Big corporate job cuts point to problems for older workers – Liam Dann

Spark was reporting the number of jobs it had shed in the year to June 30, and SkyCity was outlining how many it planned to shed in the next year.

Economists are also fond of pointing out that the labour market is usually the last part of the economy to turn in an economic cycle.

So we probably shouldn’t be shocked that there are still big job cut headlines landing on the front page.

I suspect there will be more to come, even as the economic situation picks up.

There are multiple forces at work on New Zealand’s labour market.

Some of them involve structural change: artificial intelligence-related stuff.

That’s not going anywhere. In fact, there are fears we may see it accelerate.

You can bet that Spark’s ever-decreasing headcount includes some of that.

Herald tech editor Chris Keall has pointed out that Spark’s outlook for the year ahead includes cost-cutting plans at least as big as last year’s.

Nobody really knows to what extent AI adoption is inflating the unemployment rate right now.

Most economic commentary doesn’t really factor it in.

I don’t want to oversimplify what’s happening. I’m sure it is intimately intertwined with cost-cutting.

But it is surely changing the nature of those job cuts.

I don’t know what is happening at Spark, but more broadly I’ve heard anecdotes of 50-something software developers and tech support workers being made redundant from well-paid jobs because artficiail intelligence (AI) is making it possible for 20-somethings to do the same work much more cheaply.

I have at least five friends who’ve suddenly found themselves unemployed in their 50s.

That’s tough at any age. But in your 50s, there are some specific difficulties.

You might have been quite well paid previously, but that brings a lifestyle with high outgoings: a mortgage that is still to be paid off, teenage children.

Your life is less mobile; you can’t just pack up and head to Australia as you might have done in your 20s.

What does it do to all the national retirement saving equations if people don’t have a safe career path to 65?

It messes them up, is what.

I guess it makes getting started early on retirement saving all the more important.

But for now, we still have a lot of people counting on working until at least 65, and probably longer.

There was another piece of interesting news last week that complicates the labour market outlook in the long run.

New population figures from Stats NZ show New Zealand’s estimated natural population increase was “the lowest since the early 1940s, during World War II”.

I guess Stats NZ added the bit about “World War II” as a reminder that there was famously a shortage of young men around in the early 1940s.

In the year to June, the total fertility rate was 1.51 births per woman (down from 1.57 over the previous 12 months).

If anyone needs a “birds and bees reminder”, the replacement rate is two.

Actually, it’s technically 2.1, as it has to factor in infant mortality.

Our population is still rising. But only just.

Net migration is also at historically low levels – a gain of just 17,600 in the year to June.

So total population growth (0.7%) is more or less stagnating.

That suggests we may still be on a path to labour shortages in the near future.

As the economy picks up, immigration will need to rise too, or we’re going to suddenly find ourselves short of construction workers, tradies and teachers – all sorts of skilled jobs – as we did in the years of Covid border closures.

It would be a brave (or foolhardy) commentator who’d claim to know what the net outcome of these conflicting social and economic forces will be.

I’m not overly pessimistic about the outlook for Generation Alpha (born in the past 10 years) or my own Gen Z children.

Perhaps it’s just naivety at not being able to see that far into the future.

But they do have youth and adaptability on their side.

Unlike my friends and me, they are not constrained by having based their lives on a rule book that was written in the last century.

I’m a firm believer in the idea that if you learn to learn (and don’t forget), you’ll be okay.

“The illiterate of the 21st century will not be those who cannot read or write, but those who cannot learn, unlearn and relearn.”

That prophetic line is attributed to futurist and author Alvin Toffler in his 1970 book Future Shock.

But what about us oldies? There is no joy in just trying to hang on to a job until you clock out at 65 years old.

Who wants to waste the last working years of their lives in survival mode?

Somehow, we are going to have to front-foot things to compete with AI.

But, to end on a more positive note, this economic downturn might yet move on.

The supply and demand curve of labour market dynamics will shift again.

Older workers may yet come into their own and, if the economy picks up but the population doesn’t, that may well be sooner than we think.

Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.

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