The war for talent in Australia’s job market has shown no sign of slowing down, with our unemployment rate falling to 3.4 per cent in October, the lowest in fifty years.
This has meant a shortage of skills for Australian employers to choose from, a scenario they have been experiencing for over a year as a lack of overseas labour due to Covid has impacted employers' ability to hire workers to cope with increased demand.
But, a new report from Macquarie Bank indicates this may be about to change, citing a predicted “decline in demand growth in the economy, and an increase in unemployment” during 2023.
‘Intensity’ of skills shortage may ease
Yahoo Finance spoke with Nick Deligiannis, ANZ managing director of recruitment and workforce solutions specialists Hays for his thoughts on whether Australia’s skills shortages are set to continue into the new year.
“Coming off these historic highs, in 2023 vacancy activity will remain healthy, but the intensity of pressure may ease to more sustainable levels,” Deligiannis said.
He goes on to say that, although the number of vacancies may fall in the short term, skills shortages will still exist in several areas.
“While monthly jobs data may fluctuate, the longer-term picture shows that jobs growth will lead to continued skills shortages. The employers we’ve spoken to recently on this topic tell us that staff shortages are still their main constraint on growth,” he said.
According to Deligiannis, some sectors are feeling the pain of skills shortages more than others, with industries such as “professional services and construction, expecting to carry a backlog of work into 2023 due to understaffing”.
While Macquarie Bank is predicting a slowdown in economic activity due to the rise in interest rates, the job market is likely to be one of the last sectors to be affected.
Wages are on the rise
One consequence of such a robust job market has been a gradual increase in wages, with the Australian Bureau of Statistics confirming a 3.1 per cent rise in annual salaries during September.
Although this is well below the current inflation rate, it’s a trend that is being borne out by what recruitment firms like Hays are seeing on the ground.
“The skills shortage has undoubtedly driven up permanent salaries and contractor rates. For skills in high demand, employers are usually offer a salary increase in line with CPI (the consumer price index) to secure their preferred candidate," Deligiannis said.
Higher salaries will undoubtedly be a welcome relief to many Australians struggling with the increased cost of living, but it could be a double-edged sword.
The Reserve Bank of Australia (RBA), which sets interest rates and is primarily focused on reducing inflation that is currently running at a whopping 7.3 per cent, will be keeping a close eye on rising wages.
Any significant increase above the current levels may encourage the RBA to keep interest rates higher for longer – a daunting prospect for many.
What this means for jobseekers
While rising wages and a robust employment market are good signs for Australian job seekers, there seems little doubt that the economy will slow in 2023, and this will inevitably lead to more competition for the best job opportunities.
“Employers will become more selective in their hiring decisions. The onus will therefore be on candidates to prove the relevancy of their skills and experience," Deligiannis said.
So, what should Aussie workers being doing to maximise their chances in an increasingly competitive market?
Deligiannis suggested a “return to the basics - personalise your CV for every application. Take the time to research an organisation to understand their values and what they want, then tailor your application to engage them”.
It’s good advice in any job search, but with an employment market set to ease next year by all predictions, it could be the difference between getting your next role or not.
However, despite the storm clouds gathering for the Australian economy – in part due to global events out of our control - Australians should be reassured that the local employment market is well set to weather the storm.
Employers should expect skills shortages to continue into 2023, although they are likely to be confined to specific sectors rather than the economy as a whole.
For workers, opportunities will still exist, but expect to work harder to secure them.