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Business optimism still evident; warnings for 2009

Media statement Tuesday, December 16th, 2008

Business optimism still evident; warnings for 2009

The majority of businesses are still optimistic about their employment intentions despite the gloomy economic forecasts for next year, a survey* of the Employers & Manufacturers Association finds.

The survey conducted on December 8th recorded 730 responses.

"In all 68 per cent of businesses reported that right now they are doing well or alright overall, or able to maintain their current business and staffing structures," said Alasdair Thompson, EMA's chief executive.

"Only two per cent of businesses report they are fighting for survival.

"Employment intentions are better than might be expected given the outlook for 2009." Mr Thompson said.

In other findings from the survey, a third of employers rate personal grievance reform their top employment priority followed by support for measures to boost productivity. EMA's Employment Services Manager David Lowe said the 90 day probation law attracted very strong support.

"Employers will be extremely reluctant to lose skilled staff given how hard it has been for them to find and train them," Mr Lowe said.

Mr Thompson said 46 per cent of businesses currently say they are keeping their staff numbers steady with a further 23 per cent not replacing staff who leave. 18 per cent are carrying out redundancies.

"Looking to next year, businesses appear optimistic with 14 per cent planning to increase staff numbers," he said. "Over half (54 per cent) are planning to maintain staffing levels at present levels.

"Twenty per cent say they will not replace staff when they leave with the remaining two per cent forecasting redundancies in 2009. This seems to be an overly optimistic opinion albeit a positive one.

"What we may be seeing in the run up to Christmas is indeed a shallow recovery from a shallow recession as Dr Bollard has noted, but our expectation is that this won't continue next year.

"The recession we have had was largely driven by high interest, petrol and food prices. The recession we're about to have will result from a lack of export orders and falling commodity prices on world markets.

"40 per cent of our economy is dependent on export earnings.

"Business needs to be pragmatic, prudent and cautious for at least the first half of 2009."

Mr Lowe noted the 90 day probation law was very strongly supported, but employers also rated highly the fixing of the rest of the personal grievance laws along with the Mediation Service and Employment Relations Authority.

"Real and tangible outcomes from Government initiatives to improve productivity were also at the top of the list.

"Changes to laws involving unions were lowest priority which is to be expected given less than 10 per cent of employers have any union involvement.

"Employers clearly think KiwiSaver is a good idea gone bad, but are split on whether to do anything about it. About half want it changed to become fairer for all concerned and the other half have had enough of the constant changes and just want it left to settle down.

"Employers support competition and choice to oblige ACC to spend taxpayer's money more efficiently. 78 per cent support a private sector role in rehabilitating injured employees and 80 per cent support choice in getting ACC cover from either the government or the private insurance sector.

"Overall wage increases are down on previous years.

"Employers who responded said they gave an average pay rise of four per cent to those on individual agreements compared to 3.8 per cent for unionized employees.

"We expect these wages increases to fall further as the economic down-turn continues to take effect."


*Similar surveys were undertaken in December 2006 and December 2007.
Full results from this year's Employment Round Up Survey are attached.


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