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Cost Of Staff Soaring For NZ Businesses

2 April 2008

Cost Of Staff Soaring For Most New Zealand Privately-Owned Businesses

A big majority of privately-held New Zealand businesses are paying significantly more in staff costs than a year ago, according to the International Business Report produced by accountancy and business advisory firm Grant Thornton.

Some 79% of New Zealand businesses surveyed for the report said “yes” to the question: Is it costing you significantly more, excluding inflation, to pay staff than it was 12 months ago?

In the global league table, this was seventh-equal highest, with Mainland China heading the top six with 91%. At the other end of the scale was Japan, where only 17% of businesses said they were paying significantly more.

“The New Zealand figure gives a bit of a lie to the general belief that wages here are being held down low,” said Grant Thornton New Zealand spokesman Peter Sherwin. “The New Zealand finding won’t exactly be music to the ears of unions who may be pressuring employers for further pay increases.

“What staff here receive in the hand is another matter, of course, and it is that tax factor that fuels the debate about the relentless flow of skilled workers across the Tasman to Australia.”

Not surprisingly, more than 70% of New Zealand businesses were either more focused, or significantly more focused on attracting and retaining staff than a year ago.

“This reflects the general shortage of skilled workers, which is undoubtedly one of the drivers of rising wages,” said Mr Sherwin.

New Zealand’s private businesses top the league table internationally when it comes to identifying work flexibility as a staff attraction and retention tool.

Asked how important various strategies were in attracting and retaining employees, 61% of New Zealand businesses highly rated having a flexible attitude to various working patterns, such as flexitime, working from home, and working part-time. The next highest in this category were Germany and Turkey, both with 55%, and the global average was 47%.

Other strategies for staff attraction and retention which New Zealand companies scored highly on an international basis were “ensuring that all employees understand the company’s core values, mission and goals” (rating third after the Philippines and Turkey) and allowing work beyond the normal retirement age (fourth behind Russia, Mexico and Turkey).

“All of these results indicate that New Zealand’s private businesses are prepared to be both focused and flexible, so it would seem they are doing their best to be good employers. It remains for the Government to play its part by significantly reducing the personal income tax for all working New Zealanders, “ said Mr Sherwin .

One area which New Zealand firms did not rate as highly as an attraction was benefit packages (such as bonuses, commission, pensions, health insurance etc). They were second lowest in rating this factor as of importance – only Singapore rated it lower. The United States saw it being more important that any other country.

The survey shows another side to the rising staff costs. New Zealand’s private businesses top the international league table in identifying increased operating costs as the main problem that staff retention issues have caused their businesses. They were also third in the world, behind Russia and Denmark, in citing increased workload for remaining staff as a problem stemming from staff retention issues.


About the IBR The International Business Report surveyed more than 7,500 owners of medium sized businesses in 34 countries. In New Zealand, Consumer Link surveyed 150 businesses. For the purposes of the IBR survey, a medium-sized business in New Zealand was seen as employing between 10 and 149 people. The research was conducted by Experian Business Strategies Limited and Harris Interactive. All figures were correct at time of going to press. To find out more about IBR and to obtain details of IBR reports and results please visit

About Grant Thornton International Grant Thornton International is one of the world's leading organisations of independently owned and managed accounting and consulting firms providing assurance, tax and specialist business advice to privately held businesses and public interest entities. The strength of each local firm is reflected in the quality of the international organisation. All Grant Thornton International member firms share a commitment to providing the same high quality service to their clients wherever they choose to do business.

About Grant Thornton in New Zealand In New Zealand, Grant Thornton has independent firms in Auckland, Christchurch, Dunedin and Wellington. From market-leading services for the owners of private businesses, to audit, to insolvency and capital markets services for corporations, and to innovative taxation and wealth management services for individuals, Grant Thornton in New Zealand helps business owners achieve success and realise their ambitions.

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