Post-Budget analysis: Employment market the big winner

by HCA20 May 2009

Bridget Beattie - Right Management

Leading recruiters have given a tentative thumbs-up to the Federal Government's budget announcement last week, especially initiatives to combat unemployment and shelter working Australians from the effects of the global downturn.

Randstad CFO, Edmund Khalaf, applauded the Government for its attempt to save an estimated 210,000 jobs by investing in infrastructure, but expected the Australian public would monitor its progress with great interest.

"Since last year's budget, we've gone from a severe talent shortage to a situation where organisations are cutting costs and having to restructure. People, afraid of losing their jobs, are working harder and extending their working day in order to stay in their current roles.

"Any move by the Government to stimulate the economy and boost the employment market must be welcomed by Australia's business community."

Federal Treasurer Wayne Swan's $22bn Nation Building program will see increased spending on rail, road and port facilities. The program will be supported by extensive investment in communications, energy, education and health, and savings of $22.6bn by trimming Federal spending over the next four years.

With the Government forecasting that the unemployment rate will reach 6% by June this year and accelerate to 8.25% by June 2010 - well above the previous estimate of 7% - the spend on infrastructure comes at a good time for the employment market.

"Although the pace of spending might be slow, it is doing its part to boost the employment rate in sectors such as construction, engineering, building and design. The creation of more jobs will have a knock-on effect in other areas and will play a vital role in aiding our economy," said Khalaf.

Despite the apparent easing of the talent shortage in Australia, Khalaf said there will still be pockets of the labour market that will experience acute difficulties finding the right people over the next 12 months. 

"While the Government should be applauded for the investment it is making in healthcare, this sector remains critically short of skilled workers. This shortage is impacting on service delivery and patient care. Australia needs a sensible immigration policy that supports the increasing demand for healthcare workers in Australia."

Bridget Beattie, regional general manager of Right Management in Australia and New Zealand, added that all employers must continue to take into account their long-term needs when making staffing decisions.

"While the skills shortage appears to have eased dramatically in recent times, the problem has not simply dissolved. Employers will need to continue to develop the skill sets to meet their own demand. Reducing headcount is not always the best alternative to securing long-term growth," she said.

Beattie added that the growing financial strain on many employers means they will need to be more creative about how they can use their workforce in different ways as they are forced to do more with less.

"For instance, this means utilising the skills they do have across different parts of their business through redeployment strategies, and paying more attention to employee wellness and engagement levels so as to continue boosting productivity among existing employees," she said.

Employers must also be aware of the new rules on redeployment set to take effect on 1 July 2009.

Under new changes to the Fair Work Act, set to take effect on 1 July 2009, employers will be legally obliged to consider their redeployment options before making staff redundant, and this also applies to their associated entities.

"Despite little media attention, employers must ensure they are aware of the new rules on redeployment and take a broad look right across their associated companies to adhere to the new requirements. Most importantly, they will need to put proper systems and processes in place to ensure they have the capability to implement the changes effectively and seamlessly," Beattie said.

Both Khalaf and Beattie praised the Government on its decision to introduce a paid parental leave system, which will bring Australia in-line with all other OECD countries outside the US. It is expected the move to offer new parents 18 weeks pay at the minimum wage from 2011 will encourage employees to take leave and return to the workforce rather than resigning.

"Offering parents a government-funded paid parental leave scheme is a long-term economic and social measure that will help retain as many jobs as possible in a tough climate, keep productivity on track and build a healthy and prosperous community," said Khalaf.

"Countries that offer paid parental leave, either by the employer or the Government, overwhelmingly keep people connected to the workforce for the long-term. Without it, many parents stop work altogether and find it difficult to return."

Beattie urged employers to ensure that they are able to factor in the prospect of parental leave into their workforce planning and are able to tap into existing skills within the business to fill the temporary gap.


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