The Australian job market is showing signs of strain as companies prioritize retention over new hires amidst economic uncertainties. Robert Half director Nicole Gorton said, “Companies are focusing more on their retention strategy than attraction at the moment. If they have the opportunity to upskill existing staff to fill an opportunity gap, they will prioritize that.”
A new Deloitte employment report echoes this sentiment, suggesting businesses are leaning towards internal staff development rather than new hires.
The report surveyed 84 chief financial officers from Australia’s top 200 companies, with Deloitte partner David Rumbens noting that the private sector had essentially entered a hiring freeze. The Deloitte report forecasts the unemployment rate to peak at 4.5 per cent. In July, the unemployment rate increased to 4.2 per cent, despite Australian Bureau of Statistics data showing more than 58,000 people found work last month.
Canberra University economics professor Leonora Risse pointed out that these numbers trigger the “Sahm Rule” recession indicator, named after US economist Dr. Claudia Sahm.
Deloitte hints at hiring freeze
The indicator suggests a recession is looming if the average unemployment rate for the past three months increases by 0.5 percentage points above the lowest rate recorded in the prior 12 months. Professor Risse emphasized that the Sahm Rule serves as an early warning sign for governments to take preemptive actions. “The idea is to address the numbers proactively to avoid a recession rather than waiting until it’s officially recognized,” she explained.
Meanwhile, Australian households have started to cut back on spending, with new data from the Australian Bureau of Statistics showing household spending fell by 0.5 per cent in June after two consecutive rises. For job seekers, recruiter Nicole Gorton advised flexibility, saying, “Now is not the time to be picky. Consider widening your search criteria to open up more opportunities.”
Economists are also keeping a close watch on employment data in the context of future interest rate decisions.
Professor Risse warned that the Reserve Bank’s discussions about possible interest rate hikes could further accelerate the rising unemployment rate. The combination of rising retention strategies by companies and economic caution from central banks paints a cautious picture of the Australian economic landscape. The potential slide toward recession is a significant concern, with both job markets and broader financial indicators reflecting this apprehension.
