Each month I sit down to write an article that people working on the 'Frontline' can read and hopefully implement strategies that may assist them in their day to day business. For the past three months there has been a preoccupation with the fallout from the Global Financial crisis. They say that knowledge is power so what I have tried to do is to keep you informed with what we see happening in the marketplace and what you can do to help keep focussed on important issues we see as recruiters. We all read the articles and listen to the experts predictions but in recruitment we get to see the fallout directly and often before it is actually reported.
What Happened In January?
Nearly 37,000 Australians joined the unemployment queue in January as the nation's jobless rate hit a 31-month high. A small increase in the total number of jobs created in January could not stop the unemployment rate rising 0.3 percentage points to 4.8 per cent. It was the highest jobless rate since June 2006.
The additional 36,800 people looking for work in January was the largest number seen in a month since November 1998.
Overall, an extra 104,700 Australians have become unemployed since the jobless rate hit a 34-year low of 3.9 per cent in February last year.
The federal government recently projected the unemployment rate to rise to seven per cent by the June quarter of 2010, from its previous forecast of 5.75 per cent, as the global economic slowdown hit local business. Deputy Prime Minister Julia Gillard on Thursday said the domestic labour market was more robust than that of most of the other advanced economies.
The 4.8 per cent jobless rate in Australia compared well with 7.6 per cent in the US, 7.2 per cent in Canada and 6.3 per cent in the UK, she added.
Business Confidence
A lot of what is driving the behaviour of decision makers is based on their individual business confidence sentiment with a lot of business decision makers feeling that they need to follow the pack and take a wait and see approach to any decisions regarding expenditure and costs.
There are obviously some significant real factors influencing this business confidence.
For the first time in over 3 years business confidence is down in WA on the back of the slowdown in the resources sector based on the slowing economies in India and China. Unemployment is still the lowest in the country at 3.2% whilst South Australia has the highest unemployment rate at 5.6%.
The ACT and Wellington in NZ are reasonably unaffected because of the strong public service sector. The Northern Territory is unaffected as this market has always been a difficult market to attract and retain staff because of the transient nature of this location due in part to the high level of armed services based in Darwin.
Victoria and NSW have been hardest hit based on the impact of the banking and finance sectors whilst Queensland business confidence is lower but still stronger than the rest of the Eastern seaboard.
Job Redundancies and recruitment Freezes
Some major companies in Australia, such as ANZ Banking Group Ltd, Qantas Airways Ltd, Rio Tinto Ltd and Telstra Corporation Ltd, have shed staff or plan to due to the tough trading conditions here and abroad.
Nearly two-thirds of Australian employers are forecasting redundancies and plan to cut, on average, 5.5 per cent of their workforce, according to new research.
The Redundancy Policy and Practice Report, by Hewitt Associates, surveyed 148 organisations in late 2008 and January 2009, finding that 63 per cent plan to cut staff numbers.
This is despite 79 per cent of employers formulating strategies to avoid redundancies, the report says.
The most common preventative measures are hiring freezes (87%), but employers are also freezing salaries and delaying salary reviews (both 54%) and forcing employees to take accrued leave.
The hardest-hit job sectors are administration (61% of organisations plan to make cuts in this area) and sales and marketing (41%).
By industry, redundancies in banking, finance and insurance companies are expected to slow, while an upswing in retrenchments is forecast for IT and high-tech industries.
Employee performance (54%) is the main criteria being used to determine which employees should be made redundant, followed by employee potential (32%). Only eight per cent of organisations base their decisions purely on seniority.
It is important for businesses to make decisions based on the long term benefits to the business. Making experienced staff redundant can have significant impact on the intellectual capital leaving the business and for most businesses it has been a very difficult and tight candidate market, employers should consider the pain they experienced and difficulties they had finding the staff members in the first place and then the investment they have made in developing these employees.
Those organisations that make decisions based purely on short-term cost reduction will be poorly placed to take advantage of the inevitable upswing in the economy, and will find it more difficult to recover.
Retention is the key
Employers need to shift their HR strategies to current employees as they step up their focus on improving employee performance/productivity, right-sizing the business, and employee development and retention.
It is these experienced employees that will drive the business as the market improves.
Communication is key in these uncertain times, although job ad numbers are down the incidence of job searches has increased by over 40%, simply put some employees are thinking the worse and are already looking for alternative employment. It is critical for business leaders to communicate with their employees and let them know where they stand.
Please feel free to contact us at Frontline Retail. with any recruitment requirements - we are here to help.