Despite the downturn, staff have little to fear, says Steve Hart
KEY POINTS:
While the word recession is being bandied about by employers, staff are still riding the tidal wave of increased salaries on the back of a continuing skills shortage - buoyed by thousands of people fleeing to Australia.
But one employment industry leader says loyal members of staff are being short-changed when it comes to pay increases as employers bump up salaries to attract new people. That's the view of Martin Turner, head of Mercer's human capital business, a company that offers consulting, outsourcing and investment services.
Turner says that despite being in a recession the global financial crisis means employers need to contain costs while still struggling with the skills shortage.
"Despite being in a recession since the start of 2008, New Zealand is not seeing business come to a halt, nor are we yet seeing the widespread job cuts that occurred in other economic downturns," he says.
"Although our unemployment rate has recently increased it still remains relatively low at 4.2 per cent. However, this year the nation saw a record outflow of Kiwis [opting for] Australia."
Turner says employers are paying more to attract the people they need, indicating that the labour market is still tight and the skills shortage is far from over. A remuneration survey by the firm shows that salaries across the country have risen. Turner says the survey shows that while pressure from the global financial crisis has slowed business growth, employers are still offering generous salaries to attract new talent.
The survey, says Turner, shows that in the 12 months to July, and for the first time in more than four years, salary movements for all employees, including new hires and promotions, were greater than those offered to employees who had been in the same job with the same organisation over the past 12 months.
However, Turner says pay increases were not distributed equally across career streams, with professionals, management and entry-level staff receiving more generous salary increases, (8.5 per cent, 7.2 per cent and 7.1 per cent respectively) than executives entering new roles (6.8 per cent).
"Organisations' same incumbents [existing staff] received less generous pay increases than the overall market but these increases were greater than the rises seen last year," says Turner.
Existing employees such as executives received the highest median salary increases of 5.9 per cent, compared to 5 per cent last year. Professionals received a 5.8 per cent pay rise, compared to 5.3 per cent the year prior, while entry-level staff were rewarded more favourably this year, seeing a salary increase of 5 per cent, a jump from 3.8 per cent in July last year.
One exception to the upward trend was management staff, receiving an increase of 5.4 per cent this year: slightly less than the 5.6 per cent seen last year.
Turner says the speed at which the economic crisis has deepened since July last year means employers may currently be less optimistic than the figures represent, and while it's important to manage the short-term turbulence, employers must plan to manage their workforce for the long term.
Employment firm Hudson's Employment Trends report covering January to June next year shows that employers' sentiment continues to decline, with 7.9 per cent of the 2285 employers surveyed saying they will increase their permanent staff levels during the first six months of next year. And while this may sound good, it is 18.9 per cent lower than for the same period this year.
Unsurprisingly the Hudson report reveals a continued slowing in national employer sentiment, with more employers adopting a wait and see position on hiring. However, the report says that employment has held together far better than expected given the state of the economy.
Due to the skills shortage of the last several years and the acute difficulty sourcing staff, for many businesses the downturn in economic conditions has simply reduced their excess demand for staff rather than leaving them overstaffed, says the report.
Perhaps the hardest hit people next year, according to the report, will be temporary workers. According to the survey employers will cut their need for temps by more than 10 per cent.
"Employers are clearly taking action to reduce spend on contractors and are investing instead in permanent staff, which cost less in the short term, and in upskilling existing staff," says the report. It says a greater availability of candidates on the market also means employers are able to engage permanent staff where they previously had to turn to temporary/contract staff to meet the needs of candidates seeking flexibility.
However, one area that is still under pressure to find staff is the health industry.
The latest quarterly member survey by the Recruitment and Consulting Services Association found that business professionals have dropped from fourth to 14th place in the skills shortage list, while demand for health professionals and nurses remains unmoved at two.
The association's research saw an easing of labour market conditions, as permanent placements dipped by 4 per cent and temporary or contract placements rose 3 per cent.
"What we're now seeing is a return to a more sustainable level of employment demand," says Julie Mills, CEO of the association. "Throughout last year and the beginning of 2008, the labour market was stretched so tight that employers were often unable to find the talent they needed; now there appears to be some relief at hand. We're also seeing more employers take a risk-averse approach to hiring, and opting for temporary staff rather than permanent placements.
"Even though we have more candidates in the market and slowing employment growth, the downturn won't simply make the skills shortage disappear.
"Years of under-investment in education and training, coupled with the large number of baby boomers retiring, means that we will continue to see pockets of skills shortages in certain roles and industries.
"We also need to remember that while the jobs market may be cooling, it is coming off a very high base of almost full employment. Employees who are worried about their jobs need to remember this, and not panic."
Contact Steve Hart at www.stevehart.co.nz
