Hiring expectations rise for first time in 2 years

Hiring expectations rise for the first time in two years, according to latest Hudson Report

* Pockets of promise in some sectors
* Movement in demand for contract workers
* Attitude a key driver of success

June 24, 2009 –Hiring expectations among New Zealand employers has risen for the first time in two years, according to the latest Hudson Report. After moving deeply into the negative last quarter, national employer sentiment is now positive with a net 0.5 per cent of employers intending to increase permanent staff levels during the July to September 2009 period.

The Hudson Report: Hiring Expectations shows a shift away from employers reducing headcount towards holding current staff levels steady. Employers intending to reduce their permanent staff levels decreased to 15.3 per cent this quarter (from 23.7 per cent in the previous quarter). Employers intending to hold current staff levels steady increased 4.8 per cent to 68.8 per cent, meanwhile the proportion of employers looking to increase headcount increased from 12.4 per cent to 15.9 per cent.

“There has been a great deal of change among New Zealand businesses in recent months and those who made tough decisions early are starting to come out the other side. Feedback we’re getting is that there is a determination to keep driving forward and to be positive to ensure that businesses are well positioned for recovery,” said Marc Burrage, executive general manager at Hudson.

“Hudson itself is an example – we made some difficult right-sizing decisions 18 months ago. We ensured we were clear and upfront about our strategy and the reasons why we had to make changes. We invested in those leaving by using our own outplacement service and we invested in learning and development for those staying on. The result has been extraordinary – we are one of the biggest players in the recruitment market, and we are continuing to make a profit and gain market share from competitors. This is encouraging because our business is one that relies on other businesses investing in people.”

“While I don’t want to under-estimate the impact of external factors, the market seems to be stabilising. I think that attitude has a huge role to play in New Zealand’s recovery. This is the time to be confident in our abilities, back ourselves and our people and strive for success,” adds Burrage.

Because of the impact on staff morale, brand reputation and relationships with customers, employers in most industries are now very reluctant to make any further cuts to headcount. Some employers are starting to, albeit slowly, take on more contracting/temporary staff in a few carefully selected areas to manage the work load or start planning for future growth. Using contracting/temporary staff means employers also have the flexibility to adjust quickly if the market steps back.

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Economic and labour market conditions
The New Zealand unemployment rate rose to a six-year high of 5.0 per cent in the March quarter, up from 4.7 per cent in the December 2008 quarter. There are now 115,000 people who are unemployed.

According to Reserve Bank Governor, Alan Bollard, the global economy appears more stable, with growth forecasts for New Zealand’s trading partners appearing to have finished their freefall. He expects the economy to begin growing again toward the end of 2009, but the recovery is likely to be slow and drawn out. He also said the recovery could be erratic and severe incidences of swine flu could potentially impact economic recovery.

Other key findings

By industry. While most industries are reporting an increase in sentiment many remain in negative territory. Sentiment in the manufacturing industry rose 21.1 percentage points to -11.1 per cent, retail sentiment rose 21.0 percentage points to -7.0 per cent and tourism sentiment rose 21.5 percentage points to -22.2 per cent. The construction/property/ engineering industry fell further, down 1.7 percentage points to -17.5 per cent, while government employment expectations stabilised after turning negative last quarter, rising 6.7 percentage points to 0.4 per cent.

Sentiment in the IT industry remains stronger compared to other industries, with a net 16.4 per cent of employers intending to increase permanent staff.

By region. All regions are recording an increase compared to last quarter. Employers in Lower North Island continue to report the strongest sentiment, with a net 5.6 per cent planning to increase permanent staff. South Island employers reported the biggest increase in sentiment, up 14.1 percentage points to 2.1 per cent. While sentiment among Upper North Island employers has increased by 12.7 percentage points it is negative at -3.3 per cent.

By size. Large companies report the lowest level of sentiment, with a net 2.2 per cent of employers intending to reduce permanent staff levels. Medium-sized businesses reported the biggest increase in sentiment, up 14.5 percentage points to net 3.0 per cent. Small businesses continue to report the strongest level of sentiment, with a net 9.0 per cent of employers planning to increase permanent staff levels during the next quarter.

Contracting/temporary overview
All regions nationally have seen an increase in contracting/temporary hiring intentions this quarter. There is a clear shift away from reducing contracting/temporary staff towards either increasing or holding current levels steady.

