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Hiring expectations at the lowest in three years

See... National Permanent Employment Expectations (PDF)

Wednesday, November 29, 2006


Hiring expectations at the lowest in three years

Results only marginally lower than preceding two surveying periods


November 29, 2006 – Hiring expectations among New Zealand businesses are at a three-year low, according to The Hudson Report: Employment Expectations released today.

The nationwide six-monthly survey of 1,911 Hudson clients shows a positive net effect of 34 per cent[1] for the period January to June 2007. Net effect refers to employers’ expected increases in staff levels less the expected decreases.[2]

The 34 per cent result is a decline of 2 percentage points (pp) from the previous period (July to December 2006) which was 36 per cent and a decline of 2.6pp on the same period last year (January to June 2006).

Hudson general manager, Marc Burrage, said the survey was only marginally lower than the preceding two surveying periods.

“When looked at across the seven years the Hudson Report has been tracking employers’ hiring expectations, employers’ outlook for the first half of 2007 is buoyant,” he said.

Economic and labour market context

Despite low economic growth predicted in the upcoming six months, New Zealand continues to enjoy record low unemployment rates and record labour force participation.

Furthermore, a recent labour market survey by the Department of Labour suggests that the skill-shortage has eased from its historic heights in 2004 and 2005 and therefore employers’ estimations on future hiring has consequently decreased.[3]

In addition, the New Zealand Institute for Economic Research forecasts economic growth to strengthen 12 to 24 months into the future with a rise to 2.2 per cent growth in 2008 and solidly rising to 3 per cent from here.[4]

The unemployment rate remains low – at 3.8 per cent, according to the latest Statistics New Zealand Household Labour Force Survey (September 2006 quarter). At the time of the release of the January to June 2006 Hudson Report in November last year, unemployment was at 3.7 per cent.

Labour force participation is at 68.3 per cent, a 0.4 percent drop from the last quarter, however still particularly high, according to the latest Statistics New Zealand Household Labour Force Survey (September 2006 quarter).

Other key findings
* Industries that indicated a more positive sentiment than the national average included information technology (65.5 per cent), government (43.1 per cent), utilities (46.2 per cent) and construction/property/engineering (54.4 per cent).

* There have been large negative movements recorded by several industries including financial services, down 18.7pp on the previous period and down 5.2pp on the same period last year and tourism, down 6.4 pp on the previous period and down 20.6pp on the same period last year.

* Hiring expectations for small organisations decreased dramatically compared to the previous period, from 42.7 per cent (July to December 2006) to 33.8 per cent (January to June 2007). This is a further decrease from the same period last year with a 47.2 per cent positive sentiment.

* The South Island recorded the two highest positive sentiments by industry: Information Technology (76.2 per cent) and Construction/Property and Engineering (63.6 per cent).

Industry overview
For all industries surveyed, employers are on average expecting to increase staff numbers rather than decrease.

The information technology sector is by far the most positive industry (65.5 per cent), with an increase of 11.4pp from the previous period and a 9.7pp increase from the same period last year (58.8 per cent).

Campbell Hepburn, from Hudson IT & T, said the strong positive result in the information technology sector was linked to the overall economic outlook.

“When the economic outlook is less positive, investors in technology tend to maximise the period before the inevitable economic upswing to improve their offer so that they can be one step ahead.

“In the government sector, central, local and regional governments are progressing with the e-government strategy and wider technology initiatives, which is contributing to demand for IT professionals across this sector.”

The construction industry continues to record strong results significantly in excess of the national average. It is up 6.7pp from the previous period and 1.0pp from the same time last year.

The tourism sector expressed the least positive sentiment towards hiring expectations in the next six months. The sector still expects to hire but at a significantly lower rate than in the first six months of 2006. The percentage point change was from 30.4 per cent (January to June 2006) to 9.8 per cent (January to June 2007). This is the third consecutive year that this has been below the national average. The price of fuel has undoubtedly played a role in the substantial drop in optimism.

