The previous 12 months presented significant challenges for the New Zealand economy. Looking ahead to 2026, there is reason for cautious optimism, with some signs of recovery and improving economic conditions.
Towards the end of last year, we asked HR professionals what their main considerations were around staffing remuneration and rewards heading into the new year.
The top five trends for consideration in 2026:
Economic and Budget Constraints: 2025 was a challenging year for New Zealand, seeing a 1.1% GDP drop that exceeded GFC levels. While exports and tourism show promising signs of recovery, organisational profitability remains under pressure. Unsurprisingly, navigating economic constraints and tight budgets tops the list for HR professionals heading into 2026.
Market Pressure and Salary Adjustments: Salary trends have been volatile recently, swinging from stagnation to peaks of 6-7%. With market movements dropping significantly in 2025, HR professionals face the challenge of balancing competitive pay with affordability. Since forecasts have consistently exceeded actual spending, this remains the second biggest issue for the year ahead.
Strategic Alignment and Future Workforce Planning: Ranking as the third biggest issue, workforce planning is difficult in this constrained economy. With growth forecasts uncertain, determining the right workforce size is complex. Organisations face a tough choice: run too lean and risk being unprepared for recovery, or stay too large and carry unsustainable costs.
Employee Retention: Despite a slower market, New Zealand is losing skilled talent to Australia while immigration numbers dip. Although there is currently slack in the market, conditions are expected to bounce back quickly. Retaining top talent now is essential to ensure organisations aren’t caught short when skill shortages return.
Balancing Employee Wellbeing and Budget: Balancing employee wellbeing with budget constraints is a critical challenge. HR leaders must ensure that cost-saving measures don’t negatively impact morale or retention. Ultimately, the long-term cost of a disengaged workforce is often higher than the short-term savings gained from strict budgeting.
So how can organisations respond to these key issues in 2026? Download the full whitepaper here to find out.