Subtle shifts towards less secure employment recently

Hiring decisions in New Zealand’s labour market appear to be becoming more cautious at the margins. New data shows a small but notable drift away from permanent employment and towards more flexible work arrangements, hinting at a shift in how businesses are responding to ongoing economic uncertainty.

Although permanent roles still overwhelmingly dominate, the recent uptick in casual employment suggests firms are hedging their bets – continuing to hire, but doing so in ways that preserve flexibility as cost pressures, uneven demand, and global risks cloud the outlook.

In the December 2025 quarter, the proportion of paid employees who were in a permanent role eased slightly, down to 91.0% of all paid workers. This figure was the lowest proportion of permanent workers since the end of 2021.

Context is important here – the vast majority of New Zealand jobs are permanent roles. Since this data has been collected since 2016, over 91.1% of paid employees have been in permanent roles. Despite the fall not being large overall, the slight shift in the employment relationship trend is still notable.

Looking at Chart 1, there appears to have been a general shift towards permanent roles from 2016 to 2020, with quarterly proportions rising from a low of 88.7% in the June 2016 quarter to over 92% in the June 2020 quarter. That spike in 2020 was probably driven by more non-permanent roles being disestablished during the early stages of the COVID-19 pandemic, and so it isn’t fully representatives of overall trends. From that high in mid-2020 until 2022, there was a slight pull-back in permanent roles, reflecting more caution from employers about taking on permanent staff amid the pandemic, before a tight labour market saw the trend shift towards more permanent roles since 2022.

The recent reduction in the proportion of permanent roles was due to an increase in paid employees in casual roles, with this group lifting to 4.92% of all paid employees – the largest proportion of casual employees since the start of 2021, when this group was last above 5.0%.

The casual employees group was at its largest at the start of the series in June 2016, at 5.33%, and casual employees have been closer to 4% of employees in the last few years.

Other groups remain small – fixed term workers are the next largest, at 2.27% at the end of 2025, and averaging 2.32% since 2016, followed by seasonal employees (0.86% at the end of 2025, and 1.00% on average since 2016), then temporary agency employees.

The subtle shift away from permanent roles and towards more casual roles reflects a higher level of uncertainty around hiring from businesses, given the current subdued economic climate.

Casual roles provide more flexibility for both employees and employers – with no guaranteed hours, employers can adjust work levels for casual employees to match workloads, and workers have more flexibility in deciding what work to take on or not.

The slight shift towards casual roles also reinforces other labour market trends that show a level of aversion to commitment from businesses. Jobs growth at the end of 2025 was more focused on part-time rather than full-time work, again suggesting that businesses are hiring, but aren’t fully committed to a permanent full-time role amid a patchy and uncertain economic recovery – and that was before the Iran War.

Although we expect jobs growth to continue in 2026, we also now expect that growth to be more subdued, given even greater uncertainty from geopolitical events. For businesses, not only are they facing higher operating costs, but also possibly slower sales, meaning many firms might be less willing to commit to role that they were previously thinking of filling. In that context, we expect there could be more of a focus away from permanent roles throughout this year.