The financial services sector also showed a large decrease in hiring expectations from the previous period going from 48.4 per cent (July to December 2006) to 29.7 per cent (January to June 2007). It is also a 5.2pp decrease from the same period last year, when it was 34.9 per cent.


Regional overview
Positive net effects were recorded across all three regions surveyed, with the highest net effect of 42.9 per cent in the Lower North Island.

Upper North Island: The Upper North Island (27.8 per cent) recorded a reduction of 4.7pp when compared to the same period last year, and 17.8pp when compared to the same period in 2005. This is the third consecutive period where sentiment has decreased quite rapidly from the previous year and is the only region to be below the national average of 34.0 per cent.

Lower North Island: For the third consecutive period, the Lower North Island recorded the highest level of sentiment (42.9 per cent). This was up 0.3pp on the previous period and an increase of 4.6pp from the January to June 2006 period. Lower North Island employers surveyed are weighted towards the government, financial service/insurance, professional services and information technology sectors.

In keeping with the overall trend of the survey, the Information Technology sector hiring expectations were particularly high at 71.8 per cent, a 10.2pp increase from the same period last year.

South Island: The South Island showed positive hiring intentions from the previous period, up 9.4pp to 36.9 per cent which is above the national average, however a 0.2 per cent decrease when compared to the same period in 2006.


By organisation size

Small, medium and large employers have all recorded an optimistic outlook for the six-month period January to June 2007 period. Small organisations’ (<20 employees) hiring expectations at 33.8 per cent decreased the most dramatically from the previous period by 8.9pp which follows a pattern decreasing from the same time last year from 47.2 per cent in January to June 2006 which is a 13.4pp drop.

Medium-sized organisations (20-200 employees) recorded 38.4 per cent positive sentiment, a 1.7pp increase from the previous period and a 0.1pp increase from the same time last year. This makes them the most consistent group in terms of hiring expectations.

Large organisations (>200 employees) recorded 30.9 per cent (January to June 2007), a decrease of 3.4pp from the previous period (34.3 per cent in July to December 2006) and a moderate decrease of 2.3pp from January to June 2006.

Contracting/temporary overview

Employers have recorded a positive sentiment around hiring contracting and temporary staff of 11.9 per cent. This is 5.6pp less than the previous period and a decrease of 4.05pp from the same period last year.

Contracting and temporary hiring expectations have decreased due to increased pressures on businesses to control costs at a time when it is difficult for them to assess the economic environment in the medium term.

The South Island recorded the highest net positive result at 20.5 per cent, an increase of 5.1pp over the previous survey, although this is only a 1.67 per cent increase when compared to the same period last year.

The healthcare industry (non-government) showed the highest decrease in positive sentiment from the previous period, dropping 23.9pp to a net effect of 1.5 per cent.

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 nationwide research, the bi-annual Hudson Report uncovers and analyses the hiring expectations of New Zealand employers. Part two of the report, due out in January, provides insights into a range of topical human resource issues currently impacting business.

Hudson recruitment professionals personally surveyed 1,911 participants to collect the data for the hiring expectations survey, which covers the intentions of New Zealand 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 trends.

About Hudson
Hudson delivers specialised professional staffing, outsourcing, and talent management solutions worldwide. From single placements to total solutions, the firm helps clients achieve greater organisational performance by assessing, recruiting, developing and engaging the best and brightest people for their businesses.

Hudson is a division of Hudson Highland Group, Inc. one of the world’s leading professional staffing, retained executive search and talent management solution providers. The company employs more than 3,800 professionals serving clients and candidates in more than 20 countries. More information is available at www.hudson.com

[1] All statistics in this survey refer to employment expectations relating to permanent staff, unless otherwise mentioned.


[2] Therefore, for the period January to June 2007, 43.1 per cent of businesses expect to increase their workforce, 9.2 per cent intend to decrease their workforce and 47.6 per cent intend to maintain their workforce at current levels.


[3] Skills in the Labour Market, Department of Labour, August 2006. See http://www.dol.govt.nz/publications/lmr/lmr-Skills.asp


[4] See http://www.nzier.org.nz


ENDS

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