New Zealand’s public sector has undergone significant change over the past year, driven by nationwide cost-cutting mandates and widespread restructuring efforts. Unlike Australia’s more layered government system, New Zealand’s centralised model—comprising central government and local councils—has enabled broad, simultaneous change across agencies. This has led to an approximate 7% reduction in staffing, achieved partly through eliminating open vacancies and implementing redundancies.

In this climate, job security has become a top priority for public sector workers. Many employees, having retained their roles, are reluctant to change jobs amidst ongoing economic uncertainty. This has resulted in unusually high retention levels but also reduced job mobility and opportunities for internal advancement.

The shift has had substantial knock-on effects. Agencies have seen decreases in morale and productivity, as remaining staff shoulder increased workloads. Hybrid work remains common, though many departments are now encouraging more in-office presence. Contractor roles, once prevalent, have declined sharply in both availability and pay, due to lower demand and tighter budgets.

Looking ahead, while opportunities may emerge through agency consolidations and limited growth in contracting roles, challenges remain steep. Salary increases are unlikely in the short term due to stagnant funding levels, further fuelling potential turnover as staff seek advancement externally.

“Staff turnover has been really low because people are sitting there going, I’ve got a job, thank you.”

In a conversation with people2people Recruitment Consultant Nicole Consterdine, Peter Crestani, Branch Manager at Frog Recruitment, painted a stark picture of the New Zealand public sector’s current climate.

“The structure of our government is different to start off with,” Crestani explained, referencing New Zealand’s streamlined system of central and local governance. Over the last 12 to 18 months, a uniform cost-saving initiative has pushed staffing reductions across agencies. “A third of the staff reductions were in open vacancies… the rest were redundancies,” he said, adding that retention is now high due to employees prioritising job security over advancement.

This risk-averse environment is reflected in candidate behaviour. “It's very much now around retaining a job rather than looking for a whole lot of career opportunities,” Crestani noted. Economic pressures, including mortgage obligations and living costs, have shifted focus from career mobility to employment stability.

Despite the slowdown, some structural changes are opening up new opportunities. Agency consolidations are creating roles for staff to participate in cross-government functions. However, Crestani warned that many changes have been tactical rather than strategic: “They’ve got their headcount down, but it may not be in the right areas.” As a result, some teams are stretched thin, with remaining staff expected to maintain former output levels.

Morale and productivity have taken a hit. “Twelve to eighteen months ago, the public service ethos was quite different… productivity has dropped back a little,” he said. Staff burnout has become more common, compounding the challenges posed by reduced support and shifting expectations.

On flexibility, New Zealand continues to favour hybrid working models. “There’s quite a bit of hybrid work… but a lot less remote,” Crestani explained. Anchor days are common, with agencies often requiring partial weekly presence in-office. While some remote roles exist—particularly for highly skilled workers—these remain the exception.

Salary expectations are also being realigned. “Any salary increases will have to come out of [existing budgets],” he said, referencing baseline government funding constraints. Contractors have been hit especially hard, with falling demand pushing rates down. “In the contracting side… those rates have come down quite significantly,” he noted. Meanwhile, public sector staff seeking higher pay are increasingly eyeing roles at other agencies. “If I want to get more money, I have to move jobs,” Crestani quoted one worker as saying.

The situation is further complicated by perceived barriers to entry. “If you haven’t worked in government, it’s very difficult to come from the outside,” he said, highlighting the sector’s preference for experienced insiders familiar with government processes.

Practical Takeaways for Public Sector Employers in New Zealand

• Be strategic in staff reductions to avoid overloading remaining employees and damaging morale.

• Use internal consolidation and cross-agency collaboration to create new career pathways without expanding headcount.

• Provide clarity on hybrid work expectations and ensure they align with both operational needs and employee preferences.

• Recognise the risk of talent drain due to limited salary growth—consider role progression opportunities to retain staff.



• Acknowledge the challenges faced by external candidates and explore pathways to bring in diverse talent with transferrable skills.