Why is job confidence falling in New Zealand in 2025?

After a period of relative stability, confidence in New Zealand’s employment landscape has taken a notable hit. Businesses are tightening budgets, job seekers are feeling the chill of slower hiring activity, and uncertainty continues to cast a shadow over long-term security. Despite the country’s resilience in recent years, the latest data points to a workforce growing increasingly uneasy about what lies ahead.

The latest Westpac McDermott Miller Employment Confidence Index underscores that mood, sitting at 89.9 – well into pessimistic territory. Job security concerns are rising, and the number of people saying jobs are “hard to find” has climbed to its highest level since the 2020 lockdown. Employers, meanwhile, are caught between managing cost pressures and retaining key talent in an economy that remains fragile.

Economic headwinds such as falling employment, a cooling labour market, and weaker demand in some sectors have dampened optimism. Yet, there are pockets of resilience – regions such as Wellington have shown slight improvement, offering a glimpse of stabilisation even as broader confidence declines.

“Many New Zealanders are feeling gloomy about their employment prospects, and the index remains in negative territory… perceptions of job scarcity are at their weakest point since COVID.”

On a recent NZ Market Update, Host Mark Smith, Principal Consultant at Frog Recruitment, examined the figures and their impact on job seekers and employers alike. He noted that while national sentiment remains subdued, market behaviour still reveals movement – candidates are active, but more cautious, and employers are hiring selectively.

The index shows that 24% of respondents expect job security to worsen in the coming months, compared with 20% who expect improvement. Employment has slipped 0.9% year-on-year, and forecasts suggest unemployment could edge up to 5.3%. For many, especially women under 30 and workers over 50, insecurity is pronounced. These groups tend to feel the earliest impact of market contractions and are often the slowest to recover when conditions improve.

Mark highlighted how these numbers are shaping recruitment conversations in real time. Candidates are more likely to prioritise stability and culture fit over aggressive salary moves, while employers are refocusing on retention. “What we’re seeing,” he said, “is not a lack of talent, but a recalibration of expectations on both sides.” That shift is consistent with global trends – employers want high-performing teams who can adapt, and employees want clear development pathways and secure, flexible workplaces.

The mixed picture in Wellington offers a small sign of relief. After months of contraction, there has been a slight uptick in hiring, particularly in government and professional services. Still, the pace of recovery is slow, and many organisations remain cautious. For job seekers, this means being proactive, prepared, and patient; for employers, it means maintaining engagement and communication even when hiring slows.

The broader story is one of adjustment. The pandemic redefined how New Zealanders think about work, flexibility, and security – but now the conversation is shifting again, toward long-term sustainability. Businesses that stay transparent about their challenges and focus on building trust are likely to weather the storm more successfully than those that retreat behind hiring freezes and cost cuts.

How can both sides rebuild confidence in an uncertain market?

As New Zealand navigates this period of recalibration, the key will be balance – acknowledging short-term pressures without losing sight of long-term opportunity. Employment confidence may be low for now, but with smart planning and open dialogue, both employers and employees can help rebuild a sense of optimism across the workforce.

• Stay informed: Track regional trends, as confidence and hiring activity vary significantly across New Zealand.
• Prioritise communication: Clear, timely updates help employees feel valued and reduce anxiety about future changes.
• Focus on skill development: Continuous learning remains one of the most effective buffers against uncertainty.
• Balance flexibility with structure: Offer adaptable work models that still deliver productivity and cohesion.
• Promote well-being: Stress and insecurity erode performance – well-being initiatives have a direct impact on retention.
• Recruit strategically: For employers, it’s not just about filling roles quickly but ensuring long-term cultural alignment.