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Skills shortage will keep labour market tight until 2024

Tech workers are in high demand.

Tech workers are in high demand. Photo: TND

Economic pressures are increasing, but a skills shortage and job mobility will keep many companies on the hunt for workers for the remainder of the year.

Almost half of Australian employers across white-collar industries have plans to hire for vacated positions in the next six months, up from 39 per cent at the start of the year, research from specialised recruiter Robert Half found.

Only 8 per cent are planning to freeze their headcount, and 3 per cent anticipate layoffs.

These findings come as Australian Bureau of Statistics data for June found the national unemployment rate remained at a historic low, while February data found job mobility remained at a decade-high for the second year in a row.

Next stage of post-pandemic recovery

Nicole Gorton, Robert Half director, told The New Daily that the upswing in hiring projections comes as organisations attempt to ‘rightsize’ after downsizing early in the pandemic.

“Many companies, over the course of 2020 and 2021… they downsized their number of employees, and they had very, very lean teams to execute on their workload,” she said.

“They also shelved all of their projects … because they didn’t want to have that expenditure attached to technology, or attached to product launch, or attached to geographical expansion.

“As business confidence re-emerged last year, actually what started to happen then was … an artificial high of so many companies hiring … to get, not only back to the headcount that they had prior, but also to make sure that they had enough people to execute the project work and everything else that they’d have to put back in the business.”

Fiona Macdonald, industrial and social policy director at the Australia Institute’s Centre for Future Work, said employers waited as long as possible to fill roles.

This led to more pressure on those already employed to cover the gap which, along with increasing cases of work encroaching on private life, has left Australian employees among the most stressed workers in the world.

“Given the fact that employers haven’t been hiring for quite a while, I think they’ve possibly reached the limit of their ability not to hire,” Dr MacDonald said.

“It’s not possible to keep pushing the current workforce any harder, and vacancies need to be filled.”

Open borders go both ways

The “crazy” hiring frenzy has calmed down over the past year, but Australia is still suffering from a “severe” talent and skills deficit, Ms Gorton said.

There were expectations that these gaps would be filled when the borders opened after pandemic restrictions ended and international workers would be able to enter the local jobs market.

But Ms Gorton said many failed to take into account that open borders would allow Australians and foreign nationals to leave the country and work overseas as well.

Companies across various industries are particularly in need of employees well-versed in areas such as cybersecurity, cloud migration, artificial intelligence, and accounting, she said.

“The rampant hiring is definitely starting to ease, but the demand for specialised talent still remains,” she said.

“The demand is far outweighing supply … partly [because] we’re definitely skill-short – therefore, talent-short – in that area.”

But companies have found a workaround the talent and skill shortages in the form of contractors, particularly for specialist IT-related roles.

“Also, some of [the projects] are contract-related anyway, so once the project is complete, then these contractors can move on to other companies,” Ms Gorton said.

Wage growth slowing

While job candidates were able to command a premium for a while as employers were desperate to fill gaps, advertised wage growth has also slowed down as the market has calmed.

Seek data shows advertised salaries grew by 4.5 per cent in the 12 months to June.

While this growth was strong, it represented a quarterly growth of 0.8 per cent, compared to a faster-paced quarterly growth of 1.2 per cent recorded in July 2022.

“This is still very solid growth, but we’re now seeing a clear moderation, reflecting the slight cooling in the job market,” Seek senior economist Matt Cowgill said.

“July’s data is likely to bring a bump in advertised salaries, with rises to the national minimum wage and award minimum wages coming into effect from the start of the month.”

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