optimistic region in the country.
Increases were also recorded in Wellington, Auckland and Nelson/Marlborough/West Coast, although the index for the latter remained in pessimistic territory.
Northland employees were the most pessimistic.
