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Thursday, 12 May 2016 18:19

Executive demand nosedives as election jitters take hold Featured


The federal election is barely underway but is already putting a dampener on business demand for executives - including in ICT - with many businesses now holding back on taking on new employees, according to the employment demand index from EL Consult.

Locally and internationally, the index shows demand for executives across all business and industry sectors was down 7% in April this year, a drop to below the same period in 2015.

And in the ICT sector executive demand was down slightly more - 8% - which EL says was affected by cyclical delays in investment in the industry.

“Information Technology was down 8% but this was no doubt affected by the cyclical delayed effect of IT investment than a particular demise of investment in this sector,” notes EL Consult managing director Grant Montgomery.

“IT investment takes time to plan, develop and implement and the culmination of these decisions result in a steady but sawtooth demand from month to month for IT skills.”

But, on a positive note for executives in the technology sector, Montgomery says the reality for IT positions is that there is a “pretty steady and continuous demand for their skills despite monthly fluctuations”.

On state by state and territory basis all industry sectors - except for Western Australia – recorded a fall in executive demand.

The positive result in Western Australia was assisted by gains in management and marketing, but EL reports falls in demand in the larger states were between 4% in Queensland and 7% in New South Wales.

Also in positive territory was engineering, which EL says led the way with a 3% pickup – but demand was down in marketing, with the sector lagging all other sectors with a 16% fall.

EL Consult managing director Grant Montgomery says the overall downward impact across all business and industry sectors comes as business prepares for a two month journey of “economic policy uncertainty”.

“We are certainly in for a slow few months of political boredom but the really unfortunate downside is that employers have no choice but to sit on their hands until they know the outcome of some very diverse policy possibilities.

“This time around, along with the chance of a 6th new prime minister in 6 years, no one can be certain if any new government will have a Senate that will enable them to do anything at all.

“In reality if you wanted to slow economic growth and innovation in Australia the best way would be to call a long election campaign. It is far more effective than slow step changes in official interest rates by the Reserve Bank or increased taxation on businesses.”

Across the board nationally, Montgomery says as confidence is eroded by continuing falling commodity prices, weak consumer demand and the beginning of a long election campaign “that will provide business with total uncertainty on economic policy and taxation for the remainder of the financial year”.

On interest rate cuts and the effect on employment, Montgomery compares Australia unfavourably with other countries.

“While there might be some celebration about interest rates reaching their lowest level on record of 1.75% it is important to realise that more than 50 countries, including all of the world’s most advanced economies have interest rates considerably lower than this.

And, according to Montgomery, “the reason the RBA could cut interest rate even to this level is that their research is showing that the economy is deflating and needs stimulus despite all the talk of inflated property values”.

“The Australian economy needs concerted attention if we are to avoid a more serious downfall and that means a properly focused government and an intelligent rational Senate.

“That outcome looks pretty long odds at the moment and a gamble that business is rightfully avoiding by not making too many long term investment plans that could end in tears.”

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Peter Dinham

Peter Dinham - retired in 2020. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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