The labour market would also see a return to the workplace for many employees who had recently been working from home, CoreData's Andrew Inwood said. Photo: 123rf
The price of labour is falling in the United States, Britain and Europe, as the balance shifts back to employers from employees in a number of major markets.
That was a key observation of international business research firm CoreData founder Andrew Inwood in an event hosted by the Financial Services Council, this week.
The event coincided with the release of a council report indicating an increasing number of people are concerned about their financial well being, amid high inflation and rising interest rates.
While New Zealand's tight labour market reflected record-low, first quarter unemployment of 3.4 percent and strong wage growth of 4.3 percent, Inwood said there were big changes afoot in other markets.
Inwood said the tech sector was among the first to see jobs repriced at lower rates of pay, following a large number of recent layoffs by the global tech giants, with an estimate of more than 168,000 job losses so far.
"Labour is being repriced very quickly in Britain, very quickly in America and very quickly across Western Europe," Inwood said, adding that it was only a matter of time before labour costs began to drop in other economies, including New Zealand's.
"Labour costs have run up pretty strongly in Australia and New Zealand and the other economies, and Covid has allowed labour costs to remain high," he said.
"What's going to happen now is that the cost of labour will be repriced spectacularly around the world."
Inwood said the labour market would also see a return to the workplace for employees who had enjoyed working from home in recent times.
"In England, for example, bosses are now compelling everybody back to work," he said.
"The kind of work from home environment that exists there for the past few years is disappearing relatively quickly."
The shift from in-office to work from home had come at a cost of productivity, Inwood said.
"Work from home was great for the good workers, great for the poor workers, but produced between a 15 and 20 percent drop in productivity."
He said the drop in productivity was a contributor to inflation and was adding to the cost of manufacturing, for example.
"Economists and reserve banks around the world are saying that unless we can get productivity back into the system, then recession is assured."