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More contracts, less commitment: ANZ firms favour flexible hiring

The job market in Australia and New Zealand is undergoing a significant shift, with a rise in temporary and contract placements contrasting a decline in permanent placements.

According to data from JobAdder’s Q3-Q4 2023 State of Market report, this trend reflects a cautious approach among employers, who are increasingly favoring flexible work models. Australian agency recruiters witnessed a drop in average jobs created from 61.61 in Q2 2023 to 55.44 in Q4 2023, while their New Zealand counterparts saw a decrease from 57.59 to 45.2 during the same period.

Despite minor fluctuations throughout the year, overall agency contract roles in ANZ grew from 1.1 per cent in Q1 2023 to 2.2 per cent in Q3 2023 and then dropped to 1.2 per cent in Q4 2023 due to the hiring in this quarter historically being low compared to the rest of the year. However, for permanent roles, there was a consistent negative trend throughout the year, dropping from -2.7 per cent in Q1 to -6 per cent in Q3 and -3.6 per cent in Q4. The data suggests that despite caution across the ANZ job market until the economy becomes more stable, many employers still have hiring needs but are approaching the process more thoughtfully, evaluating each new permanent hire for legitimate needs and holding recruiters more accountable for hiring success. Across talent acquisition and agency recruiters in the ANZ region, there was a dramatic increase in the number of job applications received per job over the year. For Australia, recruitment agencies increased from 17.7 applications per job in Q4 2022 to 31.7 in Q4 2023. For talent acquisition, this has risen from 24.9 in Q1 2023 to 32 in Q4 2023. In New Zealand, applications per job moved from 14 applications in Q4 2022 to 34.1 in Q4 2023 for agencies and a 24.5 per cent YoY increase of 24.3 in Q1 2023 to 40.1 in Q4 2023 for talent acquisition.  

CEO of JobAdder, Martin Herbst, said: “The decrease in permanent roles during the year indicates a significant shift in the employment landscape. Economic conditions have undoubtedly played a role in this pattern, with downturns potentially influencing employment stability. However, you can’t overlook the shift towards more flexible employment models as a contributing factor. This plays into the evolving nature of work, as businesses and employees may opt for more flexible arrangements like contract or part-time roles. It doesn’t necessarily signify a decline in job opportunities overall but rather a transformation of what employment looks like. 

“Even with the rise in applications, these roles are becoming more challenging to fill. Employers are becoming more selective; decision-making processes are slower; and the criteria for a suitable candidate is more niche and tricky to meet, making the recruiting process more complex. However, the current market does not indicate that there are no jobs available to fill; there is more so a need for recruiters to expand their role and be more strategic,” Mr Herbst continued.

Mr Herbst added: “Despite the decline in the number of roles created, the job market is still solid. The pace it was moving at previously was unsustainable and didn’t allow recruiters, both in-house and within agencies, the opportunity to be strategic and create matches between candidates and organisations that would set both parties up for long-term success. Despite us seeing a decline in proactive sourcing, this should still be a key tactic for recruiters over job boards to find the perfect fit, especially with skilled employees becoming reluctant to change jobs in the face of economic headwinds.” 

Recruitment Thought Leader and JobAdder Advisor, Greg Savage, said: “The number of jobs has shrunk slightly, but that was from an almost all-time high post-COVID-19. The much more challenging aspect of the market than the decline in jobs is that employers are more cautious when hiring, and candidates who are acutely aware of rising interest rates, cost of living, and layoffs are more tentative when considering a move. 

“In these kinds of job markets, temp desks thrive. However, many companies have put all their eggs in the permanent recruitment basket. They made great money in the perm boom but are now not equipped to take advantage of the temp upswing. You need dedicated recruiters, a bespoke candidate acquisition plan, the right technology, rigorous processes, thorough compliance, and deep funding to grow a temp business. Some of my clients have seen strong temp and contract growth, and, in some cases, this has even exceeded the losses felt in perm. That’s how to run an agile, sustainable, consistently profitable recruitment company.”

Talent and Recruitment Leader,  Mitch King, said: “2024 is going to be an interesting year for internal talent teams as the past four years have had Covid layoffs followed by re-hiring at breakneck speed and then another spate of layoffs and cutbacks on teams and budgets.

“An increase in blended workforces is certainly something to expect this year. The increase in temp hires will likely continue as companies deal with reduced headcounts, causing employees to be thinly stretched, opening the door for freelance and temporary staff to come to the rescue. This also ties into a trend I expect to see more of on the candidate side; more talent will move away from traditional single-income and permanent employment and instead venture into the world of freelancing or, as we’ve started to see it more commonly referred to, ‘fractional employment,'” continued Mr King.

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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