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Despite wobbles with economy, employers are finding ways to avoid staff sackings

Australian employers are opting for alternatives to outright job cuts as the economy slows, including freezing new hires and upping prices.

Feb 20, 2024, updated Feb 20, 2024
Foot traffic in the Brisbane CBD has improved but is yet to reach its pre-pandemic highs. (Image: BCC)

Foot traffic in the Brisbane CBD has improved but is yet to reach its pre-pandemic highs. (Image: BCC)

 

For the March quarter, there were 22 per cent of organisations planning redundancies.

While that’s a significant number, it was down from the 31 per cent recorded in the Australian HR Institute (AHRI) survey in the December quarter.

Economic activity has been tapering off as a consequence of higher interest rates and global headwinds, with slower spending and the like feeding into lower demand for workers.

AHRI chief executive Sarah McCann-Bartlett said the easing labour market was yet to translate into a faster rate of job cuts.

“About three months ago, we had seen a very sharp jump in redundancy intentions. Now that has eased somewhat,” Ms McCann-Bartlett told AAP.

She said 70 per cent of 600 employers who responded were pursuing alternatives to cutting headcount, such as raising prices, hiring freezes and ditching bonuses.

“We suspect that employers are pausing redundancies, potentially to assess forward economic conditions because we are seeing some changes in the economy,” she said.

Construction workers at a Melbourne building site.
Australian employers are opting for alternatives to outright job cuts. (Joel Carrett/AAP PHOTOS)
Workers are also in line for pay rises, with the survey recording a 3.7 per cent increase in expected mean pay, which excludes bonuses, in the 12 months to January 2025.

This was well up from the 2.6 per cent predicted for the 12 months to October 2024.

Ms McCann-Bartlett said the weakening labour market would moderate wage increases but the situation on the ground was complex for HR professionals.

“Although recruitment difficulties have eased, many organisations are still having trouble both recruiting and retaining staff,” she said.

About seven in 10 organisations plan to hire staff in the March quarter, unchanged from the previous quarter.

An official update on wages is due from the Australian Bureau of Statistics on Wednesday.

A slightly slower pace of pay growth is expected through to the December quarter after the industrial umpire’s wage calls fed into a record-breaking quarterly increase in the three months to September.

Australian households appear more optimistic about their financial situations based on the ANZ and Roy Morgan consumer confidence report.

The weekly gauge rose an insignificant 0.2 points last week to 82.8.

The sub-components told a more interesting story, with consumers reportedly feeling more upbeat about their financial situations in the short and long term.

By contrast, confidence in the state of the economy – both short and long term – tumbled.

ANZ senior economist Adelaide Timbrell said the gloomier view on the economy probably reflected the uptick in unemployment last week to a two year high.

But she said the economic markers were still above their 2023 averages, with the overall consumer confidence index now tracking comfortably above the lows of last year.

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