Mood of the Labour Market: May 2023

While the weather might be cooling off, the job market isn’t. What does this mean? For the most part don’t believe the hype - Great talent is still hard to find for many role types, and more application numbers isn’t always equating to more choice. Read on for further insights to help you hire successfully in this market.

1. Demand for talent

While the weather might be cooling off the job market isn’t, as a whole. There have been some high-profile layoffs reported this year, particularly in construction and technology but what we don’t read about is the large number of firms still hiring - Whether that be catching up still having struggled to fill vacancies last year, or to support business growth. Bad news headlines clearly get better attention as several business failures have also been mentioned of late, however I read last week that the overall number of liquidations is still lower than 2019.

Will it turn? Maybe. The general election and a reserve bank hell bent on a ‘boiled frog’ policy of raising interest rates without appreciating the lag impact of fixed mortgages means we might yet see hiring fall flat and unemployment rise in some sectors later this year. For now though demand for talent is holding up generally, but with notable losers in technology and construction and winners in hospitality, tourism, financial and professional services.

What does this mean? For the most part don’t believe the hype. Great talent is still hard to find for many role types, and more application numbers isn’t always equating to more choice, especially given the dramatic increase in overseas applications. You still need to run a compelling and efficient process and expect to pay more than you have previously when hiring, especially in the $50,000 to $150,000 salary bracket.

2. Salary levels

As the cost of living has soared in recent times so has salary levels, with the quarterly increase in salaries and wages to March 2023 the highest since Stats NZ began the measuring it in 1992.

We continue to speak with job seekers entering the market purely driven by the desire to lift their earnings, buoyed by stories of co-workers doing the same. We find ourselves having to counsel these candidates on the risks of leaving a stable and healthy business for money alone, and to have a money conversation with their employer first before leaving.?

Most employers we work with now appreciate that they have to pay significantly more for the same (or even less) experience than two years ago. However, it feels like there are less stories of employers stretching well beyond market value for some talent compared to last year. Although we still see the odd company quibbling over a few thousand dollars at offer stage, only to lose that talent and start again.?

What does this mean? Get an informed opinion on the true market rate for the role you’re recruiting first and get this amount signed off early. The crazy offers might be rarer but the direction is still up for replacement costs.

3.?????Purpose vs price

The scramble from many job seekers to chase a material salary lift recently could have you assuming that little else matters when choosing their next employer.?

An increase might be the primary reason for leaving (alongside flexibility which I’ll touch on next) but you still need to present a well rounded proposition to be their preferred choice. The increased weight on company purpose is still very real. Why does the organisation exist? What do you stand for? How does this role help realise that purpose? We all want to be part of something, have a sense of belonging and meaning or impact in what we do. Be ready to pitch this clearly when describing your role. Beyond this, your pitch should also include:

• How you ensure people thrive at work. Think wellness, personal support and inclusion.
• Your policy on flexibility
• How you onboard and train people
• Examples of how you develop people.

4.?????A shift in candidate behaviour

We’re currently seeing three obvious trends in behaviour from candidates once engaged in a process:?

The impact of life stressors:

This is more a working hypothesis than proven correlation but I sense there is a link between the well documented increase in stress, burnout and mental health issues and how candidates are conducting themselves in a recruitment process. I’m hearing a lot more stories of candidates ghosting us or hiring managers, struggling for the time and energy to interview, and generally requiring more support, communication and counseling. If the general level of stress is higher, then the emotional (not to mention time) drain of changing jobs is going to take a much greater toll.?

It isn’t over until they start:

Not that long ago I very rarely heard of someone tearing up a signed contract to take another role. However, with it being a candidate’s market and with pressure to maximise earnings given inflation levels, there are increasing numbers of candidates continuing to interview after signing your contract, or even after they start. Engaging them during their notice period over coffee or a team morning tea etc makes walking away from your role a lot harder. There is still some complacency that signing a contract means they’ll definitely start – don’t bank on it. Click?here ?to read more on this trend.?

Pulling the pin early

Candidates are typically less willing to put up with a poor initial experience with your business and are more likely to act on their concerns. Why put up with a role, manager or induction that isn’t up to scratch if other options are out there? Look out for early resignations if you’re not delivering to your employee promise, especially while the labour market remains tight.

5.?????Flexibility

This is becoming a beast of a topic. Everyone has an opinion, there is no right answer, and it’s closely tied to issues of leadership, trust, and culture. A reasonable degree of flexibility(when and where work is undertaken) is now expected from the outset, and those businesses that have pulled back on their flexibility offering need to be clear on why they’re doing it and be sure it’s the flexibility that needs to change, not something else. Unless there is an obvious reason why flexibility wont practically work in a role, not offering something ongoing will make attracting talent in an already tight market almost impossible. Our last blog, which explored this topic further was our most popular ever. Click?here ?to read it.

6.?????Diversity and Inclusion

Creating more diverse, equitable and inclusive workplaces has been on the radar for some time, and there are organisations doing amazing things in this space. However, the elephant in the room for me is DE & I in recruitment. If you haven’t made changes to the way in which you recruit then there is a chance your inclusion promise is being undermined, and despite your desire to improve diversity, your selection process is still leaving more of the right people at the door. It’s a little out of date now but?here ?is some of the things we’ve been doing in this space.?

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If you want to discuss any of these topics further, or you're keen to learn a bit more about the labour market in your industry or function, reach out?here .