That’s the employment picture for executives in November, according to the latest executive demand index from recruitment firm EL Consult.
Referring to the more upbeat performance of the IT sector, EL Consult managing director Grant Montgomery said “spending on technology will continue to be the focus of cost-conscious business. What’s more technology, especially online spending has now captured more and more of the marketing budgets”.
“The shift to the cloud is a further growth example as more and more business ditch their own hard storage.
“The downside of IT spending is of course that it ultimately saves jobs and employment falls.
“Still many have being predicted a crisis but that is unlikely to occur unless technology reaches a pinnacle of development with every advancement possible completed. Not going to happen!”
As EL reports, all of the other sectors put in negative results, with engineering registering the biggest loss - but with New South Wales again the strongest state during the month, “almost pulling off a positive result thanks to gains in IT and management”.
Overall, the EL Index fell 6% in November, its lowest position in 2019, with Montgomery noting that “employment opportunities for executives fell heavily this month bottoming out the year in a clear warning call for Australia’s overall employment trends”.
A fall in the index indicates a weakening within 3-9 months, and Montgomery went on to say that “it has been a year of correction, with the Reserve Bank trying to chase after the economy to keep it moving by lowering rates, and at the same time trying to jawbone the economy higher by pleading with companies to lower their hurdle rates for new investment.”
“But the real problem is that small business, which accounts for 57& of Australia’s GDP, is being held in a massive credit squeeze.
“Recent denials by ASIC and AFIC that the post Royal Commission new ‘responsible lending’ rules do not apply to business lending is as ignorant as it is wrong.
“The truth is that banks in their highly protected comfortable environment have never actually lent to business but have lent against property for business purposes
“The distinction here means they have so skills or capacity to differentiate or assess a business loan outside the lien they put on a property. So as soon as the regulators bought in ‘responsible’ lending the banks naturally applied the higher interest cover rules.
“This is not how business works.”
“If someone has a highly innovative piece of technology and wants to set up a business, they used to get bank funding by putting their house on the line,” Montgomery said.
“As a new business with a high potential has very little income on inception, ‘responsible lending’ means they can no longer get funding to start.”
According to Montgomery, even existing businesses rarely have consistent week on week or year on year incomes and if they seek funds for a tight period such as during drought “the banks have no ability to assess the risk outside of morphing the ‘responsible’ lending rules and consequently refusing to lend regardless of the backing security.
“The whole small business sector isn’t spending or investing money. Ill-conceived borrowing rules are affecting innovation and entrepreneurship and it represents around half of the Australian working population or more than 5 million people. It is very easy to see why there are very few pay rises and very little wages growth
“Maybe the Federal Government very recently was trying to address this and spark innovation lending by setting up a venture capital lending vehicle.”