With job advertisements soaring from a year earlier, a great resignation could emerge in Australia this year with employers having to offer higher and higher salaries to keep their staff, or many employees will look elsewhere if they are unhappy in the workplace.
ANZ Jobs ads data for April reveals that ANZ Job Ads fell 0.5% in April from March 2022 but were up 26.3% on a year earlier at 242,536 and were 57.3% higher than the pre-pandemic level in February 2020. ANZ Bank said the labour market is very tight and it expects strong labour demand to lead to solid employment gains in the coming months.
With job ads much higher than one year earlier, we are seeing a war for talent emerging and it is only likely to worsen as the Australian economy expands post Covid-19 lockdowns. Because of the labour and skills shortage, wage costs in some pockets such as IT are arising between 20% to 50%, with employers having to boost salaries to attract and retain staff.
If employees don’t feel supported with training, flexibility or the payment of a competitive salary, they are more likely to look for another job and resign. The time has never been better for employees to demand higher wages from their employers or leave for another job with job ads so high and potentially more lucrative opportunities emerging in the labour market.
More generally, employers need to work on their employee value proposition to motivate and keep their staff from leaving. This includes offering workplace flexibility, which employees have become used to through the pandemic, learning and development opportunities, and in many cases, putting more money in employees’ pay packets.
If employees don’t feel happy, they are more likely to look for another job. Looking at official Australian data, the ‘Great Resignation’ trend is not yet evident in Australia. During the year ending February 2021, 975,000 or 7.5% of employed people changed jobs, the lowest annual job mobility rate on record.
But we can expect that turnover rate to climb towards 10% in 2022 as the skills shortage worsens and employees who aren’t happy move on to employers that can offer them more, whether that is more money, more flexibility or greater career opportunities. My conversations with leaders in the public and private sector have revealed the extent to which they see attracting and retaining talent as a critical challenge for them this year and beyond.
Along with flexible work practices, learning and development is a key area where many employers in the private and public sector need to improve. We are seeing employees being promoted in some organisations before they are ready, because of the skill shortage. Employers need to offer training and development opportunities to ensure their staff acquires the necessary skills to do their job, including the development of management skills.
With the Australian economy operating at full employment and annual inflation at around 5%, the Reserve Bank of Australia (RBA) is expected to raise interest rates at its May meeting tomorrow or its June meeting. “With consumer prices rising quickly and the expectation that interests rates will jump this year, employees will be more likely to demand higher wages from their employers and this is likely to add to wages inflation across the entire economy.