Contracting/temporary employment expectations have increased for the first time in two years, rising 9.4 percentage points from last quarter’s record low. A net 4.8 per cent of employers intend to reduce the size of their contracting/temporary workforces during the July to September 2009 period, the best result recorded this year.

By industry
Wide variation in the level of confidence exists among different industries and while there are pockets of optimism, a number of industries remain in negative territory.

A net 16.4 per cent of employers in the IT industry intend to increase permanent staff levels during the next three months. Skills shortages continue with many hiring managers seeking certain skill sets including .NET developers, MS reporting services specialists, architects, WebSphere specialists, flex developers and top-end test managers.

Employer sentiment in the construction/property/engineering industry softened a further 1.7 percentage points from last quarter. A net 17.5 per cent of employers expect to reduce their permanent staff levels during the next quarter.

Up 6.7 percentage points, a net 0.4 per cent of government employers intend to increase their permanent staff levels during the next three months. Many government departments are seeking to deliver services with existing staff, with top-down pressure to increase productivity and do more with less or the same.

Although up 21.1 percentage points from last quarter, a net 11.1 per cent of employers in the manufacturing industry are expecting to reduce permanent headcount over the coming three months. The industry is seeing some signs of recovery, however manufacturers remain subject to cancellations of international orders, and there are concerns about the strength of the dollar and its impact on exports.

The professional services sector continues to feel the impact of reduced demand for consultants as organisations do more finance and legal work in-house and demand from government trends downwards, however employer sentiment is up 9.6 percentage points compared to the previous quarter.

The telecommunications industry has reported a 37.0 percentage point increase in sentiment. Sentiment is now positive after three consecutive quarters of rapidly falling confidence. A net 11.6 per cent of employers reported an intention to increase permanent staff levels during the next three months.

Retailers employer sentiment is improving moderately from last quarter’s record low and consumer confidence figures show some promise. Up 21.0 percentage points, employer sentiment remains negative, with a net 7.0 per cent of employers expecting to reduce permanent staff levels during the coming three months. Employer sentiment in the FMCG sector increased 8.2 percentage points to 0.0 per cent this quarter.

A net 22.2 per cent of employers in the tourism industry intend to reduce permanent headcount during the coming three months, which is 21.5 percentage points higher than last quarter’s record low. Many people are deciding to holiday locally due to job uncertainty and a drop in discretionary incomes.

A net 4.7 per cent of employers in the transport industry reported an intention to reduce permanent staff over the coming three months, up 12.5 percentage points from last quarter.

By region
Upper North Island:
Employer sentiment in the Upper North Island rises 12.7 percentage points, although remains negative. There is a significant reduction in the number of employers planning to decrease headcount as the intense focus on cost cutting eases slightly.

In the contracting/temporary market, hiring intentions have increased 8.1 percentage points from last quarter, with a net 4.1 per cent of employers intending to reduce the size of their contracting/temporary workforces.

The IT sentiment returns to positive territory, rising 12.0 percentage points to 9.8 per cent.

Employers in the financial services/insurance industry appear to have completed their major restructuring programmes, with sentiment returning to positive after dropping deeply into the negative earlier in 2009. Up 30.0 percentage points from last quarter, a net 2.2 per cent of employers are expecting to increase permanent staff levels next quarter.

While a net 6.4 per cent of employers in the professional services industry are planning to reduce permanent staff levels, many are unwilling to make redundancies, preferring to manage their workforce through natural attrition, redeploying resources to new areas of the business or moving people into regional secondments.

Although up 20.7 percentage points from last quarter, a net 12.9 percent of employers in the manufacturing sector are expecting to reduce permanent headcount over the coming three months.

Up 13.1 percentage points, sentiment in the retail industry remains negative with a net 15.9 per cent of employers expecting to reduce their permanent staff levels next quarter. Employer sentiment in the FMCG sector increased 5.6 percentage points to 0.0 per cent.

The transport industry softened a further 1.1 percentage points this quarter, with a net 21.1 per cent of employers expecting to reduce permanent staff levels during the coming three months.

Lower North Island:
Employer sentiment in the Lower North Island has grown 8.0 percentage points this quarter, returning sentiment to positive territory. A net 5.6 per cent of employers are expecting to increase permanent staff levels over the coming three months, the strongest level of sentiment across the regions.

