High demand but short supply fuelling a skills shortage

Wednesday 1 June, 2011

• Increased hiring intentions declared by employers;
• Demand in key areas drives market from employer-driven to candidate-driven;
• Yet to see widespread salary increases, despite rising demand - a ‘perfect storm’ brewing.

Rising staff levels, more candidate confidence and a widening gap between candidate and employer salary expectations are three pressure points that look likely to combine to create a ‘perfect storm’ of high demand but short supply in New Zealand’s recruitment market in the year ahead, according to the 2011 Hays Salary Guide.

Out today, the 2011 Hays Salary Guide reveals that we are also yet to see widespread salary increases despite hiring intentions rising and the talent pool starting to shrink.

“Despite our dual economy - in which many SMEs are running lean teams but the larger corporates are recruiting talent - we see the beginnings of a perfect storm surrounding a skills shortage,” said Jason Walker, Managing Director of Hays in New Zealand.

“According to our survey results, 57 per cent of New Zealand organisations said business activity increased over the past 12 months. Permanent staff levels rose in 38 per cent of departments, with the greatest increases evident in engineering (up 67 per cent) and operations (up 65 per cent).

“Given rising recruitment activity and candidate confidence, turnover rose in 24 per cent of organisations surveyed.

“Looking ahead, 45 per cent of organisations expect permanent staffing levels to increase over the year ahead, with just nine per cent expecting to decrease levels. In addition, 67 per cent expect business activity to increase.

“Despite this, New Zealand employers are yet to make widespread salary increases. 57 per cent of employers intend to increase salaries by less than three per cent when they next review, while 14 per cent will offer no increase.

“Such low intentions are at odds with candidates’ own rising expectations - particularly those candidates in demand - and so we expect the gap between salary expectations to widen even further.”

Hays says the pressure points of rising recruitment activity, candidate confidence and the gap in salary expectations will likely fuel a forthcoming ‘perfect storm’ of high demand for skills, but short supply.

“One clear example can be seen in New Zealand’s construction industry, where employers currently hold high expectations when recruiting. Yet a Christchurch rebuild in full flight combined with a general overall upturn in the domestic market, will cause waves of candidate demand as the recruitment of construction professionals accelerates towards the last quarter of 2011 and into the first quarter of 2012.

“To counteract this ‘perfect storm’, smart employers will have recruitment strategies in place to hire talent well in advance of when it is needed.”

According to the Hays Salary Guide, the notable salary trends by sector are:

• Accountancy & Finance: Many employers are reviewing the salary and benefits on offer to make their firm or company more attractive to candidates. In the profession, salaries are being pushed up due to the demand in the commercial and public sector for CA trained candidates, where higher remuneration can be gained.

• Banking: After two years of very little salary movement, candidates are attracted to opportunities that offer better remuneration. In particular those candidates with exceptional skills, who can bring value-added components to a new employer, have a number of options presented to them and so are receiving the highest increases. This includes senior managers, business development managers and candidates successful in high net worth value retention or market share growth. We are also seeing salary increases within collections and debt restructuring, as well as risk and compliance.

• Insurance: New Zealand’s insurance market has been dominated by Christchurch’s Earthquake. It has placed a huge strain on insurance resources and led to a shortage of domestic Loss Adjustors and Claims Specialists. Salaries have increased, with premium salaries on offer for roles based in Christchurch since many candidates have relocated for these positions. In addition, the focus on increasing market share, particularly in the SME commercial market, has put pressure on salaries for Telesales staff and Sales and Service Team Leaders, particularly at the lower range of the salary band. Underwriters are in high demand and salaries continue to increase for experienced senior candidates.

• Office Support: In most demand are Project Administrators and Document Controllers. As such, salaries for these candidates need to be competitive. Candidates are also starting to think of their career progression after gaining more confidence and are looking to move for promotion, higher salaries and for a role closer to home to improve work/life balance. Employers are utilising temporary staff to help overcome critical shortages while a permanent employee is sourced. This has driven up pay-rate expectations for temporary staff.

• Contact Centres: Demand has led to salary pressure for specialist Customer Service Representatives, experienced Telesales candidates and Account Managers. Given the shortage of good entry-level telesales candidates, which led to salary increases for the top talent, salaries for the Team Leaders who manage them came under pressure. This in turn saw salaries start to rise for Customer Service Representatives.

• Human Resources: Within learning & development, HR specialists with skills in the implementation and delivery of new learning techniques and strategies are in demand, which will put pressure on salaries, particularly within the contract space. We also note some movement in salary bands within the remuneration analyst space in response to rising demand, the movement of candidates and two years of static salaries.

• Sales & Marketing: Salaries over the past year remained stable. The major change was to commission structures, which were altered to reward, incentivise and recognise improved sales performance and outcomes, as businesses sought to increase market share and secure medium to long-term contracts. As the market continues to improve, salaries for mid-level candidates will come under pressure as companies look to secure top industry performers.

• Procurement: As a number of procurement and supply chain positions are created, greater pressure is placed on the candidate market. Thus salaries are expected to rise and employers are already willing to pay top premiums to attract and retain professionals with the proven ability to impact positively on their bottom line.

• Legal: Despite demand, salary levels have remained steady. Firms are however starting to feel some pressure to increase salaries to retain and secure top talent, especially for those hard to fill positions.

• Information Technology: Permanent salaries remained steady, partly due to an influx of overseas candidates. Most employers have re-introduced yearly salary increases and ensure bonus structures are realistic and achievable. Contract rates have slowly risen as candidates seek to get back to pre-recession rates.

• Construction: Salaries have been static for several years. Over the last 12 months we have seen some notable exceptions, with increases for Estimators/Quantity Surveyors the result of the fiercely competitive tender market. Increases were also noted for Intermediate Design Engineers since more projects are in the design phase. Pressure will increase salaries towards the end of 2011 as the competition for talent heats up.

• Property and FM: Salary levels remained static over the past 12 months as companies consolidated following the Global Financial Crisis. Many organisations have lean headcounts and any increase in workload will result in the recruiting of high calibre property professionals, which may increase salary expectations. The impact of the Christchurch Earthquake on the property sector is likely to be significant. Already demand has risen for Building Surveyors, Leasing specialists, Project Managers and Development Managers.

• Energy: Although the signs of growth are positive, they do not seem to have had any immediate impact on salaries.

• Resources & Mining: The shortage of domestic talent in New Zealand’s mining sector continues to be exacerbated by the flow of talent overseas, particularly to Australia where salaries are higher. In response, some companies have slightly increased salaries in an attempt to retain New Zealand expertise.

• Oil & Gas: Given the growing demand from Australia, attracting candidates is challenging. Unable to compete in terms of salaries, which have remained stable over the past year, New Zealand employers are instead promoting job satisfaction and lifestyle improvements. Many employers have made packages more attractive through nonmonetary benefits such as flexible working hours, education and gym memberships.

Hays, the world’s leading recruiting experts in qualified, professional and skilled people.

ENDS

© Scoop Media