HR in New Zealand

New Zealand shares close ties with Australia, yet while there has been strong economic cooperation and historical bonds forged in international affairs, the two countries have quite distinct histories and experiences. HR practice in New Zealand has been characterised by innovation, experimentation, collaboration and strong networks. The nation has been described as the business laboratory of the South Pacific.

However, there are several major challenges to overcome. Chief among these is the 'brain drain' out of New Zealand. While increased trade with China and the rest of Asia continues to boost New Zealand's already strong economy, there are clouds on the horizon in the form of a sizeable talent shortage. The pressure to recruit better and faster has never been more acute.

With a population of four million, New Zealand suffers from much of its talent moving to Europe, Australia or elsewhere in Asia in search of greater opportunities and higher salaries.

Economic growth through innovation and productivity is the key if New Zealand is to remain an attractive place for its native workers, and indeed to lure overseas workers to its shores. A well-educated, skilled and adaptable workforce will play a crucial role in sustaining current economic growth rates. The New Zealand government is anticipating that these skills and talents will contribute to growth by increasing productivity and participation in paid work. Better skills will also increase the likelihood of employment and support higher labour utilisation, and make it easier for organisations to adopt the latest technologies which enable them to compete internationally.

The main challenges for New Zealand's HR professionals have been identified by the Human Resources Institute of New Zealand as:
· achieving growth in a highly competitive marketplace
· value chain analysis of employee motivation, customer satisfaction, product to market processes and distribution and service channels
· evaluation of the strength and relative quality of internal processes
Further shifts in New Zealand's labour market will be characterised by:
· a readiness to challenge accepted wisdom
· a shift from a labour economy to a knowledge economy
· less people in big organisations and more people in small organisations
· a casualisation of the labour market as individuals begin to manage their personal brand value
· the challenge of maintaining a coherent organisational brand in terms of employer value propositions while catering for the emergence of personal branding amongst educated, talented and marketable people - this reflects a fundamental shift in the power from the employer to the employee/contractor, particularly in high-demand, strategically imperative capability areas

NZ at a glance

Talent challenges
· Workforce skill building: New Zealand organisations are under constant pressure to improve productivity and enhance competitiveness by producing value-added and differentiated goods and services. New Zealand managers are increasingly required to take an international focus, benchmark themselves against global competitors and become more responsive to the requirements of international markets.

· Education: Research by the OECD suggests that reducing the inequality in educational achievement in schools (by improving outcomes for low achievers) can have significant economic and social payoffs. According to the International Adult Literacy Survey, around 49% of New Zealanders aged 16-65 have weak literacy skills, slightly worse than the OECD median.

· Supplying advanced skills: Although New Zealanders are entering and graduating from tertiary education at a growing rate and have a high rate of tertiary participation by international standards, the small population base makes it difficult to offer some types of education and training at tertiary level. It is likely that immigration and return migration will play a large part in developing the specialist and technical skill base in some niches of the New Zealand labour market.

Solutions
· ACE Training, Microsoft New Zealand and a number of key technology providers recently announced their commitment to overcoming New Zealand's ICT skills shortage by offering a New Zealand Qualifications Authority-approved level-five Diploma in Computer Technology for business graduates and people with business experience. The industry is also extending this qualification to provide graduates of the course with an internship at the end of the course.

· A survey by global recruitment firm Robert Half International found that New Zealand employers are leading the way in incentive-based pay for finance professionals. In the survey of more than 2,500 finance professionals across 13 countries, New Zealand came out on top (alongside Ireland) with 55% of employees receiving a bonus.

· In 2004, changes were made to the skilled migrant policy in order to attract employable immigrants to the country. Skilled and talented potential migrants now have a greater chance of their skills being recognised as a result of these enhancements to the Skilled Migrant category.

Employment laws
· Hours of work: There are no standard working hours in New Zealand. Traditionally, the working week has been 40 hours, commencing at 8.30am and finishing at 5pm, Monday to Friday, with a half-hour break for lunch. However, since the Employment Contracts Act took effect, employers and employees have been free to set the length of their working week and their start and finish times.

· Overtime: Overtime is traditionally paid at a rate of 'time and a half', although in many industries it has effectively been abolished, as employers have agreed with employees (or have insisted) that they take time off in lieu of overtime.

· Annual leave/sick leave: The Holidays Act 2003 guarantees workers not less than three weeks annual leave per year, but this will increase to four weeks from 1 April 2007. Special leave has changed from five days per annum to five days sick leave, three days bereavement leave per death of an immediate family member, plus one day of leave for certain other bereavements.

· Discrimination: Under the Human Rights Act 1993, a number of grounds of discrimination are outlawed. They include sex, martial status, religious belief, race, disability, political opinion, age (over the age of 16), family status and sexual orientation. It is unlawful to discriminate in employment, including advertising and recruitment and in the provision of goods and services (amongst other things) on any of these grounds. However in employment, there are certain exceptions such as where being of a particular sex or age is a genuine requirement of the position. There are also detailed provisions in the Human Rights Act dealing with sexual and racial harassment.

