Southland households pessimistic about employment outlook
Southland's employment confidence has dropped and the dairy downturn could be to blame, economists say.
Southland and Taranaki were the only regions which recorded a fall in predicted job security, earnings and opportunities in the latest Westpac McDermott Miller Employment Confidence Index.
The index summarises New Zealand households' outlook of opportunities, earnings and job security. Southland employment confidence dropped 2.7 on the confidence index, from 101.4 in December 2015 to 98.7 in March 2016.
A score above 100 shows more optimism than pessimism and vice versa for a score below 100.
Federated Farmers Southland dairy chairman Graeme McKenzie said there was no doubt Southland's drop in employment confidence was affected by lower confidence in the dairy industry.
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He said when the dairy business was less affordable it was difficult for employers to make wage increases or increase opportunities for staff.
Confidence in the dairy industry would affect business across Southland, McKenzie said.
"Other businesses in Southland do rely on the dairy industry money being spent. With less money flowing around the province that would mean that the [employment] confidence is much lower."
McKenzie said farm operators were doing more work themselves to cut employment costs. Some jobs would be lost, he said.
"Employers will be very reluctant to lay-off staff but when it comes down to it, there will be unfortunately some cases where that is to happen."
McKenzie said he had not heard of any specific cases where employers had to lay-off staff.
Southland Regional Development Strategy governance group chair Tom Campbell said the employment confidence drop showed Southland's reliance on dairy and aluminium.
"Southland is a region that's very dependent on the success of two commodities," he said.
"It's inevitable that the confidence is going to go down with them."
The strategy wanted to develop two new industries over ten years to grow employment opportunities, Campbell said.
"We are linked to the commodities cycle, so it is more a matter of changing the reliance on two commodities," he said.
"I don't think it's a bad thing but I think it's a problem to only have two [commodities]. But it's much better to have a much broader economy."
Campbell said an increase in dairy and aluminium prices would see employment confidence improve.
Crowe Horwath managing principal Neil McAra said the dairy downturn would impact employment confidence.
Dairy was coming in to a new season which could create some uncertainty, McAra said.
He said the 98.7 in March 2016 was still higher than the 96 recorded on the same index in September 2015.
McDermott Miller Ltd managing director of strategy and economics consultancy Richard Miller said public sector employees were more likely to attribute their views to "wrong" government policies.
"In contrast, private sector employees see farming and low dairy prices as the main reason for being pessimistic about the outlook for increased employment opportunities."