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Nearly half of employers report recruitment difficulties in Australia

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Australian employers remain positive in short-term employment intentions

Australian employers continue to hold positive short-term employment intentions with a score of +45, as indicated by the Net Employment Intentions Index released by the Australian HR Institute.

The index calculates the net positive outlook by subtracting the percentage of employers planning to reduce staffing levels from those intending to increase them.

Despite predictions of lower economic growth in 2023 and a decline in job vacancies since mid-2022, the net positive recruitment plans persist. This is attributed to expected minimal redundancies and anticipated high recruitment activity. Interestingly, the strength of employment intentions may be attributed to a “recruitment catch-up” phenomenon, wherein employers are now filling previously vacant positions they had difficulty filling.

The Index reveals that 69% of employers plan to recruit new employees in the June 2023 quarter. However, nearly half (47%) of the employers currently engaged in recruitment express concerns about recruitment difficulties.

These concerns exceed the figures reported in official data from June 2022, which indicated that almost one-third of recruiting organizations faced challenges in finding suitable staff.

The main obstacles contributing to recruitment difficulties include a lack of suitable candidates (75%), high salary expectations (45%), and fierce competition from rival organizations (34%).

According to the Index, the average employee turnover for Australian workplaces between May 2022 and April 2023 stands at 12%. Around 20% of organizations report an annual turnover rate of 20% or higher.

These figures suggest that the positive recruitment intentions are not exerting significant upward pressure on wages. Employers project a mean basic pay increase of 3.3% in their organizations (excluding bonuses) for the 12 months ending in April 2024. In the same period, public sector employers anticipate higher pay intentions (4.4%) compared to private (3.2%) and not-for-profit (2.2%) sectors.

The survey also inquired about the utilization of fixed-term contracts. It found that over a third (36%) of employers with fixed-term workers have employees who have served at their organization for more than two years.

Regarding casual employment, the primary reasons for hiring casual employees include managing short-term fluctuations in demand (46%), providing individual flexibility (42%), adapting to changes in business conditions (37%), and accommodating employee preferences such as higher pay (31%).

In terms of employee engagement, 66% of employers observe no significant difference in engagement levels between permanent and casual employees. However, a quarter of organizations (25%) state that casual employees exhibit higher levels of engagement compared to permanent employees.

Furthermore, approximately 17% of casual employees do not have access to the same training and development opportunities as permanent employees.

More than half (58%) of employers confirm paying a higher rate for casual workers. In contrast, one in ten (10%) employers admit to paying casual employees less than their permanent counterparts for similar roles within the organization.

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