Alan McDonald: EMA Head of Advocacy on the increase in businesses seeking advice about redundancies

A record number of businesses have sought advice about redundancies in the first three months of the year, according to new Employers and Manufacturers Association data.

EMA’s AdviceLine received 403 queries from businesses on the topic of restructuring and redundancies last quarter - almost double that in the same period two years ago (204).

EMA’s head of advocacy and strategy Alan McDonald says this reflects many years of tough economic conditions.

"The last resort play for a lot of businesses when they look at their costs is - well, we're going to have to restructure the number of people. And that's what's happening."

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Episode Transcript

Speaker 1 (00:00):
First though, news just in in the Herald is that
Smith and Coe has just announced it will close for good.
It will close its doors for the final time within
the next ten weeks, by July the thirty first. Now,
this is going to mean a loss of one hundred
jobs and also the end of one hundred and forty
five years of history. Smith and Coey, if you've been
following this, have obviously tried to make it work lately.
They've kept the Queen Street store going. They've tried to

(00:22):
curate the collection there. They closed the New Market store,
but it hasn't worked, and they say, unfortunately the foot
traffic on Queen Street is significantly lower than it was
this time last year. It's very very sad news, Heather
do for see Allen, Right, remember all those businesses telling
themselves they just have to survive till twenty five, Well,
it sounds like they may now be telling themselves they
need to hang on till twenty six. The EMA says

(00:44):
it's received a huge number of queries over four hundred
from businesses in the first three months of the year,
all wandering about restructuring and redundancies. EMA's head of Advocacy,
Alan McDonald, is with me now, Hey Allen, Hey, ever,
what about the news about Smith and Coey Oh.

Speaker 2 (01:00):
That's a real shame. I mean that's been part of
the Auckland landscape for as you say, one hundred and
forty odd years, that's slightly older than the NA Actually yeah,
I mean there's one hundred people losing their jobs.

Speaker 1 (01:10):
That's snuggod case in point exactly what you were talking
about here, which is that businesses just cannot hold on
through this.

Speaker 2 (01:18):
Yeah, it's you know, there's been a lot of good
news and I think you're talking earlier about the export
numbers and things like that, but it's still really really
tough on the ground, and business conferdence is going up.
Some of the indicators are turning, but that's not what's
happening on the ground. We've seen, unfortunately, a record number
of inquiries around restructuring and redundancy in the first quarter.

Speaker 1 (01:39):
What is it? Is it that they Is it that
people had sort of just been too optimistic about how
much of a recovery we would experience, or is it
that basically everything's just banked up and they had expected
to last until this point and then no longer.

Speaker 2 (01:54):
Really? Yeah, I think there's a few things in there,
so I think really it's the combination of what six
or seven years of really tough economic conditions. I mean,
if you go back even pre COVID, you know, the
economy was turning down then then we had COVID. Then
we had supply chain shocks and inflation and high interest
rates and all of those things. And I think the

(02:14):
last resort play for a lot of businesses when they
look at their costs and all that is well, we're
going to have to restructure the number of people. And
that's what's happening. They are at that last chance to
leon if you like, and that's been reflected in some
of those numbers.

Speaker 1 (02:30):
Trouble is, though, allan, isn't there a risk that business
is cut deep? They get rid of the people, they
try to cut down in terms of their size, and
then when the economy starts to recover, they find that
they're replacing those people. Is actually really hard.

Speaker 2 (02:43):
Yeah, we did see that post GFC actually where the
numbers of businesses closing continued to rise actually as the
economy improved, and that was the case, then people would
cut too deep. So really it's about just making sure
that while you're kind of making those adjustments to right
size yourself. You don't leave yourself short of capabilities and
skills and capacity when things do turn. And that's a

(03:05):
very fine balance and that's where organizations like ourselves and
others can help.

Speaker 1 (03:09):
What's on your wish list for tomorrow? You must have something.

Speaker 2 (03:13):
Well, there's been a lot of hints dropped about something
around the accelerated depreciation and I think that would be
really good for a small business economy. The one that
maybe in the frame is just raising that threshold on expenses.
So it's currently in one thousand in Australia, it's twenty thousand.
I don't think we'll go that high, but something that
either one of those areas would be great, even if

(03:34):
it's just a simplication, not a big headline number. Yeah,
that would help with the confidence.

Speaker 1 (03:40):
Good stuff. Hey Allen, always lovely to talk to you.
Thank you very much, Allan McDonald, head of Advocacy Amays.

Speaker 2 (03:45):
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