Mood of the Boardroom: Border restrictions are ‘a mixed blessing’

Finding and retaining skilled workers is now a major issue for New Zealand’s small to medium businesses (SMEs).

BusinessNZ asked its SME membership how difficult it had been to fill vacancies over the last year.

On a scale of one to five, 41 per cent of survey respondents said it was “very difficult”, while no respondents found it “very easy”.

When it comes to hiring overseas workers, two-thirds of SME respondents (65 per cent) said that the Covid-19 border restrictions have made matters harder; 15 per cent were unsure. 20 per cent have not run into problems.

VBridge chief executive Todd Cassie says: “More so finding new people. Retention has not been an issue for us — this I believe is part of the challenge.

“People that, pre-Covid, would have been open to a change seem to be hunkering down and sticking with what they know.”

Australia is the focus for many leaders when it comes to finding and keeping skilled workers.

Oceanagold’s GM Corporate & Legal Affairs Alison Paul says: “We generally train our own workforce, but we then compete with Australia to retain those workers. Border restrictions have been a mixed blessing.

“When borders reopen, we may struggle to hold on to staff. That said, not all expertise can be sourced from within New Zealand and that part has been very difficult. It has held our business back.”

EMA CEO Brett O’Riley says salary expectations have gone through the roof as a result of inter-company poaching and Australian companies looking for staff from NZ.

Spending

A major wave of business spending appears to be on the way. More than half (54 per cent) of SME respondents plan to increase capital expenditure in the coming year compared with last year.

Around 21 per cent intend to keep capital budgets at the same level; with 20 per cent saying they expect to authorise less capital expenditure.

Much of the extra expenditure will go to the technology sector. The survey found spending on IT remains a priority with two-thirds (67 per cent) of survey respondents planning to spend more. Another 20 per cent say their spending will stay at 2020 levels. Only 12 per cent say they will cut IT budgets in the coming year.

Tax

Business chiefs are equivocal about the international competitiveness of headline tax rates.

An industry body chief executive reflects this. He says tax rates are “probably not the biggest constraint at present”. The head of a large manufacturer says other factors are more important at the moment.

A real estate leader says, “To attract foreign investment, many of those people would also like to live here so many things need to change, like borders opening and immigration policy changes. Then consideration on corporate tax rate can be looked at and made inviting for those investors; but at the moment it does not worry me.”

Some 43 per cent of SME respondents are concerned that the local corporate tax rate is not internationally competitive; A third (34.5 per cent) are not concerned.

For the first time in a generation we have an economy working at capacity yet there is probably more uncertainty internationally, because of Covid and China, than ever before.”

Banking executive

A software business headsays, “I think that lower corporate tax rates would attract more investment from overseas. Singapore is a good example.”

Parity with Australia’s lower headline corporate tax rate remains a popular idea. 67 per cent of the company heads surveyed said they want the government to consider a phased reduction of local headline corporate tax rates to fit in line with Australia’s 25 per cent rate by 2027. The idea was dismissed by 22 per cent of the respondents with 18 per cent saying they don’t know.

Clemenger Group chief executive Strahan Wallis says New Zealand needs to remain competitive with Australia on taxes.

A manufacturing sector CEO adds, “That would be helpful to many business owners to offset the added costs recently imposed on us.”

The head of an accounting business pointed out the potential complexity of such a move saying: “Change it or don’t change it, but it would be a nightmare if it was a phased reduction.”

Housing

One in four of SME respondents to the BusinessNZ survey say the unavailability of affordable housing means they are finding it hard to attract or retain workers. Fifty per cent were unaffected; 25 per cent are unsure.

Oceanagold’s Alison Paul says, “We operate in regions that are seeing the knock-on impacts of housing shortages in the large urban centres.

As a sector that pays well, housing affordability has not usually been an issue for our workforce.”

The head of a print and packaging firm adds “Prices are way out of line even in rural locations”.

Others pointed out they have suppliers who are losing good staff due to housing problems. But job security is also a factor.

RMA

The Resource Management Act continues to be rated poorly. Asked how well the RMA has worked to facilitate growth and development on a scale of one to five, one-third (34 per cent) of respondents gave it a score of one; not impressive. The same number scored the Act at two. A little over 20 per cent offered “no opinion”.

Local councils continue to under-perform from a business point of view. Asked if their local council performs to facilitate growth and development on a scale of one to five, just a single respondent gave a score of 5.

The Top Priorities

Joe Jakicevich, Hancocks
• Staff development and retention.
• Supply chain alternatives options.
• Looking forward rather than to the now.

Rod Younger, Alchemis Ltd
• Expand through acquisition and organic growth.
• Pay back debt.
• Develop new markets.

Ruth Cobb, PrintNZ
• Ensuring no disruption to supplies.
• Retaining staff.
• Maintaining business confidence.

Strahan Wallis, Clemenger Group
• Continuing to deliver global best-in-class marketing services for our clients.
• Stabilising in the post Covid-19 era and adjusting well to the new realities that brings.
• Growth: for our clients and our people.

Stefan Vermeulen, Nespresso
• Carbon neutrality.
• Customer loyalty.
• Launch new innovation.

Over half the respondents said staffing was a priority; for most, retaining or recruiting new employees.
For others, key was staff development or growth. Many mentioned staff wellbeing. Dealing with supply chain disruptions was a common priority with some worrying about shifting global trade patterns. Climate change and sustainability were prominent, in some cases with reference to regulatory change.

Key concerns

Skills shortages and immigration — Nearly seven in ten respondents (68 per cent) name skills and labour shortages when listing their top five concerns affecting confidence in the wider business community. Almost the same number (67 per cent) nominate skills and labour shortages as the main concern for their own business. Skills shortages are closely linked to immigration restrictions and closed borders, which were named by 56 per cent as a business confidence problem for the wider community. When it comes to how closed borders impact their own companies, a little under half of respondents (47 per cent) name it as a concern.

International trade and transport cost fears— Almost half (48 per cent) of survey respondents list international transport and logistics costs among the factors affecting confidence in the wider business community. That makes it the second biggest concern. Fewer company heads (43 per cent) say transport and logistics affects their own business. One quarter of companies say the international trade environment is having an effect on the general business community. Yet only 13 per cent see this as a confidence problem when they look at the question from their own company’s point of view.

Uncertainty — Over four in 10 of the companies (42 per cent) business chief respondents name general uncertainty about the impact and direction of government policies as having an effect on the wider business community. When it comes to the impact on their own companies, the number was lower at 38 per cent.

Source: Read Full Article