Key Insights on NZ’s Employment Market September 2025 Edition

Starting this month’s blog edition, it’s clear New Zealand remains in a slump, and the numbers tell the story. KiwiSaver hardship withdrawals have surged by $179.3 million, bringing the total to $443.6 million. While this provides short-term relief, the long-term cost is staggering, with an $8000 withdrawal today estimated to cut $50,000 from a retirement balance. The fact that so many are drawing down their savings is not just about individual hardship, it is a reflection of how deeply the economy is biting into everyday life. For many households, survival now outweighs stability later, and that trade-off is fuelling both frustration and anger.

That frustration is spilling over into politics. The latest RNZ–Reid Research poll shows 37.6% of voters now blame the coalition for the struggling economy, 30.8% blame Labour, and nearly half the country (48.9%) believe New Zealand is heading in the wrong direction. With confidence slipping and people stuck in uncertainty about where the economy is heading, the mood is one of desperation. Both households and voters are sending the same message: the pressure is mounting, and patience is wearing thin.

A story that is becoming all too familiar in today’s media is the struggle of businesses, and unfortunately that struggle often ends in closure. The hardest-hit sectors have been retail and, in particular, hospitality. Over the past 12 months, 2,564 hospitality businesses have shut down, a 19 percent increase on the 2,158 closures the year before.

This pressure has forced businesses in hospitality to rethink and adapt. Ethnic restaurants are holding up better, but many established operators are being forced to cut costs, restructure, or close in order to stay afloat. As Chris Wilkinson of First Retail Group notes, “It’s really all about evolution. The businesses that aren’t evolving are the ones struggling most, while those caught in the mass middle, like many retailers, are finding it hardest to survive.”

And this problem extends beyond hospitality. Across the board, businesses are turning to cost-cutting as a survival strategy. Rising costs are a major factor, but so too are high levels of debt and the interest burdens that follow. For households, this creates a more conservative approach to spending, further squeezing businesses already under pressure.

The cycle is clear: when consumers spend less, businesses stop investing in new talent and innovation. Why would they, when the risk feels so high? To break this cycle, debt alone cannot be the only focus. Investment in infrastructure and long-term growth strategies is essential to give New Zealand industries the chance to prosper again. Until then, the sectors most exposed, particularly hospitality and retail, will continue to bear the brunt.

New Zealand’s infrastructure tells a story of both challenge and opportunity. A recent Infrastructure Commission study found that most of our core networks were built between the 1920s and 1970s, with “very little” added since. Investment today sits at 5.8% of GDP, but the country is now in a catch-up phase, facing aging roads, shrinking hospital capacity, and the urgent need for new renewable energy projects like wind and solar farms. For context, the number of hospital beds actually peaked in 1945 and has steadily declined through the 90s and 2000s, even as the population has grown older and demand is rising. Electricity distribution networks will also require major upgrades as the country transitions to clean energy. While this sounds daunting, it represents one of the biggest job creation opportunities in decades. Large-scale infrastructure investment not only modernises critical systems but can create thousands of roles across construction, logistics, and support services.

 

 

At the same time, regions like Central Hawke’s Bay highlight why this investment matters for people. Stats NZ reports that 10,000 jobs have been lost nationwide in the past three months, with nearly 1,000 of them in Hawke’s Bay alone. SEEK data shows 11% fewer jobs advertised in the region than a year ago, while Ministry of Social Development figures confirm 1,161 locals are now living on a benefit, the highest level in more than 12 years. Community leaders like Bevan Thompson of Te Taiwhenua o Tamatea are on the front lines, helping jobseekers with everything from driver licences to confidence-building. His work reflects both the scale of the challenge and the resilience of local communities. If infrastructure projects are prioritised and aligned with grassroots support like this, they could provide pathways out of hardship, reduce regional inequality, and give people the skills and confidence to thrive in long-term employment.