There is no doubt the employment market is tough right now (if you are an employer, that is). Demand is high and supply is short. Most businesses we talk to are experiencing skills shortages, and operating leanly as a result. Jobs are taking longer to fill, and with counter offers and salary expectations on the rise, employers are competing for good candidates at a level we have not seen before (flexible hours, work from home options and incentives are common place).
In March, ABS reported that the 3.8% unemployment rate for women was the lowest since May 1974 (and forecast to decline over 2023). The unemployment rate measures people looking for work and available to start, which gives us a fair indication of the competition employers are facing for talent.
85% of business leaders in Executive Outlook are experiencing skills shortages – that’s epic.
We are extremely grateful to our team of recruiters for going above and beyond to support our clients through this tough period. It’s times like this when an internet job board is no match for an experienced recruiter who knows where to look for both active and passive candidates.
But will this last, with inflation and interest rate hikes in the mix?
This has been a tale of two pandemics. For some businesses, it’s just an inconvenience, but the disparities have led to substantial concerns for others.
Companies and manufacturers reliant on global supply chains re amongst the hardest hit sectors. Our last Executive Outlook survey revealed that:
“A 40 foot container pre-covid cost $500 in shipping freight. Our last one cost $13,500 (in just 18 months).” December 2021
That’s been ball park for furniture and timber imports out of China. This has come back slightly, but current data still indicate cost increases in the order of 1000%.
We now see these raw material cost hikes filter through to pallets, aluminium, steel, cars and many more products. Manufacturers have absorbed what they can, but throw in worker and product shortages, and that’s a perfect storm.
Of course, there are silver linings. The supply chain crisis opened up potential to customise locally-made products to suit the market. Some local manufacturers, and their supply chains, are thriving. When it comes to price hikes in meat and fresh produce, there’s scope to move away from factory-based supply chains back to boutique food producers, especially in regional areas.
Everyone’s talking about the massive housing growth in South East Queensland, but it’s not so great for builders locked into fixed contracts. Reports show Queensland’s building crisis has hit breaking point, with fears supply chain backlogs and raw material cost blowouts could send more builders to the wall. The recent floods may be “the straw that broke the camel’s back” for those construction giants caught up in the fallout. No-one knows how this will play out, not just for the businesses impacted, but flow-on effects for the whole economy.
It feels like we got to this place because people were paid to stay inside during COVID. It was deemed “too dangerous” to go out and produce anything. To counter this, trillions of stimulus dollars poured into world economies by central banks. These massive injections of stimulus buffered our economy. This helped drive confidence, hiring and investment, resulting in record profits across many sectors. Travel came to a grinding halt, but stimulus flowed through the economy into luxuries, like caravans, 4WD’s, hobbies and renovations.
Fast forward to the present, and we’re just starting to see the opposite effect.
Inflation is now a global issue, with mass protests in countries like Sri Lanka. By its very nature, inflation erodes purchasing power, which sets the stage for sluggish growth, market volatility and less availability of cheap money. When you add in supply chain shortages, skills shortages and the war in Eastern Europe, the outlook’s not so rosy.
America’s inflation is 8½%, but called out as closer to 20% in the wallet. They’ve charted a course of gradual interest rate hikes to control inflation and deal with a surge in debt levels. Acceleration of housing, rent, fuel, food and fertiliser costs, coupled with inventory and skill shortages, have hit all sectors.
Back home, our RBA only increase interest rates when the economy’s performing – that’s a good thing. IMF predictions rank Australia as the world’s 12th largest economy in 2023 (despite being home to just 0.3% of the world’s population).
But if these spikes in inflation last, purchasing power can plummet quickly, and that’s not so great.
Some economists are talking up the likelihood of a recession and fiscal cliff – ouch. That’s when we would see the return of quantitative easing by Central Banks, to stimulate the economy and control inflation. Meanwhile, we’re likely to see contradictory forces of inflation and deflation play out at the same time.
We’re keen to explore the impact of these macro trends at a local level, through our annual Executive Outlook survey (in particular, business sentiment, conditions and skills shortages, as well as the undercurrents of COVID stimulus leading to inflation and what that means for local businesses).
Presented exclusively by Top Office Group, no other survey gives such a detailed analysis of business sentiment in our region, matched against broader trends (this is our 14th year running). If you would like to come on board to share your insights, please call Roger on 3812 2920. We love your feedback.
When the people you’re looking for aren’t looking, call our recruitment team at Top on 3812 2920
Compiled by Jan Gadsden, Founder of Top Office Group Pty Ltd.