Employers' Redundancy Intentions Rise in the 4th Quarter

The Australian HR Institute’s (AHRI’s) Quarterly Australian Work Outlook report shows that almost one third (31%) of Australian employers intend to make redundancies this quarter while at the same time, the jobs market will continue to grow: AHRI_Quarterly-Australian-Work-Outlook-Report_December.pdf

Our December quarter survey of 600+ senior HR professionals reveals redundancy intentions have risen sharply to 31% - up from 17% in the September quarter. At the same, recruitment intentions have increased from 61% to 71%.

The survey also found:

Strong jobs growth: The survey records a Net Employment Intentions Index of +41 - unchanged from the previous quarter. In total, 45% of organisations plan to increase staff levels in the quarter, compared with 4% that intend to reduce their workforce size.

Absence levels: Organisations are seeing an overall increase in unscheduled employee absence, driven in large part by COVID, home responsibilities and minor illnesses. The average Australian worker took six days off during the last financial year.

Impact of good people management: Cost-of-living pressures (51%), work-life balance concerns (40%) and excessive workloads (38%) are the most significant stressors for employees. There’s an encouraging realisation that good people management practices can significantly mitigate these challenges. The survey identifies investment in line management capability (31%) as one of the most effective interventions to reduce absence.

Right to disconnect: 64% of employers believe that a law or policy that gives employees the right to disconnect from work-related communications outside of working hours would have a positive impact on employees in terms of them being able to work flexibly.

Wage Expectations Decline: The mean basic pay increase in organisations (excluding bonuses) is expected to be 2.6% in the 12 months to October 2024, down from the 2.8% previously expected in the 12 months to July 2024.

There could be a number of reasons why redundancy intentions and recruitment intentions are simultaneously high. Some of the factors that may be driving recruitment are ongoing high employee turnover rates which are leaving essential roles vacant and the fact that some employers are experiencing proficiency gaps. These point towards recruitment as an ongoing backfilling activity rather than a response to, or driver of, business growth. In addition, organisations may also be undertaking restructuring alongside recruiting for vacant or new roles in other areas.

The higher redundancy intentions, combined with modestly lower wage intentions, serve as a forward indicator of economic challenges that HR professionals will need to consider in their planning for 2024.

It will be important to consider strategic HR measures to control costs, enhance productivity and attract and retain skilled employees. This has been brought into sharp focus by the divergence between falling productivity growth and sharply rising unit wage costs, which will put further pressure on employers to contain wage costs either by raising productivity or keeping an even tighter lid on pay rises.

Either way, 2024 looks a more challenging year for employers and workers.

The survey data also reaffirms the significant role line managers play in reducing absenteeism and ensuring employee wellbeing and should be a reminder to organisations to invest in boosting line manager capability to create more resilient, engaged workforces.

A strong focus on line management capability will not only help reduce absence, but also provide a short-term boost to productivity.