Inflation: Finance Minister Grant Robertson points to 'global factors' as worker confidence in economy drops

Finance Minister Grant Robertson is blaming "global factors" for a drop in confidence in the economy among workers. 

The latest ELMO Employee Sentiment Index, the results of a survey of 515 Kiwi workers aged 18 and over between 11-18 March, found that just 14 percent had confidence in the economy, down from 19 percent at the same time last year. 

But while workers feel the economy is less secure, 63 percent anticipate a pay rise within the next year. It could be linked to inflation and a drop in workers who feel fairly remunerated for the work: 63 percent last quarter to 59 percent this quarter.

The survey found that concerns about economic security appear to be driven by international conflict and instability with 83 percent worried that global conflict will negatively impact their economic security.

However, workers are slightly more confident about their job security. The survey found that 56 percent rate their job as secure, 60 percent consider their industry secure and 56 percent rate their organisation as secure.

"There's some good news and bad news for employers in these latest insights," said ELMO Software CEO Danny Lessem.

"Plummeting confidence in the economy makes it clear that workers aren't being reassured that things will stabilise. Instead, they're seeing rising living costs as inflationary pressures and global conflict erode their confidence in the economy."

The Finance Minister said there is hope on the horizon. 

"The survey shows that global factors such as the war in Ukraine and the ongoing disruptions from the pandemic have understandably raised uncertainty and affected confidence about the economy's prospects," he told Newshub. 

"While this is a difficult period, the economy is in good shape and is growing and unemployment is at a record low. The survey found that people are more upbeat about the security of their own job and the chances of a pay rise." 

Robertson said economists are expecting wage growth to rise this year as businesses look to attract and retain workers. 

Finance Minister Grant Robertson and Prime Minister Jacinda Ardern.
Finance Minister Grant Robertson and Prime Minister Jacinda Ardern. Photo credit: Getty Images

"We are in a good position to support New Zealanders through this uncertain time and come out the other side. The impact of Omicron is waning and the move to the orange setting under the COVID Protection Framework is expected to boost confidence and spending. 

"The opening of borders to foreign workers and tourists and the Prime Minister's trade missions to reconnect with our key trading partners will also help accelerate the recovery and rebuild."

It comes a week after the latest MYOB Business Monitor survey of small and medium enterprises (SMEs) found that support for Prime Minister Jacinda Ardern had dropped 15 points to 25 percent from 40 percent in September.

The latest ANZ-Roy Morgan Consumer Confidence survey published earlier this month showed that consumer confidence dropped in March to reach a fresh record low.

It highlighted the "perfect storm" of the COVID-19 Omicron outbreak, rising living costs due to three-decade high inflation sparked by supply chain constraints and Russia's invasion of Ukraine, a retreating housing market, and rising interest rates.

Robertson has given himself $6 billion in new spending for the upcoming Budget in May to pay for the Government's massive health restructure and climate change initiatives. 

National's Nicola Willis says it's time to rein in spending, especially after Reserve Bank Governor Adrian Orr said on Tuesday central banks grappling with inflation need support in the form of "more targeted effective fiscal policies" or else resort to increasing interest rates. 

"A credible Finance Minister would be doing all he could to rein in inflation right now," Willis told Newshub. "It's driving a cost of living crisis for all New Zealanders." 

Robertson rejected that, telling reporters: "We have to continue to be balanced in the way we approach Government spending."

"It is important we don't cut our nose off despite our face and take away funding that's really important. We're not going to reduce the price of food at the supermarket by reducing health spending."

Robertson said he did not think Kiwis blame the Government for rising inflation

"They can see the war in Ukraine, they've heard about the supply chain constraints. They know it themselves because they've ordered goods that aren't arriving as quickly because ships aren't coming to New Zealand as quickly."

The Government has tried to ease the pressure on low income families by reducing petrol taxes and halving the cost of public transport. The Government also increased benefit rates and tax credits and bumped up the minimum wage to $21.20.