Despite pay rates relatively competitive with other industries, farmers are finding it harder to recruit workers. Phil Edmonds reports.
With the unemployment rate officially at its lowest level since mid-2008 and fewer youth ‘unemployed and not in education’, economists are predicting wage inflation to re-emerge over the next 12 months. Do farm owners need to prepare to pay higher wages, given the already tough challenges of attracting people into farm work?
The increasingly scarce pool of ready, willing and able farm workers is nothing new to the primary sector and has been well-signposted in farmer surveys over the past 12 months.
The most recent Federated Farmers confidence survey showed farmers were continuing to have more difficulty in recruiting skilled and motivated staff with the gap between those finding it more difficult and those who had found it easier widening.
The survey found almost 40% of respondents believed it was becoming harder to recruit, with the tight labour market believed to be central to the difficulties.
The issue of pay was not considered in the confidence survey but the findings in the Federated Famers 2018 Remuneration Report on farming salaries showed pay across all positions had increased over the previous year – suggesting farm owners have already been actively incentivising potential workers with more money.
Entry level positions – dairy assistant and sheep and beef farmhand – saw 2.8% and 1.7% increases in pay to $42,114 and $43,118 respectively. The report found more significant pay increases for dairy herd managers and farm managers (+5.5%).
With farm owners finding it increasingly difficult to attract employees, are these proportional remuneration increases to date good enough?
NZ Farm Management’s recruitment and HR manager Julie Carruthers thinks pay isn’t the key motivator.
“Lifestyle is still a big factor, particularly for families and those who have grown up on farms.”
With reference to the challenges in finding staff, Carruthers says “To be honest I don’t think it is about pay. It is more about the terms and conditions of working. Farm assistants are generally younger. On a dairy farm they come into a seven-day-a-week job, go through a calving and a mating, and all of sudden they’re unable to live the social life their friends are living. Pay won’t fix that, and even if you did dangle more, they still want a balanced lifestyle.”
Making comparisons between entry-level farm roles and those in other sectors is one way for those considering farm work to determine whether it is adequately rewarded.
The farming salaries report found a dairy assistant worked an average 46 hours per week for an average hourly rate of $18.40. The equivalent entry level worker on a sheep and beef farm worked an average 39 hours a week for $20.70 per hour.
These hourly rates compare favourably with the minimum wage -$16.50.
The Ministry for Business Innovation and Employment Occupational Outlook, designed for those looking at career options, suggests farm work will be in demand in the next few years, particularly as older workers retire. However, “wages for entry-level workers are low”. It says the annual income for farm workers is estimated to be about $47,000 (consistent with findings in the Federated Farmers report). Nevertheless, it would appear the pay level is competitive enough with jobs most often considered as alternatives.
Low retention rates
One indication of dissatisfaction with pay is the lower-than-average retention rate in farm work. Ministry for Primary Industries data shows 48% of dairy workers have been in the same job after one year compared with 56% across all jobs. The retention differential is similar after three years (29% in dairy compared with the NZ average of 34%).
Are people leaving farming because of low pay? Not necessarily, if MPI’s available data on where those ex-farm workers move to is considered a reasonable measure. MPI director food and regulatory policy Ruth Shinoda says “we don’t have any data about why people are leaving the dairy industry but in terms of where they are going, our data shows new entrant dairy workers tend to leave in the first three years and move into the construction, accommodation and food services and retail trade sector.”
Looking at remuneration in those sectors, retail and accommodation pays less than farm work. The MBIE Occupational Outlook shows average salaries for retail assistants is $34,500. Accommodation and food services work pays about $18.00 per hour (although average annual salaries are $20,400 given the part time nature of the work). Construction however pays more ($51,000).
Beyond those occupations, general labouring, entry-level trade work and driving are jobs farm owners and rural HR consultants believe young people are looking at when weighing up farm work as an option. Driving pays slightly better on average than farm work ($49,200).
Is farming remuneration skills-based enough?
A further aspect young people take into account when considering specific fields of employment is the potential for remuneration to escalate with the accumulation of skills, and time-related experience.
Messages from the education sector are also increasingly focused on the need for people to continuously accumulate transferrable skills and be multi-skilled to meet the requirements of the changing labour market.
Julie Carruthers plays down the influence of skills accumulation as important in the minds of young people considering farm work.
“I don’t think skills are a major factor for farm workers compared to others who want to develop skills to take to another job or industry. Farm assistants aren’t necessarily looking that broad. For career-changer contract milkers for example, it is probably more the other way around – it’s about what skills can they bring to the job.”
The findings in the Federated Farmers Remuneration Survey shows a ‘middle management’ position of herd manager or head shepherd is paid better ($59,096 and $50,966 respectively) than entry level roles, and farm managers earn more again ($69,259 for dairy and $64,916 for sheep and beef). For many, these are ‘end of the road’ industry positions.
