In its latest Index on the market in Australia, EL Consult says that executive employment remains in the doldrums, with jobs falling by one third by the end of January.
“Hopefully the Chinese Year of the Snake will provide some improvement for Australian executives but a recovery in the senior end of the job market looks a little way off yet, says Grant Montgomery, Managing Director of EL Consult.
“While the general level of unemployment has remained fairly constant, the executive market has continued to shrink. A lot of the demise can be blamed simply on what has generally been a very bad year for Australian non-resource sector businesses.
According to Montgomery, a lot of the demise can be blamed simply on what has generally been a very bad year for Australian no-resource sector businesses.
“Flowing on from the GFC there has been cost cutting in the Australian financial services sector, poor retail sales and negative building and construction sector growth.
“Even the government sector with reduced tax and levy incomes has had to restrict their hiring.
“The high Australian dollar has pushed many local and multinational manufacturers to locate their production outside of Australia to compete with imports and management teams or re-hired in regional areas such as Singapore.
“In short the outlook has been gloomy and it is of no surprise that business managers are reluctant to take on the high investment and commitment required to take on new managers,” Montgomery says.
So, is an improving stock market likely to help? On that, Montgomery has this to say: “One bit of light at the end of the tunnel is that the Australian stock market has been improving with rises of some 14 percent after a few years of languishing at less than 4,000. The rise which started in 2012 and accelerated in the second half are seen as positive for the future.
“Globally, this is great news but it will take time for any benefit to flow through to the Australia economy proper.”
Montgomery makes the point that the stock markets are fed by global conditions and improvements particularly in the US has a multiplying effect on equity investment here in Australia.
“Currently cautious international investment funds are holding a lot of cash in low yielding bonds and any confidence improvement in the US gets funds running for better returns. This seems to be happening now.”
But, according to Montgomery, the rise in the Australian market is not necessarily indicative of a better 2013 in executive employment which, he says, “will ultimately require some significant across the board improvements to bring back local business confidence.”
“We are also now embarking on an election year. Electoral uncertainty has never been good for business confidence and this time around it is set for a very long drawn out process.
“Our outlook is for a slow first half with manly job replacement providing most of the opportunities for executives new or organic growth is not expected until at least the second half.”
EL also reports that New South Wales was the only state to register a positive or flat result in January, while all other states recorded significant declines.
“New South Wales was the clear standout performer in January, with demand remaining flat despite the seasonal lull and negative performance of the other states.
“If NSW can continue to perform well this will buttress the executive demand sector. Of course there is no guarantee of this at the moment.”
EL also found that all the market sectors produced negative results for the month, with the financial sector down the most, closely followed by management, IT and marketing. The fall in the engineering sector was less significant than the other sectors.