Internal promotions, hiring freezes and prioritising cybersecurity skills are among the eight key hiring trends that are set to shape the talent market in 2023.

As employers continue to face ongoing skills shortages and a looming recession, the recruitment landscape in 2023 will be shaped by cost-cutting and upskilling measures to help businesses weather the storm. 

Here are eight recruitment trends that HR should keep an eye out for in the new year.

1. ‘Rightsizing’ versus downsizing

Talks of a potential recession have hit Australia’s shores, with growing employer concerns about the rate of hiring and turnover. Multinational corporations with offices in Australia will likely rein back their hiring plans and implement tentative hiring freezes, taking the lead from their UK/US headquarters. 

At the same time, local businesses will focus on maintaining headcount and filling vacant roles rather than adding new positions. Companies that added permanent headcount in 2022, with some having over-hired or ‘panic hired’ during a time when business confidence and growth initiatives accelerated, are restructuring and focusing on optimising the team headcount and managing workloads. 

Next year will likely see companies focus on efficiency and improving the productivity of existing employees.

2. Increased use of contract talent

With more caution in the market, companies are less inclined to commit to permanent headcount, and want the flexibility to scale their workforce up and down as required. 

As a result, 2023 will see employers increasingly engage contract talent to secure specialised skills immediately, with the flexibility to keep staff on for longer if required. 

Contracting is already a common hiring strategy, with Robert Half’s June 2022 research of 300 hiring managers, CFOs and CIOs finding that almost seven in ten (68 per cent) companies in Australia are working with contract staff. This number is expected to grow going into 2023.

3. Salary to drive candidate decisions

Pay remains a crucial factor at a time when candidates have substantial power to negotiate their salary. However, candidates need to be realistic around salary expectations. Business leaders are making every hire count, and the big money will only go to candidates with a wealth of experience and knowledge.

As cost-of-living pressures escalate, candidates will continue to follow the dollar sign to stay ahead of inflation. Even though the employment market is set to ease and some starting salaries are set to stabilise, ongoing skills shortages in specialised areas will continue to give jobseekers with in-demand skills and experience the bargaining power to demand a higher salary. 

Regular salary benchmarking remains critical for employers to ensure they offer salaries in line with current market rates.

4. Demands for workplace flexibility despite in-office employer requests

With lockdowns now becoming a thing of the past, more employers will request that employees increase their number of in-office days in 2023. 

However, many candidates and employees will not consider a role that involves working in the office full-time, and will expect a high level of workplace flexibility. This will put those employers in a challenging situation when it comes to attracting and retaining staff. 

The hyper-focus on work-life balance means employees will continue to expect flexible working arrangements. Companies that want employees back in the office need to strike a balance between in-person office days to build corporate culture and collaboration opportunities, while sustaining flexibility to uphold work-life balance and employee morale.

5. Values-driven jobs selection 

Candidates are taking a more values-driven approach to their career choices, especially Gen Z, tending only to consider organisations whose values align with their own. 

When evaluating job opportunities, candidates are asking questions about a company’s ethical behaviour, corporate citizenship and diversity, equity and inclusion (DEI) and environment and social governance (ESG) policies. 

Among everything being thrown at candidates as selling points for a business, DEI and ESG have become increasingly important for professionals. More companies are showcasing DEI and ESG in their recruitment processes, and actively building pipelines for diverse workforces.

6. Economic uncertainty will mean candidates prioritise job security

Concerns of a possible recession are making employees more hesitant to change roles, contributing to the further tightening of Australia’s talent pool. 

When looking for a new role, candidates are often focused on job security to be sure they won’t be first out the door if the market continues to soften. Talking about the company’s performance, growth plans, current market situation and onboarding process in the interview can go a long way in creating a sense of job security, as well as showcasing how the business will support new recruits and existing employees.

7. Internal promotions will take priority to fill vacant roles

With ongoing skills shortages and companies being reluctant to add extra employees to their teams, business leaders will increasingly look inward to identify and train in-house talent to step into more senior roles. 

Promoting existing staff is also a cost-effective and efficient way to retain company knowledge and employees.

Read HRM’s article on how to avoid a rejected internal candidate from becoming a flight risk.

8. Cybersecurity skills become a top priority

The recent high-profile cyber-attacks have put the spotlight on companies’ security policies and programs yet again. 

The booming demand for cybersecurity talent – both on a permanent and contract basis – will collide with a deep talent deficit in 2023, putting pressure on employers to further increase starting salary offers and, in some cases, offer premiums to starting salaries to fill crucial roles.

Read HRM’s guide about employers’ legal obligations when storing employee data.

The state of talent in 2o23

Despite fears of recession and global political uncertainties stirring hesitation in the marketplace, the jobs market is expected to remain buoyant with companies primarily focused on filling vacant roles, boosting performance of existing employees and upskilling their staff – rather than adding expanding teams.

Though companies are taking a conservative hiring approach, many continue to make extra strategic hires for business-critical positions. Business strategies for 2023, which include implementing digital transformation and cyber-security initiatives, staying abreast of regulatory reform, and an increased cost-focused approach in the finance sector, are driving ongoing demand for specialised staff in the finance and technology sectors.

More broadly, candidates with in-demand skills continue to be in control of the job market, forcing employers to finesse and adapt their attraction and retention strategies to differentiate themselves from competitors.

What are some of the key hiring trends that your organisation is experiencing? Let us know in the comment section.

Andrew Brushfield is a Director at Robert Half Australia.