Recruitment activity to remain robust in 2nd half of 2023

The labour market remains very tight after job advertising headed back towards record levels in April, with employers still facing steep skills shortages. This amplifies the need for employees to look internally to their existing workforce and invest in learning and development to train up skilled staff.

We have seen solid growth in recruitment activity over the past 12 months, and we expect that momentum to continue over the remainder of the year, with the labour marketing remaining exceptionally tight as the Australian economy continues to grow despite higher interest rates. Job advertisements jumped 3.6 per cent or 10,100 job advertisements in April 2023 to stand at 294,500, according to the federal government’s Internet Vacancy Index. That is 0.7 per cent higher than a year ago.

Data from the Australian Bureau of Statistics show the unemployment rate was steady at 3.5 per cent in March 2023. Full-time employment rose by 72,200 to a record high of 9.8 million people, while the total number of people employed also hit an all-time high of 13.9 million. These levels are well up from around 11 million people working in 2021 when there were 7.1 million people working full-time and 4 million people working part-time in the week before the 2021 census. So we are seeing strong growth in the Australian workforce, which is putting pressure on the supply of skilled labour available to meet employers’ recruitment needs.

Employers are seeing job advertising at near-record levels across the mining, healthcare and education sectors. This is in sharp contrast to the mass lay-offs were are seeing in the US. Already this year, Meta has announced jobs cuts for 10,000 people this year, the second wave of mass lay-offs due to what it calls a difficult US economy. Google parent Alphabet in January said it planned to eliminate roughly 12,000 jobs, making it the company’s largest-ever round of lay-offs. Amazon.com in March said it would cut 9,000 corporate jobs, after announcing lay-offs of over 18,000 mostly corporate workers in January. The downsizing has now extended beyond the technology sector to other parts of the economy, including retailers, manufacturers, media companies and the financial sector, which have all announced job cuts.

Australia’s job market is stronger. The unemployment rate has remained around 3.5 per cent. The last time the unemployment rate was this low was in 1974. In recent times, Australians, particularly women, have found it easier to get a job and work the hours they want to work. Women are developing skills and progressing their careers at a faster pace than ever. That is a very positive social and economic outcome for women. Indeed, all working-age Australians can find work and the hours they want, putting more money in their pockets.

Retaining workers should be a key focus

Importantly, employers need to focus on strategies to maintain their existing workers. Many are paying higher wages to attract and retain staff, and this trend is likely to remain intact in the months to come, given how low the jobless rate is. Employees have gained bargaining power, so if they aren’t happy, they’ll likely begin searching for more rewarding employment if wage demands aren’t met. Many employers, too, can afford to give a decent pay rise to better match inflation, which sits around 7 per cent. If they don’t, they risk losing their most valuable resource, their people.

Apart from paying wages that better match inflation, employers should be implementing strategies to better retain and invest in their staff to overcome skills gaps. A tight labour market amplifies the need for employers to develop skills internally and train existing employees to improve their supply of skilled labour available to their organisations, now and into the future.

Employers may also need to be more strategic about workforce planning to overcome skills gaps. All organisations need to assess what capabilities they have now, whether they can upskill their existing staff and identify and develop new skills or expertise they will need in the future to grow their organisations.

Employers also need to look broader than traditional websites to find skilled staff. A recent federal government report found that employers use a wide range of methods to find workers they need. Advertising on internet job boards is the most common method; almost two-thirds of recruiting employers used this method in 2022. The report also found that nearly one-third of recruiting employers used word of mouth to promote their positions in 2022. Social media was used by 25 per cent of recruiting employers in 2022, with greater use of social media in recent years.

A growing trend in social media recruitment is through region-based or industry-based Facebook “job groups”, which are an inexpensive way for employers to post vacancies and allow interactions between employers and local job seekers, especially for lower-skilled positions. LinkedIn is also popular, especially for more highly skilled positions. Employers will need to use all the methods they can to find skilled staff this year to help maintain their workforces in such a tight labour market.

By Kris Grant, chief executive, ASPL Group