New Zealand plans to cut 14% of public sector jobs to slash spending

New Zealand’s government will cut nearly 9,000 public sector jobs—14% of the workforce—by mid-2029, Finance Minister Nicola Willis announced on May 19. The move aims to reduce spending by 2.4 billion New Zealand dollars ($1.4 billion) over three years, trimming the public sector workforce to 1% of the country’s 5.3 million population, down from 1.2%. Willis stated the current size was ‘unsustainable, unaffordable, and out of step with international trends,’ though military, teachers, and doctors will be exempt from layoffs. The government plans to shrink the number of departments from 39 to an unspecified lower figure and enforce 2% budget cuts for most agencies in the upcoming May budget. If reelected in November, further 5% annual cuts would follow. Willis also emphasized faster adoption of AI technology across the public sector to improve efficiency. The job cuts will not happen immediately, and Willis did not outline a selection process for affected employees. The National Party, which took power in 2023, blames the previous Labour-led government for expanding public sector jobs from 48,000 to 63,000 after lifting a hiring cap in 2018. Labour’s opposition leader, Chris Hipkins, criticized the plan, warning it would harm front-line services. Most public servants are based in Wellington, where numbers will drop from 63,700 in December 2025 to 55,000. The government argues the reforms are necessary amid sluggish economic growth, with Prime Minister Christopher Luxon framing the changes as a path to fiscal responsibility ahead of the November election. Unions and opposition parties condemned the plan as ‘willful destruction,’ while Willis defended it as a step toward a more efficient public sector. The government also cited ballooning contractor spending under Labour as a reason for the overhaul.