Market Overview
Entering 2023, we have seen shifting market conditions alongside slowing economic growth. The employment market activity has eased with job advertisements returning towards pre-pandemic levels, recording a drop of 15.7% YOY in March (SEEK Employment Report). The number of job applications per job is slowly increasing; however, unemployment continues to hover around the lowest level in 50 years. Hiring top talent is still challenging, with high competition and greater candidate expectations regarding salary and flexibility.
 Salary growth slows down whilst candidate expectations remain high
Businesses advertised significantly higher salary packages last year to attract candidates. This trend is no longer sustainable for organisations impacted by surging prices and the need to cut costs. Recent data shows salaries are up 4.5% YOY, flattening out significantly compared to growth in recent years and lagging behind inflation rates (SEEK Advertised Salary Index).
Candidate salary expectations remain high due to cost-of-living pressures, and they seek a significant salary jump when moving jobs. Businesses that cannot provide competitive salaries and offer low market wages are finding it difficult to source the talent they seek. Drawn-out internal salary negotiations not only slow down the hiring process but runs the risk of companies losing prospective talent altogether.
Today, candidates prioritise monetary and lifestyle needs when considering joining an organisation. Regarding salary, less competitive companies can promote additional benefits that support a more outstanding work-life balance to attract candidates. Sought-after benefits include high flexibility, well-being initiatives, learning and development opportunities, and other financially valuable benefits, such as product discounts and memberships.
Finding the balance between building social connections & offering flexibility
Flexible work models have been an ongoing debate over the past few years. As we settle into 2023, most organisations have now set their policies on work arrangements. A recent Victorian Chamber of Commerce and Industry report showed that most Melbourne-based businesses had requested employees to return at least three days per week (52%), followed by two days per week (24%). To help get teams back, employers offer various incentives such as team lunches and after-work drinks to encourage people to join and build social connections.
In many industries, the ability to work from home part-time remains an expectation and is one of the most desired benefits. Research for SEEK shows that more than a quarter of Australian workers consider it a must-have when looking for a new role. Organisations that have mandated an in-office model of 4-5 days a week are commonly losing talent due to needing to accommodate highly sought-after hybrid work arrangements.
Reduced work weeks have also been a hot topic with highly anticipated research released by 4 Day Week Global, a not-for-profit advocacy group who have completed international trials in partnership with researchers from leading universities. The studies revealed that a four-day week could open the potential for lower turnover, higher productivity, less distraction and absences, and ultimately an increase in employee morale. Across the employment market, companies at the forefront of their flexibility offerings are beginning to trail shorter work weeks for themselves.
Rise in contractor and temp workforce solutions
The impact of the current economic climate and uncertainty has resulted in businesses finding value in temporary workforce solutions. Hiring contractors or temps enable a flexible workforce that can adapt to changing needs amidst market fluctuations and provides an opportunity to engage highly skilled talent for specialised projects.
The availability of candidates seeking temporary and contract work has risen. There has been an influx of Working Holiday Visas (WHV) and increased allowance of skilled migrants by the Australian Government in late 2022. In addition, career contractors who previously opted for permanent work due to job security are now returning to contracting for the flexibility it offers and higher wages than permanent roles. Employers must move quickly to engage and retain candidates for shorter-term positions due to higher application activity as they seek to secure employment between contracts. The companies that are paying competitive market rates and are in central locations have the upper hand in securing and attracting talented contractors.
Candidates seeking employer value propositions with meaning
Today, a strong Employee Value Proposition (EVP) is essential in attracting and retaining top talent. Job seekers are looking beyond fluffy benefits for opportunities to grow and develop, a sense of connection and community, and finding purpose in their work.
Learning and development are critical to an employer’s value proposition to demonstrate commitment to employee growth and career advancement. Offering explicit ongoing learning and development opportunities is attracting top talent by displaying how their professional development is prioritised. Investing in employee growth comes with the long-term benefit of feeling valued in their roles, leading to higher levels of motivation and commitment.
Diversity, equity, and inclusion (DE&I) initiatives have become a top priority for organisations and candidates. Businesses are investing more significant efforts to create inclusive environments and improve representation in their workforce. DE&I initiatives are proven to bring advantages to the workplace, including increased profitability and creativity, greater productivity, and better problem-solving. Candidates want a clear DE&I statement outlining the organisation’s commitment and the initiatives to back it up.
Lastly, corporate social responsibility (CSR) is critical to a company’s EVP. CSR initiatives can enhance a company’s EVP by demonstrating its commitment to positively impacting society, the environment, and the community. Employees who feel that their employer shares their values and priorities are more likely to feel satisfied, engaged, and motivated in their work. This can lead to higher retention rates, greater productivity, and a more positive brand reputation. By incorporating CSR into their EVP, companies can attract and retain top talent while making a meaningful difference.
Increased demand for technology & soft skills
In today’s business world, technology is crucial to companies’ day-to-day operations. The demand for technology-related skills is multiplying, with increasing job postings requiring expertise in management, logistics, marketing, sales, and more. Skills that combine human abilities with digital knowledge, such as artificial intelligence, data analysis, and software integration, are rapidly emerging as the most sought-after skills in the Australian job market.
The impact of automation on Australian industries has been a popular subject in 2023, with many businesses adopting this technology to streamline their operations. By automating repetitive and time-consuming tasks, employees have more time to focus on building relationships, using their creativity, and making instinctual decisions. Although automation does pose some challenges to the labour market, it also presents new opportunities. According to SEEK, automation will create 1.2 million new technology jobs by 2034.
Contrarily to the demand for tech skills, hiring soft skills has become increasingly important within organisations to build a team with the right mindset, work ethics and values alignment. While other technical skills are necessary, soft skills help employees collaborate effectively, communicate clearly, and adapt to changing situations. Soft skills such as problem-solving, empathy, emotional intelligence, leadership, and teamwork are valuable assets for any organisation. They promote a positive work environment and help create strong relationships with colleagues, customers and stakeholders. Hiring for soft skills helps organisations build a more engaged and productive workforce, enhances the company’s reputation, and creates a culture of excellence.
Summary
In 2023, the hiring market has slowed, but the competition to secure top talent remains high. Meeting salary and flexibility expectations, alongside a meaningful EVP, has given businesses the upper hand in attracting candidates. More companies have found value in temporary and contract workforce solutions to remain agile in challenging market conditions. The demand for technology-skilled candidates to drive productivity and streamline operations is met with the desire to find candidates with the right soft skills that reflect their organisation’s ethos.
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