For sheep and beef farm work, remuneration has a flatter structure across the recognised positions. The pay increase between general hand and head shepherd is 18% while the average pay for a dairy herd manager is 31% higher than for a farm assistant.
Prospects for farm work
Job seekers are also likely to consider future employment prospects within a sector. This is not an area where the primary sector has an advantage. MBIE regularly updates its short and long-term employment forecasts and in 2018 it expected construction, transport, general manufacturing and the utilities sector to have the highest demand for workers across a wide range – from professionals, technicians, trade workers to labourers.
At the same time the employment forecasts singled out several occupations with broad skills to go into decline by 2020, and this group includes farm managers.
Generally, forecasts out to 2026 have identified agriculture and primary production to see the weakest employment growth prospects – well below average employment growth across the sectors. The MBIE Occupational Outlook says farm worker employment is projected to increase a little to 2021 and decline slightly until 2026.
MPI’s Ruth Shinoda says the ministry can’t confirm negative growth in job opportunities is a factor in dissuading potential workers from considering farm work as a career, but says “In our report ‘Human capability in the primary industries’, the analysis shows that from 2002 to 2015, the number of dairy workers in dairy production roles has stayed relatively the same year-on-year, which suggests workers aren’t being dissuaded from choosing a career in the dairy industry.”
Accommodation more of a deal breaker than pay
Farm work pay has historically lacked transparency, with most farm workers having their accommodation provided, and in some cases other benefits (power, phone, use of vehicle for private use, milk, meat etc).
But with rising housing costs, the benefits of accommodation are increasingly undervalued.
Carruthers says the question she gets asked most often beyond the pay is about accommodation.
“When people are considering their options, that is right up the top. If you are going to get good quality accommodation out of the job, then pay is less likely to be the key factor.”
Waikato dairy farmer and employer Bryce Anderton agrees.
“Providing high quality housing is absolutely crucial for staff retention, especially for staff with families. In many instances this is a real make or break situation. If the family is happy in a modern, warm, dry house, generally things run a lot smoother for all concerned.”
Many farmers charge a nominal rent for accommodation as part of a remuneration package but it isn’t likely to be anything like the market rent. The Tenancy Services NZ website shows the average weekly rent for a three-bedroom house in Matamata is $390, in Ashburton $350 and Gore $260. This respectively translates to $19,240, $18,200 and $13,520 per year.
Until recently, accommodation for farm workers has to some extent been taken for granted and not considered a significant financial benefit. The standard of the accommodation has probably been a factor here with some farm owners not necessarily feeling a need to meet standards that would be required if rented on the market.
Some primary sector organisations are pushing for farm workers to be charged and paid for accommodation based on market rents. Federated Farmers dairy chair Chris Lewis says this would make pay more transparent and more attractive. “What sounds better to a prospective employee – earning $45,000 for example, or earning $57,000?”
Not all about pay; still about stigma, working conditions
Lewis says there is now a lot of great work being undertaken by NZ Young Farmers, MPI and DairyNZ to make farm work more attractive and add transparency to pay. But there is still a stigma attached to farm work.
“All employers are tough – everyone wants you to work hard for your dollar, it doesn’t matter which industry you are. But farming has traditionally been a tough industry. And the perception out there is that it still is tough work, with tough bosses, long hours and little time off. So as a farming community we have to make tweaks, and tell a good story, because it is very competitive out there.”
Anderton says you have to ensure good staff are adequately rewarded, which means they are financially remunerated at a level competitive with other industries.
“There have been large increases in wages particularly in the last 10 years on dairy farms. It has become increasingly important to attract and keep talented staff and farmers are definitely paying more to retain them.
“But getting the work/life balance right for your staff is just as important because many employers forget that staff have lives too. So whether it be hobbies, sports, or family time, employers need to be flexible where possible to allow staff to pursue activities off the farm without sacrificing overall farm performance.”
SALARY AND JOB PROSPECT COMPARISONS
Job prospects are reasonably good. Older workers are retiring so employment is expected to be steady in the next few years. However, wages for entry-level workers are low. Estimated average income: $47,000.
Job prospects good. Road freight movement accounts for 80% of all freight moved within New Zealand, and demand is increasing for experienced heavy vehicle drivers. The average age of drivers has increased in recent years meaning more opportunities for new drivers. Estimated average income: $49,200.
Reasonably good job prospects particularly in Auckland with growing building activity. Other regions still have many opportunities. Estimated average income: $45,200.
Increasing demand for construction workers in Auckland due to increasing building activity to support the city’s active housing market and large civil construction projects. Estimated average income: $51,000.
Source: MBIE estimates, StatsNZ Census.
- Phil Edmonds is a freelance journalist.