AHRI research has forecast a positive outlook for job seekers and revealed employers’ pay and redundancy intentions for this quarter.

The majority of Australian employers hope to recruit new staff in the June 2023 quarter, according to a recent report from the Australian HR Institute (AHRI).

Published earlier this month, AHRI’s June 2023 Quarterly Australian Work Outlook is the first in a new research series monitoring the state of the Australian labour market. The report offers a forward view of the work environment facing HR professionals and business leaders, including employers’ pay, recruitment and redundancy intentions.  

As well as providing a snapshot of the labour market, each AHRI Quarterly Australian Work Outlook will explore a topical workplace issue in depth. This report focuses on casual and fixed-term contract workers.

Recruitment trends and challenges

Drawing on responses from over 600 senior HR professionals and decision-makers across Australia, the inaugural report has revealed surprisingly strong short-term employment intentions among organisations of diverse sizes and sectors.

The AHRI Net Employment Intentions Index, which measures the difference between the proportion of employers that expect to increase staff levels and those that expect to decrease staff levels in the June quarter of 2023, is firmly in positive territory (+45). Seven in 10 employers intend to recruit staff in the June quarter, and 46 per cent of organisations plan to increase their overall headcount.

Just one per cent of employers plan to reduce the size of their workforce over the same period, and 16 per cent said they were planning redundancies in the next three months.

“This might be a surprising finding given projections for lower economic growth in 2023 and a pattern of falling job vacancies since mid-2022,” says AHRI’s CEO Sarah McCann-Bartlett. 

“However, job vacancies remain high and it’s possible that the relatively strong employment intentions balance is due to a ‘recruitment catch-up’ – that is, employers are now filling vacancies that they previously struggled to fill.” 

Hiring intentions for the second quarter of 2023 were higher for those in the public sector (82 per cent) compared with private (67 per cent) and not-for-profit (76 per cent) sectors. (See graph below.)

Unsurprisingly, the increased demand for talent has brought with it fresh challenges for employers. Almost half (47 per cent) of employers who are currently hiring report experiencing recruitment difficulties.

The top three roadblocks cited by employers are a lack of suitable candidates, high salary expectations and intense competition from rival organisations. 

Three quarters of employers who are recruiting say they find it challenging to source candidates with the right skills and qualifications. 

“This demonstrates the need for further investment in our nation’s skills and future capabilities,” says McCann-Bartlett. “As the work that we do continues to change, leaders need to help future-proof Australia by making sure we’ve got skilled, resilient talent on board.” 

“It’s possible that the relatively strong employment intentions balance is due to a ‘recruitment catch-up’ – that is, employers are now filling vacancies that they previously struggled to fill.” – Sarah McCann-Bartlett, CEO, AHRI

Wage and redundancy intentions

Interestingly, despite the positive recruitment intentions, the data suggests that there is no substantial upward pressure on wages. On average, employers anticipate a mean basic pay increase (excluding bonuses) of 3.3 per cent within their organisations over the 12 months leading up to April 2024. 

However, the report highlights sector-specific variations, with public sector employers projecting higher pay intentions (4.4 per cent) compared to private (3.2 per cent) and not-for-profit (2.2 per cent) sectors.

“Overall, the data offers mixed signals to employers and policymakers who will be concerned about possible inflationary pressures that strong employment intentions might cause. However, there is no sign of increasing pay inflation in the data,” says McCann-Bartlett.

“It’s also worth noting that one in five employers plan to implement a pay freeze in the next 12 months,” she adds. “While this data paints an interesting picture, it’s important we don’t over-emphasise the results, as almost a third of employers told us they don’t yet know the extent of wage increases over the 12 months to April 2024.”

AHRI also found that 16 per cent of employers are planning redundancies in the June 2023 quarter, the majority of which (29 per cent) are public sector employers. (See graph below.)

The state of casual and fixed-term employment

AHRI’s report suggests that casual employment yields substantial benefits for both employers and individuals. 

The flexibility and potentially higher pay rates associated with this type of employment make it an appealing option for job seekers looking for temporary or part-time work. Almost half of employers who engage casuals do so to manage short-term fluctuations in demand, and 58 per cent of employers pay their casual workers a higher rate, recognising the value of their flexibility and willingness to work on short notice. 

Managing costs is also a substantial motivator for employers who engage casual workers. Three in ten employers say they employ casual employees to provide cost efficiency, 19 per cent say it is to avoid paid entitlements and 18 per cent say that it is to avoid notice of termination or redundancy pay.

The research also suggests that casual employment is not always seen as a temporary or short-term arrangement. Almost a quarter of employers say that the typical length of service of casual employees at their organisation is more than two years. Small employers (2-19 employees) were most likely to report this (38 per cent). 

“Employers are also more likely to perceive casual employees as more engaged than permanent employees,” says McCann-Bartlett. 

Despite being seen as a beneficial addition to the workforce, nearly a fifth of employers do not provide the same training and development opportunities to casual employees as they do to permanent employees. This disparity can hinder the long-term growth and career advancement of casual workers, potentially perpetuating job insecurity and limiting prospects.

Given the recent legislative changes to fixed-term contracts, which will come into effect in December 2023, the survey also asked about the potential impact of new limitations on the engagement of fixed-term employees.

Overall, the new rules have been well-received by employers. Almost half (47 percent) say the rules will have a positive impact on them, compared with a third who say it will have a neutral impact. Eight per cent are unsure of the impacts and 12 per cent predict a negative impact.

As the employment landscape continues to evolve, it is crucial for policymakers and employers to ensure a balanced approach to talent management that addresses recruitment needs, job security and employee development. 

“AHRI’s Quarterly Australian Work Outlook series will empower individuals and organisations with knowledge about the evolving labour market, enabling them to align their aspirations with emerging opportunities,” says McCann-Bartlett. “This is a new research project for us, so we welcome any feedback from our members or the broader business community.”

You can send feedback to gerwyn.davies@ahri.com.au

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