NZ Property Sector Update: What Employers Need to Know 2025

In 2025, the public sector across Australia and New Zealand is experiencing significant pressure from multiple fronts, notably resourcing challenges, budget restrictions, and talent retention issues. A recent analysis shows that 55% of government teams have faced budget cuts this year, with 31% of those cuts considered significant. This financial squeeze is having a clear knock-on effect, with 62% of public sector professionals reporting that their teams are under-resourced. These constraints are hampering not only the day-to-day delivery of services but also recruitment and retention strategies.

Recruitment in the public sector is now primarily reactive rather than proactive. A large proportion of hiring—60%—is driven by the need to replace departing staff. Restructuring accounts for 46% of hiring activity, while only 25% relates to increased workloads. Growth and project-based hiring are notably low, suggesting that many organisations are operating in maintenance mode rather than pursuing expansion. This is further underlined by the fact that 31% of public sector employers report having no hiring plans for the year, pointing to widespread caution and operational constraint.

Candidate attrition also remains a critical concern. Many public sector professionals are leaving due to job insecurity (37%), limited opportunities for career progression (27%), and lower salary packages (15%). These figures reveal that improving salary alone will not resolve the sector’s staffing issues. A more holistic approach focusing on job security and long-term career development is required to strengthen workforce stability. As the public sector continues to navigate these complex challenges, the cumulative effects on performance, employee morale, and service delivery are becoming increasingly apparent.

"Public sector employers are trying to maintain stability, not drive growth."

Nicole Consterdine, Recruitment Consultant at people2people, offers an insightful perspective on the current state of the public sector labour market. "The public sector across Australia and New Zealand continues to face mounting challenges in 2025, especially around resourcing, budgets, and talent retention," she explains. Consterdine’s comments reflect an industry under substantial stress, with multiple indicators pointing to long-term sustainability concerns.

One of the most pressing issues is the speed and efficiency of recruitment processes. "81% of managers reported that they've lost candidates simply due to the speed of their hiring processes," says Consterdine. This inefficiency not only delays filling critical roles but also affects the sector’s ability to compete for talent with the more agile private sector.

Current hiring trends further illustrate the defensive stance many public agencies are taking. According to Consterdine, "Replacements account for 60% of hiring activity, followed by restructures at 46% and increased workloads at 25%." This data confirms that hiring is focused on continuity rather than growth. With only a minimal proportion of recruitment linked to expansion or project work, it is clear that most agencies are prioritising survival.

Retention remains a pivotal issue as well. "The main reason that people are leaving public sector roles include a lack of job security at 37%, limited career progression opportunities at 27%, and lower salary packages at 15%," she shares. These statistics highlight the need for more than just improved benefits. Employees are seeking assurance about their career trajectory and the longevity of their roles within the public system.

Consterdine points out the broader implications: "If these trends continue, it could have a significant impact on service delivery and long-term workforce sustainability in government." This serves as a call to action for public sector leaders to address foundational employment concerns and modernise hiring practices to attract and retain skilled professionals.

Practical Strategies for Public Sector Employers in 2025

• Streamline recruitment processes to prevent candidate drop-off

• Focus on job security and internal mobility to improve retention

• Develop transparent career pathways with structured progression

• Reassess workload distribution to reduce pressure on under-resourced teams

• Invest in employee engagement strategies to strengthen morale and stability