There is still a very high profile question mark over the use of contractors in the government sector, with a net 7.9 per cent of government employers intending to reduce the size of their contracting/temporary workforce. While this result is 11.2 percentage points higher than last quarter’s record low, pressure remains to reduce use of external resources and there is reluctance to engage contractors.

Sentiment now appears to be moderating now that clarity around the Government’s direction has occurred. A net 1.7 per cent of employers intend to increase permanent staff levels over the coming three months, up 7.5 percentage points from last quarter.

With Government having restricted its expenditure on external services, the professional services sector is feeling the impact of reduced demand for consultancy services, with sentiment falling a further 10.0 percentage points after an even sharper drop last quarter.

Employer sentiment in the IT industry has remained relatively strong, with a net 17.0 per cent of employers intending to increase their permanent staff levels over the coming three months, up 4.8 percentage points from last quarter.

A net 4.9 per cent of financial services/insurance employers are expecting to increase their permanent staff levels during the next quarter. Many banks are through their restructuring programmes and there are indications of a further increase in hiring intentions towards the end of the year.

A net 13.2 per cent of telecommunications employers reported an intention to increase permanent staff levels over the coming three months.

South Island:
South Island employers have reported the biggest increase in sentiment across the regions. After moving deeply into the negative last quarter, employer confidence has returned to more neutral territory, with a net 2.1 per cent of employers intending to increase permanent staff levels next quarter. This result is a considerable 14.1 percentage points higher than that reported the previous quarter.

In the contracting/temporary market, hiring intentions have stabilised after employers cut quite deeply over the previous two quarters. Rising 11.5 percentage points from last quarter, a net 0.0 per cent of employers are intending to increase the size of their contracting/temporary workforces.

Despite increases in regional sentiment, many industries remain severely constrained by economic conditions. A net 40.0 per cent of employers in the tourism industry are intending to reduce permanent headcount during the next quarter, a result 10.0 percentage points higher than the record low recorded last quarter. Employers in the manufacturing sector have reported a 23.3 percentage points increase in employer sentiment from last quarter’s record low, however the result remains negative with a net 5.3 per cent of employers still expecting to reduce their permanent staff levels.

The property and construction industry continues to experience a volatile market, with employer sentiment rising 16.7 percentage points after having dropped dramatically over the course of this year. Many employers were forced to make redundancies to save costs and help remain afloat in a difficult market, with a net 16.7 per cent still expecting to reduce permanent headcount over the coming three months

Employer sentiment in the accounting and financial services sector remains relatively strong, with a net 19.1% of employers planning to increase permanent staff over the coming three months, down just 3.2 percentage points from last quarter.

A net 35.0 per cent of IT employers have reported an intention to increase their permanent staff levels over the coming three months, up 16.0 percentage points from last quarter.

Government hiring intentions increased 27.3 percentage points as clarity emerged around the policy direction of the Central Government. The majority of government employers are now holding stead on permanent headcount and looking internally for resources, with a net 0.0 per cent expecting to increase their permanent staff levels over the coming three months.

By size[1]
Small, medium and large sized businesses have all reported an improvement in employer sentiment this quarter, although the net results remain diverse. Large companies continue to report the lowest level of sentiment, with a net 2.2 per cent of employers reporting intending to reduce permanent staff levels. This is 10.0 percentage points higher than that reported last quarter, suggesting that staff shedding may be stabilising.

Sentiment among medium-sized businesses is up 14.5 percentage points with a net 3.0 per cent of employers intending to increase permanent staff during the coming three months.

While small businesses were hit first and hit hardest by the recession and some have gone out of business, many have adapted quickly to meet the needs of the market. Small businesses continue to report the strongest level of sentiment, with a net 9.0 per cent of employers planning to increase their permanent staff levels over the coming three months, up 2.3 percentage points from last quarter.

[1] Small businesses are defined as fewer than 20 employees, medium are 20 to 200 employees and large businesses more than 200 employees

About the Hudson Report
The Hudson Report is uncovers and analyses the hiring expectations of New Zealand employers and has established a reputation as a key socio-economic indicator in the New Zealand market.

Hudson recruitment professionals personally surveyed 1,552 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. While a number of industry surveys currently address hiring intentions and job vacancies, the Hudson Report fills the gap with market knowledge and data on broader human resource issues and trends relevant to business leaders.

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 strong indicators 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] Small businesses are defined as fewer than 20 employees, medium are 20 to 200 employees and large businesses more than 200 employees

ENDS

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