Economic Shifts Challenge NZ Job Market in 2025

The UK's equality watchdog wants to stop employers asking job applicants about their previous salary or pay expectations. But would banning these questions create fairer pay outcomes, or could we be losing a valuable conversation? The problem isn't having a conversation about salary. It's using someone's previous salary to determine how little you can get away with paying them. That's the distinction at the heart of a debate emerging in the UK, where the Equality and Human Rights Commission (EHRC) has recommended banning employers from asking job applicants about their salary history or expectations. The concern is understandable. If someone has been underpaid in a previous role, using that salary as the starting point for their next offer can mean existing inequalities follow them throughout their career. But from a recruitment perspective, there's another side to the conversation worth considering. Your previous salary shouldn't determine your future worth. Let's say two candidates apply for the same position. They have comparable experience, similar skills and the same ability to perform the role. One currently earns $80,000. The other earns $100,000. Should the employer offer the first candidate less simply because they've previously been paid less? Absolutely not. Remuneration should reflect the responsibilities of the role, the skills and experience required, internal equity and current market rates — not simply what someone managed to negotiate with their previous employer. Otherwise, people who have historically been underpaid can find themselves perpetually playing catch-up. This can be particularly problematic for people returning from career breaks, those who have prioritised flexibility over salary, and employees who have spent years with the same organisation while market rates have moved ahead. A change of employer should be an opportunity to reset remuneration against the market, rather than carry forward an outdated benchmark. But salary conversations can work in candidates' favour. While we understand the motivation behind the UK proposal, there's an important difference between asking about salary history to justify a lower offer and discussing remuneration to help someone understand their market value. As recruiters, we're constantly having conversations with employers and jobseekers about salary. Those discussions give us valuable insight into remuneration trends across different industries, professions and locations. They also allow us to challenge expectations on both sides. For employers, that might mean explaining that their proposed salary isn't competitive enough to attract the experience they're looking for. For candidates, it can mean helping them recognise that they've been underpaid and encouraging them to aim higher. Someone earning $75,000 might assume that asking for $85,000 is ambitious. But if comparable positions are paying $90,000 to $100,000, that conversation can be genuinely empowering. The objective shouldn't be to anchor someone's next salary to their previous one. It should be to help them understand what their skills are worth in today's market. Why are we so uncomfortable talking about money? New Zealanders and Australians can be surprisingly reserved when it comes to discussing salaries. We regularly encounter candidates who are uncomfortable disclosing what they currently earn or what they'd like to earn next. And that's understandable. Jobseekers want to achieve the best possible outcome, but they also worry about pricing themselves out of an opportunity. That concern can be particularly pronounced in a challenging employment market, when competition for roles is high and candidates may feel they have less negotiating power. Some people deliberately nominate a lower salary expectation because they're concerned an employer will otherwise overlook them. Others aren't confident about their market value, particularly if they haven't changed jobs for several years. This is where transparency and access to reliable salary information become particularly important. If candidates understand the market rate for their skills and experience, they're better equipped to have an informed conversation — rather than guessing what an employer might be willing to pay. What are New Zealand and Australia doing about pay transparency? Both countries have introduced changes designed to give employees greater freedom to discuss their remuneration. In New Zealand, the Employment Relations (Employee Remuneration Disclosure) Amendment Act came into force in August 2025. The legislation protects employees from adverse action for discussing or disclosing their pay, or participating in conversations about another employee's remuneration. Pay confidentiality clauses can still appear in employment agreements, but the new protections limit how employers can enforce them. Australia introduced stronger pay secrecy reforms in December 2022. Employees have a protected right to discuss their pay, and pay secrecy clauses are prohibited in new employment contracts, with transitional arrangements applying to some older agreements. These are important steps towards greater transparency, but neither approach is the same as banning questions about salary history during recruitment. And that's an important distinction. Should employers publish salary ranges instead? One of the most practical ways to improve pay transparency is to give candidates a clearer indication of remuneration before they apply. Publishing a realistic salary range helps jobseekers assess whether an opportunity aligns with their expectations and reduces the risk of wasting time on a process that was never going to work financially. It also places more responsibility on employers to determine what a role is worth before entering the market. Rather than asking candidates what they're currently earning and working backwards from there, employers should be asking: What are the responsibilities and expectations of this position? What skills and experience are essential? What are comparable positions paying in the current market? How does the proposed salary compare with what existing employees earn? These are the questions that should establish the remuneration range. There will still be room for negotiation based on individual experience and capability, but the starting point should be the value of the role — not the candidate's salary history. What should candidates do when asked about salary? For jobseekers, preparation is key. Before entering a recruitment process, research the market rate for comparable positions and consider the full remuneration package, including benefits, flexibility, development opportunities and progression. If you're uncomfortable disclosing your previous salary, it's reasonable to steer the conversation towards your expectations for the new role. For example: "I'd prefer to focus on the responsibilities of this position and the market rate for the experience I bring. Based on my research, I'm looking for something in the range of $X to $Y." And if you're working with a recruiter, use their market knowledge. A good recruiter should be able to explain whether your expectations are realistic, identify where your current remuneration may be below market and help you approach negotiations with greater confidence. Better transparency, not less conversation. The UK proposal raises an important issue, and the principle behind it is one we support: people shouldn't be disadvantaged in their next job simply because they were underpaid in their last one. But banning conversations about salary expectations could also remove an opportunity for candidates and recruiters to have constructive discussions about market value. The focus should be on making those conversations fairer and more transparent. Employers should establish salary ranges based on the role and the market. Recruiters should challenge unrealistic expectations and advocate for fair remuneration. And candidates should feel confident discussing what they're worth without worrying that doing so will cost them an opportunity. Ultimately, the question shouldn't be "What were you paid before?" but "What is this job worth, and what value will you bring to it?"  At Frog Recruitment and people2people, our consultants work with employers and jobseekers across New Zealand and Australia, providing market insights and remuneration advice to support informed hiring decisions. If you'd like to understand how your salary or hiring budget compares with the market, get in touch with our team.

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