The current state of recruitment is undergoing a sweeping transformation and is expected to become more challenging in the second quarter of 2023 due to the forecasted outlook, the widening gap in the job market for skilled positions, and the record-low unemployment rate (still 3.5% in February 2023 according to the ABS). Recruitment has always been challenging, but in the last 36 months, the difficulty of finding qualified candidates has exponentially increased. Whilst the competition to find the right talent will remain, it will not be an employee market as compared to 2022 given available jobs have decreased due to the economic slowdown and the government trying to bridge the gap in skill shortage with increased visa approvals. However, we do foresee a number of key trends impacting hires in 2023:
- Expected remuneration by employees: With the rise of inflation, low unemployment rate, and fewer jobs available in the market; we’d normally start seeing employees rethink and adjust their salary expectations accordingly (Louis White, HRD Dec 2022). Budgets are tightening and according to Westpac Chief Economist Bill Evans, “Businesses need to stop trying to outbid one another for talent in order to avoid a wage inflation outbreak.” However, we believe the tight labour market will remain for some time, therefore, wages and salaries should be expected to pick up further.
- Increase in Contract roles: Multiple sectors are still growing and companies continue to want to onboard candidates with the specific skillset for certain projects. Contract opportunities therefore will likely increase in 2023 as a result of the economic slowdown to bypass internal hiring freezes.
- Changing Workforce: The pandemic has accelerated retirement for a lot of people who would’ve stayed in the workforce a little longer. Resignations are at the highest rate we’ve seen in the last two decades. Long hours, stagnant salaries, and job dissatisfaction are to blame for this. To fill the void of retirees, and employees quitting or being laid off; employers need to get serious about attracting good candidates. Millennials and Gen Z are expected to pick up the slack to fill this void, and their needs and expectations are very different. By focusing attraction campaigns on these needs, companies will improve talent attraction and will increase retention long-term.
- Talent Market: There will be a readjustment in 2023 from what has been an extremely candidate-led market to a slightly less candidate-led market. We’re seeing companies constantly looking at new ways to retain their top talent as well as new acquisition strategies. The marketplace now has become overwhelmed with less qualified candidates and this talent pool will become more active than ever as they seek out jobs during recessionary times. There is already some great talent in the market due to many companies restructuring to cut costs and others businesses going into voluntary administration. Sifting through to find the unicorns, getting them interested and not losing them in the process will be key.
- Recruitment & Executive Search Agencies: Companies who are a strong target for talent are strengthening their internal strategies and relationships with third-party recruiters to mitigate risks. Talent mapping is a key trend we foresee many businesses starting to implement proactively to ensure future candidate pipelines are ready. Proactiveness will be key and the focus will be on attracting top talent to stay competitive in the looming difficult market.
How can hiring managers best tackle these impacts:
- Employers need to continue to focus on retaining talent. For example Training & upskilling, ways to increase employee engagement, understanding their current requirements and checking in if they are happy with their current work conditions, salary, benefits etc. (Bryan R, Forbes ‘The Great Mismatch’ Jan 2023).
- Partner with a recruitment firm to find the right talent: Hiring Managers will continue to struggle to find the right talent – thinking that by going out to multiple agencies they will get the best candidate. A well looked after passive talent pool will become even more coveted however many may subsequently become more passive due to all the cold approaches about the same job opportunities. Therefore, partner with a specialist firm that understands the importance of employer branding and can represent your business in a professional manner.
- Understanding employee requirements: Employers are firmer on Return-To-Office policies in 2023. A recent survey by Slack found that only 12% of people would choose to be in the office full time. Over the past two years, hybrid and remote positions have dominated advertised vacancies and giving employees power when it comes to flexibility and where they work will help hiring managers to attract talent (Bryan R, Forbes ‘The Great Mismatch’ Jan 2023). Seek Senior Economist Matt Cowgill also stated that “work from home” was the most used search term on their platform. So flexibility will remain a key requirement for people moving forward.
Recruitment is an ever-changing landscape, and with the forecasted predictions, ongoing skills gap in the job market and low unemployment rate, it is more important now than ever to make the right decisions when it comes to hiring. To succeed in this competitive landscape, companies must begin to think strategically when it comes to finding the best people for their team and their business.
Written by Jerrin Francis, Recruitment Consultant, Bastian Consulting