Another financial year begins and we remain in uncertain economic times. In this edition of The Download, I look at the numerous conflicting forces affecting the Australian IT jobs market and attempt the tricky task of forecasting the outlook for the year.
On the upside, we have tax cuts of various sizes arriving today which may bolster consumer confidence somewhat, unemployment remains down at 4.0% and the AUD remains comparatively low allowing Australia to remain competitive as an international tech destination.
Conversely, there are numerous challenges, consumer confidence remains low, largely hostage to inflation and interest rates, geopolitical tensions continue to bubble away with a possible re-election of Donald Trump looming in a few months adding extra uncertainty, and last week interest rates were definitely going up, or down or not moving… and this week appear to definitely be going up.
Job Vacancies
If we look back 12 months there were just under 12000 IT job ads on Seek, around 6 months later that had dropped to just over 9000, and as of writing this article, there are 7850 ads. That’s a 35% drop in 12 months and almost a 60% decrease since the height of the post pandemic boom.
Some of that decrease in advertising volumes may be attributed more to a decreased need to advertise than a decrease in job vacancies. Most employers and recruiters are able to source candidates via lower cost channel including referrals, databases, and headhunting. At Balance we advertise on Seek far less than in the past, and when we do advertise it’s more cost effective to use LinkedIn. Additionally, we have 350,000 candidates in our database and candidates are far more receptive to approaches than they were a few years ago.
However, the decrease aligns with what our candidates and customers are telling us. It’s pretty quiet out there.
The volume of large scale tech projects has significantly retreated, large enterprises appear to have limited appetite for lavish tech outlays and start-up land is struggling for funding as the days of cheap money are left behind. NSW government announced in its latest budget that they are setting up a new unit to reduce the spend on consultants and contractors and the federal government has announced they will spend $ 1 billion less on consultants and contractors on top of the $3B decrease last year. As for the industry darlings Atlassian and Canva, they have only 56 and 172 roles posted in Australia, well down from the thousand+ of roles of yesteryear.
Layoffs
Around 2 years ago, there were widespread layoffs in the tech sector globally and though at the time we were expecting an impact in Australia, it didn’t really arrive.
At this point, we haven’t seen any large waves of redundancies this year either. Yes, there have been some cases, including a 30-person Sydney-based tech business who let half their staff go last week. But this seems to be the exception.
Most job losses relate to contracts not being renewed at the end of projects whilst most redundancies seem to be relatively small scale.
Salaries and Rates
It’s taken some time, but we’ve started to see contractor daily rates retreat a little. For a while, there was a battle of wills between decreasing demand for staff and increasing cost of living. Well, decreasing demand is starting to win, even roles such as Software Engineers are starting to see some softening.
However, this is contract not permanent. We’re seeing some lower salaries offered for new permanent roles but not significantly so, but this is more trimming of the excesses from 2021 and certainly, we’ve seen no change to incumbent’s salaries. And we don’t expect to.
Project Managers and BAs are still in massive oversupply with Balance receiving over 200 applications for a single job ad in 24 hours last week. Software Developers are significantly more available than a year ago with some softness noted in contract rates, whilst infrastructure roles seem a touch more resilient with rates holding up well. BAU roles are still reasonably steady whilst project-related roles are much softer.
We have just released our latest Salary Snapshot which details current rates and salary for all major IT roles.
Predictions for 2024/25
Certainty drives business and consumer confidence and the May RBA minutes used the word uncertainty on 7 occasions including noting ‘the considerable uncertainty about the outlook for both inflation and the labour market’.
I don’t think you’ll be surprised to hear I believe it’s going to be a flat 12 months. With consumer confidence low, and interest rises now a real possibility, today’s tax cuts will pay down debt, cover increased living expenses and where possible be squirreled away into savings.
I’m not predicting any sort of major downturn, the market will trundle along quietly, and candidates will be seeking security or will desperately chase money to balance the family budget.
At the onset of the pandemic in 2020, I said it was the greatest hiring opportunity of our generation. For those looking to hire, it’s now the second great time in 5 years to find highly skilled people, allowing businesses to improve the calibre of their teams and gain a competitive edge.