· Parental leave: Parental leave includes the following types of unpaid leave (some of which can be shared with your spouse/partner if they are also eligible):

· Maternity leave of 14 continuous weeks may start up to six weeks before the expected date of birth or adoption.

· Special leave of up to 10 days can be taken by a mother before maternity leave for reasons connected with pregnancy.

· Partner's/paternity leave (where the spouse/partner is an employee) is either one week (for a spouse/partner with six months eligible service) or two weeks (for a spouse/partner with 12 months eligible service). Partner's/paternity leave can be extended in certain circumstances, if parental leave payments are transferred from a mother to an eligible spouse/partner. Partner's/paternity leave is additional to the period of maternity and extended leave.

· Extended leave of up to 52 weeks is available for employees with 12 months eligible service. It can be up to 52 continuous weeks, less any maternity leave taken, and is available in the 12 months after birth, or date the employee assumes the care of a child they intend to adopt. Extended leave may be shared by both eligible parents, but the total leave taken must not be more than 52 weeks (including maternity leave and paid parental leave). However, the one- or two-week partner's/paternity leave entitlement is additional to this 52 week period. Both spouses/partners can take their leave at the same time or they can take it one after the other.

· Paid parental leave of up to 14 weeks is available to female employees who give birth to a child, or to either parent where a couple has assumed the care of a child under six they intend to jointly adopt. This paid leave must be taken at the same time as any unpaid leave you take. The maximum level of payment is currently NZ$372.12 per week (before tax). Employees are entitled to either their gross weekly rate of pay (pay before tax) or $372.12, whichever is lower.

Tax and contributions
Income tax rates for individuals (NZ$)

Annual income Tax rate
$0-38,000 19.5%
$38,001-60,000 33%
Over $60,000 39%
No declaration form (IR330) 49%

Corporate tax
Companies pay income tax at 33% on profits. Tax rates for individuals operating as a business (eg individuals who are self-employed) are the same as for employees.

Social security
New Zealand nationals, permanent residents and foreign workers temporarily employed in New Zealand are covered by social security, without the need to make social security contributions.

However, employees and the self-employed must contribute to the Accident Compensation Corporation (ACC) scheme, which provides compensation in the event of an accident, either at work or elsewhere. ACC contributions are deducted from salaries usually via the pay-as-you-earn (PAYE) system at the rate of NZ$1.20 per $100 of liable earnings up to an earnings limit of NZ$85,795.

Minimum wage
Workers earning the minimum wage will receive a 9.8% pay rise from April 2007. The minimum wage, which applies to people 18 years and over, will increase from NZ$10.25 to NZ$11.25 an hour (NZ$450 for a 40-hour week).

The youth minimum rate, for workers aged 16 and 17 years, will increase from NZ$8.20 an hour to NZ$9.00 an hour, to stay at 80% of the adult minimum wage.

Case study: HR at Shell New Zealand
With 250 employees, Shell New Zealand is the second largest oil company in the country, and is a Women's Choice employer that has initiated several employee-friendly HR practices.

· Promoting a healthy work-life balance
Some of the actions taken at Shell include:
- workshops to establish suitable work patterns
- leaders emphasising individual choices in work-life balance
- advocating video or teleconferences to reduce travel
- organising midweek meetings to avoid weekend travel
- promoting an e-mail code of conduct to improve efficiency
- standardising the recognition of unavoidable overtime work

· Training and development
Employees at all levels of the business have access to personal development and training opportunities, which help to enhance their skills and ensure they are better equipped to compete for employment opportunities in the future. A range of leadership training programs are offered as well as functional (eg technical, commercial, etc) and personal skills training programs for suitable candidates. All employees work with their managers to establish an annual development program. Women are encouraged to participate in all training and development opportunities, including a range of leadership programs.

· Rewards & recognition
Shell operates a consistent people management system globally, covering all aspects from recruitment, staff progression and leadership development, to performance management and reward. Policies and processes on remuneration are constructed to deliver pay based on performance and are gender-neutral. Shell has also ensured its global performance review system considers diversity and inclusiveness when offering staff rewards and recognition.

Facts and trivia
· The New Zealand government is campaigning to have expatriates return home by offering them tax incentives.
· Major industries: Food processing, wood and paper products, wool, textiles, dairy products, iron and steel, machinery, transportation equipment, banking and insurance, tourism, mining.
· By law, you can work to any age you want to in New Zealand. If a resident lives in New Zealand continuously for at least 10 years, five of them after the age of 50, they are entitled to state superannuation at the age of 65. This is currently worth NZ$249 per week after tax for singles or $383 per week after tax for married couples.

Sources:
www.gif.med.govt.nz/aboutgif/skills.asp
www.microsoft.com/nz/presscentre
www.hrmguide.net/nzealand
www.workingin-newzealand.com