The South Island labour market is entering a period of cautious optimism, characterised by improving recruitment activity, stabilising economic conditions and growing confidence among both employers and candidates. While organisations remain measured in their hiring decisions, there are clear signs that the market is strengthening, with job advertising volumes increasing and several key industries experiencing renewed demand.

Candidate availability has improved across many disciplines compared with the highly constrained market of recent years; however, significant shortages remain for experienced leaders, specialist technical professionals and skilled workers across healthcare, engineering, construction, technology and primary industries. As a result, employers are finding that while attracting applicants may be easier than it was 12–18 months ago, securing top-tier talent continues to require a compelling employee value proposition, efficient recruitment processes and a clear focus on culture, leadership and career development.

The following snapshot provides an overview of current employment trends, labour market conditions and talent challenges across the South Island.

Labour Market Overview

Statistics New Zealand’s latest data shows New Zealand’s unemployment rate at 5.3%, however South Island regions continue to perform comparatively well:

  • Otago: 3.6%
  • Canterbury: 4.4%
  • Tasman, Nelson, Marlborough & West Coast: 4.6%
  • Southland: 5.3%

While economic conditions remain mixed, the South Island labour market is proving resilient, supported by primary industries, infrastructure investment, tourism recovery and export activity.

Hiring Activity

MBIE’s Jobs Online data shows online job advertisements increased by 11.8% nationally in the year to March 2026, signalling growing employer confidence after a softer period during 2024 and 2025.

SEEK’s latest Employment Report indicates job advertising volumes have reached their highest level in more than two years. However, applications per vacancy remain elevated, reflecting a market where candidates are actively exploring opportunities while employers continue to recruit cautiously.

This has created a more balanced market than we have seen in recent years.

Sectors Performing Well

Demand remains strongest across:

  • Healthcare and aged care
  • Engineering and infrastructure
  • Construction and skilled trades
  • Manufacturing and logistics
  • Agribusiness and primary industries
  • Tourism and hospitality
  • Professional services including finance and technology

Canterbury, Otago and Southland continue to benefit from infrastructure projects, tourism activity, strong export markets and ongoing investment across the primary sector.

Areas Experiencing Softer Conditions

Some sectors continue to face more challenging trading conditions, including:

  • Retail
  • Consumer-facing services
  • Parts of hospitality
  • Some education-related roles

These sectors remain impacted by cost-of-living pressures, cautious consumer spending and ongoing cost management initiatives.

Talent Shortages Remain

Despite a larger candidate pool, several critical skill shortages persist across the South Island, including:

  • Senior leadership and executive roles
  • Engineering professionals
  • Healthcare and clinical specialists
  • Teachers and education professionals
  • ICT and cybersecurity specialists
  • Accountants and finance professionals
  • Procurement and supply chain specialists
  • Skilled trades and technical experts

The greatest challenge for employers is not attracting applicants, but securing candidates with the right combination of experience, leadership capability and cultural fit.

What This Means for Employers

The market is currently experiencing a “two-speed” recovery.

Candidate confidence is improving, resulting in more professionals exploring career opportunities. Employer confidence, however, is recovering more gradually, leading to longer approval processes, greater scrutiny around headcount investment and more selective hiring decisions.

For employers, this means:

  • Access to a broader candidate pool than 12–18 months ago.
  • Improved availability of mid-level talent.
  • Continued competition for high-performing leaders and specialist expertise.
  • Greater candidate-focus on culture, leadership, flexibility and purpose.
  • Increasing instances of counteroffers as organisations seek to retain key talent.

Outlook

Looking ahead to the second half of 2026, recruitment activity is expected to strengthen gradually as interest rates ease and business confidence continues to improve.

While candidate availability has improved across many sectors, organisations should not assume the best talent is readily available. The South Island market remains highly competitive for proven leaders and specialist expertise. Employers that move decisively and present a compelling employee value proposition will continue to secure the strongest candidates.

Sources

  • Statistics New Zealand (Household Labour Force Survey)
  • MBIE Jobs Online and Labour Market Statistics
  • SEEK Employment Report
  • BNZ-SEEK Employment Insights
  • Westpac Regional Economic Roundup
  • Hays New Zealand Salary Guide and Skills in Demand Reports