It depends on where you measure the magnetic field. From Ampere's law we know that the magnetic field only depends on the total current enclosed by a closed loop. If you measure the magnetic field outside the plasma column, then no the magnetic field won't increase as the pinch contracts. However, if you measure the field somewhere inside the pinch (and assuming a uniform current density) then yes the field will increase.
There are also other factors that affect the strength of the magnetic field. Z-pinches can be short lived experiments which never truly reach a steady-state. Here you have consider the pinch as a part of a RLC circuit. The total current flowing through the pinch will depend on the resistance, capacitance, and inductance of the circuit.
Finally, Z-pinches are notoriously unstable. The instabilities lead to large scale 3-D distortions of plasma column. These distortions also effect the magnetic field.