There has been a significant dip in new jobs across Australia and New Zealand, indicating the start of an economic slowdown that will consequently see the labour market rise, according to a new report.
Recruitment firm JobAdder has released the findings of its Q3-Q4 2022 Global Industry Report - Recruitment and Staffing.
Recruitment agency users in Australia created an average of 58.9 jobs in Q4 2022, down from 66.3 jobs in Q3. New Zealand agency users saw a similar trend, with an average of 53 jobs in Q4 2022, declining from a high of 59.9 jobs in Q3.
Fewer jobs have increased average applications per job across Australia and New Zealand in Q3-Q4. This increase in job applications contrasts with the candidate shortages seen throughout the first half of 2022. Applications per job for Australian agency users jumped from 15.3 in Q3 2022 to 16.9 in Q4, while New Zealand agency users saw movement from 12.5 in Q3 to 13.4 in Q4.
"Candidate shortages were previously an ongoing issue for recruiters as high job growth fuelled demand and employees and candidates exercised unprecedented power in the employment market," says Martin Herbst, CEO of JobAdder.
"As a result of slower growth, immigration, and sector-wide layoffs, this extraordinary imbalance between job demand and candidate undersupply will shift this year," he says.
"This means recruiters will have more time to dedicate time for forward-planning instead of racing to fill never-ending positions. Having time to think and strategise allows recruiters to emphasise finding diverse candidates, bringing them back to thinking outside the box.
"Agencies should take advantage of this breathing space to train and upskill their staff and ensure their tech stack is fit for purpose and adopted to its fullest,' Herbst says.
"Whether using technology to weed out unconscious bias or finding non-traditional candidates, the time to start getting back into strategy mode, as opposed to sink-or-swim mode, is now."
Recruitment thought leader and JobAdder advisor, Greg Savage, says the impact on recruiters of more applications per job is very nuanced.
"Job volumes are dropping, but they are still healthy, and hiring continues," he says.
"We are not in a recession (yet). The fact that candidate flow is increasing may also be a mixed blessing. The volume of candidates does not always mean more qualified candidates," he says.
"Indeed, an impending downturn reduces candidate confidence and inclines many well-qualified people to stay put."
In Q4 2022, agency users in Australia took 5.8 days to place candidates in temp and contract roles, but New Zealand knocked Australia off its long-held top spot by taking an average of 5.6 days. However, when filling permanent placements in Q4, Australia reclaimed its number one position, averaging 31.7 days compared to New Zealand's 35.1 days.
It took significantly fewer days for temp and contract roles and permanent positions to be placed across Australia and New Zealand with JobAdders existing talent pool than for agencies to place these roles through an external source such as a job board. In Australia, temp and contract roles were filled in an average of 4.8 days in Q4 when using the JobAdder database, compared to 25.3 days when using external sources. Similarly, New Zealand saw a marked difference in days to place temp and contract roles in Q4, averaging 18.2 days with an external source compared to just five days with the JobAdder database.
Recruitment agencies in the Australian market have seen consistent steady growth in average agency fees, rising 0.6 per cent in Q3 and 0.7 per cent in Q4. Meanwhile, agencies in New Zealand experienced more fluctuations, dipping 0.5 per cent in Q3 before increasing by 1.8 per cent in Q4.
"As hiring demand drops, agencies should not return to the lack of candidate service ethos that has characterised our industry for so long," says Savage.
"Even as they increase business development with clients, agencies need to ensure they don't take the focus off activating their candidate pipeline because its how they treat those candidates when they don't need them that will dictate how many they have when the hiring market improves," he says.
"Agencies need to be visible to their existing clients, nourish relationships with them and flex their business development muscle. Now is also the time to reignite dormant client relationships. Get in touch. Go and see them. Engage whenever possible.
"In their communications with clients, agencies should also focus on value. Explain that its harder to recruit great candidates in a depressed job market, not easier. The volume of applications increases, and the best candidates are reluctant to move.
"As a result, a recruiter works harder for the outcome, screening much more effectively to find the right candidates in what might become a crowded but not highly qualified candidate marketplace."