Add Category
Employment intentions are at their lowest levels in at least a year, but businesses are not yet planning mass lay-offs and are expecting to pay workers more in a bid to retain the staff they do have.
The findings come from a survey of more than 600 human resources professionals from the Australian HR Institute (AHRI), representing a mix of small, medium and large employers, from both the private and public sectors.
The report has only been running for a year, with the latest March quarter survey taken between January 9 and 18.
It found net employment intentions have fallen from +41 in the December 2023 quarter to +33 in the March 2024 quarter.
This figure measures the difference between the proportion of employers that expect to increase staff levels and those expecting to decrease overall headcount.
It indicates overall employment is expected to rise over the coming months, but not by as much as it had been.
The number is based on 36 per cent of organisations planning to increase their staff levels in the March 2024 quarter, with just 3 per cent planning to cut the overall size of their workforce.
"This is the lowest figure for net employment intentions recorded by our four Work Outlook surveys published to date," observed Sarah McCann-Bartlett, AHRI's CEO.
Economists at the Commonwealth Bank estimate that Australia currently needs to generate about 33,000 additional jobs every month to keep up with the rapid growth in the working-age population.
Fewer employers contemplating redundancies
However, while few employers are planning to reduce their overall headcounts, that does not mean that workers are immune from lay-offs.
More than one in five HR professionals surveyed expected to implement redundancies, although this was down from nearly a third in the run-up to Christmas.
"This may be because the labour market remains tight by historical standards," noted Ms McCann-Bartlett.
"It may also be partly explained by the extent to which Australian employers are adopting alternatives to redundancies.
"This could be because they wish to preserve the skills and knowledge of the existing workforce, or because they are waiting for further information about the Australian economic outlook."
For now at least, 70 per cent of employers reported adopting tactics to avoid or reduce redundancies, such as raising prices (27 per cent), exercising greater control over non-staff operation costs (23 per cent) and reducing the use of non-permanent staff in their organisation (21 per cent).
Among those employers that are planning redundancies, the job losses threaten to be fairly significant — an average of 6 per cent of their workforce.
Wages set to rise as employers seek to retain staff
Even though fewer employers are experiencing recruitment difficulties (38 per cent, down from 48 per cent in December), the institute sees recruitment activity as now being more about replacing staff than adding to the workforce.
Despite this, the drive to retain existing workers appears strong, with many employers seemingly burnt by the experience of acute labour shortages during the pandemic.
"A lack of quality in the labour supply and the high training and recruitment costs associated with replacing staff may still be putting upward pressure on wages in many Australian workplaces," Ms McCann-Bartlett suggested.
"The mean basic pay increase in organisations (excluding bonuses) is expected to be 3.7 per cent in the 12 months to January 2025, significantly up from 2.6 per cent in the 12 months to October 2024.
However, more than a third of employers surveyed said that they did not yet know the extent of wage changes in their organisation for the 12 months to January 2025.
For young people starting out, the survey sheds some light on what HR staff are looking for during recruitment.
The top three skills or attributes desired are communication skills (38 per cent), teamwork ability (36 per cent) and work ethic (36 per cent).
That is if a human ever looks at your application, with more than half of employers using artificial intelligence to filter applications in some way.
HR professionals are most likely to use AI to create online application forms (56 per cent), review CVs (54 per cent), source (53 per cent), and screen candidates (53 per cent).
Certain groups screened out by many employers
Whether by humans or AI, the survey also reveals the high barriers some jobseekers face in searching for work.
Nearly two-thirds of employers actively excluded candidates with certain characteristics during the hiring process.
The most likely to be excluded were people with a criminal record (33 per cent), those with a history of drug or alcohol problems (29 per cent), people with a history of long-term sickness (19 per cent) or mental illness (18 per cent) and the long-term unemployed (16 per cent).
Close to one in seven employers also reported screening out people who identify as neurodiverse or having a disability during recruitment.
The report noted this "represents a loss of potential labour, especially given employers' persistent claims that labour shortages have been one of their biggest challenges".