In September last year, Harvard Business Review reported that according to the US bureau of labour statistics 4 million Americans quit their jobs in July 2021, Resignations peaked in April and remained abnormally high for several months.
However, Australia is facing significant talent shortages which are exacerbated by the border closures that have limited the availability of foreign skilled and casual student labour for two years. Underlying this is the fact that Australia was due to hit zero net new entrants to the workforce in 2021 anyway - as identified by a Productivity Commission Report “The Economic Implications of an Ageing Australia” in around 2005, which was a simple projection of the birth rate in the immediate years preceding the report, to working age maturity.
There were some interesting trends in the USA :
The Great Resignation has not materialised. There are some underlying causes. As the impact of the Covid 19 pandemic began to bite in the second quarter of 2020, unemployment rates in both the US and the Australian economy soared. However, while America’s unemployment rate skyrocketed beyond 14%, Australia’s peaked at 7.4% in June and July 2020.
Rapid intervention by the Australian Federal government with the Cash Flow Boost and Job keeper programs kept many people in work and indeed brought some back. Australia’s employment laws also tend to mean that employers need to take a much more considered pathway to termination.
As both economies recovered and now have a very healthy employment rates Australia has a different challenge to that faced by the US economy. The mindset of successful American employees seems to be that there will always be another job. The Great Resignation has been a reaction to working and commuting in cities, to office cultures, to travel time and the realisation that work life balance has sometimes been poor.
In Australia, people felt fortunate to retain their employment. International borders were closed at the beginning of the pandemic. On an ongoing basis, this has severely affected labour supply at entry level. Hospitality is a prime example. The industry that suffered most from long periods of closure or being limited to takeaway food during lockdowns now finds itself short of people. It has relied on the part-time work of foreign students and now many of the same cafés and restaurants have recently returned to takeaway services only due to chronic shortages of kitchen and wait staff.
New foreign graduates often assumed entry level corporate roles where they were permitted to remain for postgraduate work for up to 2 years before returning home. This ready supply of skilled labour created upward pressure inside organisations for both performance and promotion. This simply stopped.
There has been a marked reduction in movement between jobs in Australia since the onset of the Omricon Covid 19 variant. Even though people were again permitted to move around the community more freely, there has been a genuine reluctance to give up the lifestyle associated with working from home. There are also elements of health-based caution around venturing into the community too frequently at all. This is been mirrored by very low foot traffic in the CBD of major cities, public transport and at major sporting events.
Despite markedly higher prices than two years ago, Australia’s dominant job board, Seek.com, now posts a warning on the employer job posting site “Candidate cautiousness and high demand is currently resulting in fewer applications for some job ads”.It is actually most job ads for jobs paying under $150,000.
Our recruitment network, the Australian members of NPAworldwide, are consistently reporting order books full of jobs and a scarcity of candidates. This is particularly being felt in the middle market with salaries between $70,000 and $150,000. However, at the executive end of the market where salaries range from $200,000-$750,000 there is still plenty of interest in “new opportunities”
There are a number of strategies that recruitment firms need to take to hiring managers and these include:
The reality is that if the recruitment and executive search industries are not seen as partners by their clients then the client relationship is worth very little at all. Even when a search does not result in employment, the consultant should still be able to provide valuable advice on the market conditions in any sector at that time.