Skills shortage 'to intensify in 2007'

Hudson, the global recruitment firm, said employment growth is expected to remain strong in 2007 with sentiment among employers at its most buoyant since mid-2005.

Its latest employment expectations survey released on Tuesday found 38.4 per cent of Australian employers expect to add to their headcount in the January-March quarter, while only 5.8 per cent expect to reduce their workforce.

This translates into a net effect of plus 32.6 per cent, a 1.7 percentage point improvement from the October-December 2006 quarter.

This is the biggest quarter-on-quarter improvement in two years and the highest level of employment sentiment since the July-September quarter 2005.

"The employment market remains robust for the new year, even as three interest rate increases since last May flatten growth in the economy," said Anne Hatton, chief executive of Hudson Australia/New Zealand.

"The skills shortage, higher wage costs and inflation continue to put pressure on the country's economic performance."

The jump in sentiment comes as unemployment held at a 30-year low of 4.6 per cent for a third consecutive month in December.

"Given the skills crisis, employers need to engage with their current workforce to ensure their needs are met, and also be more flexible when hiring staff," said Ms Hatton.

"Employers should look to untapped pools of talent such as mature-aged workers, attracting skilled workers from overseas and parents returning to work, in order to maintain the required staff levels."

Employment sentiment varied across the states in the Hudson survey of 7,104 employers.

Western Australia showed the strongest employer sentiment amid a continuation of the resources boom.

WA showed a net gain of 51.6 per cent for January-March, the second highest on record, and 8.5 percentage points higher than the previous quarter.

"The skills shortage remains a pressing issue for West Australian employers. The shortage of labour has driven up wages and also the cost of resources projects. WA workers are now commanding, on average, higher wages than their counterparts in the other states," Ms Hatton said.

The ACT had the second strongest employer sentiment at 44.9 per cent, albeit 2.6 percentage points lower than the previous quarter.

Queensland followed at 42.5 per cent (up 3.6 percentage points), then Victoria at 30.3 per cent (up 3.4pp), NSW at 29.6 per cent (down 1.8pp) and South Australia at 27.9 per cent (up 0.1pp).

Sentiment among industries showed professional services and construction/property/engineering were both at record highs.

The survey showed 54.6 per cent of professional services firms plan to increase staff, while only 3.1 per cent expect to reduce staff. This was a net gain of 51.5 per cent, a second consecutive all-time high.

Sentiment in construction/property/engineering showed a net gain of 45.7 per cent, while resource industries had a 43.4 per cent net gain.

"The construction, property and engineering sectors are experiencing unprecedented growth due to continuing demand for infrastructure projects such as roadways, commercial and industrial buildings and ports," Ms Hatton said.

"The sector has enjoyed extensive growth in the past three years, however the skills shortage continues to bite."