Public Service Sees Decrease in Workforce and Contractor Spending

“We knew that the recent increase in the number of back-office public service roles was unaffordable and needed to be reined in,” commented Public Service Minister Nicola Willis.

Recent data released by the Public Service Commission indicates a reduction in both the size of the Public Service workforce and spending on contractors and consultants in New Zealand.

According to the latest figures for the quarter from 31 December 2023 to 31 March 2024, there has been a decrease of 0.6 per cent in Full-Time Equivalents (FTEs), amounting to 416 fewer roles. This decline suggests that the workforce size peaked in December.

"We knew that the recent increase in the number of back-office public service roles was unaffordable and needed to be reined in," commented Public Service Minister Nicola Willis.

Despite a small net increase of 3.4 per cent in FTEs since June 2023, bringing the total to 65,283 FTEs by March 2024, Minister Willis expects the impact of Budget 2024 decisions to lead to further decreases in the workforce size in the coming months and into the next financial year.

"Our ongoing savings and efficiency drive will continue to put downward pressure on the size of the workforce," Willis added, acknowledging the tough decisions involved in reducing public spending.

The data also reveals a significant reduction in spending on contractors and consultants, with the expenditure representing the lowest share of total workforce spend since records began in 2018. It decreased from 13.1 per cent in 2022/23 to 8.5 per cent in the nine months to March 2024, totaling $700.5 million. This figure includes $249.8 million in capital expenditure and $450.7 million in operating expenditure, marking a 34 per cent decrease on an annualized basis.

"I am anticipating a further decrease in the annual spend by the end of this financial year. The Government's expectation is for this decrease to continue," Willis affirmed.

These developments underscore the Government's commitment to fiscal responsibility and efficiency within the Public Service, aiming to align expenditures with sustainable budgetary goals while optimizing operational effectiveness.