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NZ Businesses' Hiring Expectations at 6-Year High

Hiring Expectations among New Zealand Businesses at a Six-Year High

June 21, 2005 – Hiring expectations among New Zealand businesses are the highest they have been since 1999, according to The Hudson Report: Employment and HR Trends released today.

The survey of 1,683 clients showed a positive net effect of 43.5 percent. Net effect refers to the expected increase in employees less the expected decrease in staff levels.

“Despite indicators showing business confidence is faltering in some areas, research shows businesses remain optimistic in terms of their hiring outlook,” says Marc Burrage, General Manager at Hudson New Zealand. “The results demonstrate how dramatic the skill shortage has been. Employers are operating on a reduced headcount and with growth predicted to continue, albeit at a reduced rate, they are still desperate to find the right people with the right skills to continue their business success.”

National Overview

The net effect is 4.2 percentage points higher than the previous Hudson survey (six months to June 2005).

The unemployment rate for New Zealand, at 3.9 percent, its lowest level since the mid 1980s. This is close to the full employment rate, and given the historically high participation rates and record levels of employment, there is limited scope for further downward movement. Increasingly, companies are focusing their efforts in retaining and developing their existing work force, especially their top performers.

During the first half of 2005, the Reserve Bank has raised the Official Cash Rate 25 basis points to 6.75 percent Despite indicators that the economy is showing signs of slowing, underlying demand and inflation pressures remain strong. With this in mind the prospect of another increase in interest rates remains very reali. The NZD is currently 8.9 percent above the last five-year average against the AUD and a huge 32.7 percent above the average of the USD exchange rate for the past five yearsii. While high international commodity prices are currently insulating some sectors of the economy against these levels of the Dollar, exchange rates at this level for an extended period of time will have a negative effect on the economy.

“In particular, we are continuing to see a strong demand for the knowledge worker, which should translate into wage pressure for this segment of the employment market. However, skill shortages are evident. With growth predicted to continue, though at a reduced rate, employers are still seeking to hire the right staff with the right skills. Staff retention remains a critical issue as replacement costs and downtime impact on profitability,” says Marc.

Regional Overview

Positive net effects were recorded across all regions surveyed, with the highest level of optimism recorded for the Lower North Island (+46.6%), followed by the Upper North Island (+43.9%), and the South Island (+35.7%).

Industry Overview

The Hudson survey indicates a positive outlook across all industries for the coming six months. Industries that have indicated a more positive sentiment than the national average include: Information Technology (+62.9 percent), Government (+48.9 percent), Financial Services/Insurance (+46.4 percent) and Professional Services (+45.9 percent).

With employment expectations levels at record highs the upcoming elections appear to be having minimal effects on the outlook of hiring intentions of employers. Indeed the Government sector’s outlook, at 48.9 percent, is 6.5 percentage points higher than the previous survey and the highest level recorded in over three years.

The Financial Services industry has recorded a net positive outlook of +46.4 percent, this is 16.6 percentage points higher than the previous survey. These results are the highest level recorded in over three years.

By Organisation Size

Small, medium and large employer groups all recorded optimistic permanent staffing outlook for the six month period July – December 2005. Large organisations, employing more than 200 people, recorded an 8.8 percentage point increase in positive sentiment when compared to the previous survey, small organisations recorded a 4.7 percentage point increase while medium-sized organisation showed a slight, 0.4 percentage points, decline on the results of our January - June survey.

Contracting/Temporary Overview

Of those employers surveyed, 51.6 percent expect to increase permanent staffing numbers over the coming six months compared with 5.1 percent who anticipate a reduction in current staffing levels. While permanent employment expectations have increased over the past 18 months there has been a sharp contraction in the expectations in contracting employment levels over the same period. For the June to December 2005 period only a net 5.7 percent of employers expect to increase contracting employment levels. This is a sizeable 12.3 percentage points lower than the previous survey. The tight labour market is impacting the contracting market in that good contract and temp staff are increasingly difficult to find.

Of the employers contacted during our survey, 30.8 percent indicated that they would be increasing their contracting/temporary workforce over the next six months, compared with 11.7 percent who expect to reduce their contracting/temporary workforce. 57.6 percent of employers expect to hold their contracting/temporary workforce steady. The resultant net effect is a positive 19.2 percent. This is 5.3 percentage points higher than the previous survey.

For a copy of the Hudson Report please go to www.hudson.com

-ENDS-


About the Hudson Report
The Hudson Report is an initiative from Hudson, which replaces what was previously known as the Job Index Survey up until December 2003. Based on nation-wide research, the bi-annual Hudson Report uncovers and analyses the hiring expectations of New Zealand employers, and provides insights into a range of topical human resource issues currently impacting business.

Hudson recruitment processionals personally surveyed 1,683 participants to collect the data which covers the intentions of NZ employers.

The Hudson report combines the expectations of key employment decision-makers from all major industries across the spectrum of organisation sizes.

Core findings are built on the premise that the expectation to increase or decrease net staffing levels represents a significant indicator of employers’ optimism for the growth of their organisations – and, as such, are a strong indicator of more general economic growth.

About Hudson:
Hudson (Global Resources & Human Capital Solutions) is a worldwide leader in the provision of specialised recruitment and human resource consulting
services.

Through its recruitment division, Hudson Global Resources, and human resource consulting division, Hudson Human Capital Solutions, Hudson works with a variety of employers to attract, select, engage, develop and retain the people they need to succeed. Likewise, Hudson assists job seekers to explore and discover permanent or contract opportunities that utilise their abilities and advance their careers.

Hudson is a division of Hudson Highland Group Inc (NASDAQ: HHGP) one of the world's leading professional recruitment, retained executive search and human capital solution providers. More information about Hudson is available at www.hudson.com

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