Employment Market Overview
Staffing levels in white-collar markets are stabilising after the significant fall in hiring activity that commenced in the second half of 2008. Our annual employment survey, which this year includes responses from 400 senior managers from leading foreign capitalised organisations in Japan, reveals 56% of respondents believe their headcount will remain stable over the coming 12 months. A further 28% predict their staff numbers will increase, with only 16% saying more cuts are likely.
These figures substantiate the view that most white-collar employers have already made their deepest staff cuts and are now looking to at least maintain headcount. In the financial services sector, which saw considerable uncertainty and major cut-backs, the mood is slightly more optimistic, with as many as 33% of respondents seeing increased hiring likely in the next 12 months.
Business confidence has improved through the first half of 2009 and we have seen staffing levels stabilise in recent months. The outlook is cautiously optimistic with 48% of employers surveyed forecasting trading conditions to strengthen further by the end of the year. Whilst this is encouraging, these results are not as high as the corresponding results in Hong Kong, of 63% suggesting a more bullish view in that market.
The majority of recruitment activity in the current market is for replacement hires. This is an encouraging sign in itself because companies are maintaining staffing levels rather than reducing numbers through natural attrition. The jobs that are being created are typically by new market entrants and established companies looking to expand into new markets and product lines.
For those companies that have better weathered the local storm, a frustration remains that final hiring decisions are being made outside of Japan, in global headquarters located in the United States and Europe. This has often prolonged the recruitment process and made multiple interview stages common. In recent months we have started to see a back log of headcount requests signed-off, and new hiring decisions being made. If the market continues to pick up, we forecast a significant advantage for those companies with faster hiring processes.
The retention of skills has remained an important consideration despite the deterioration in business conditions over the last 12 months. To avoid staff cuts, many companies have pursued alternate cost reduction strategies. Our survey reveals 29% of companies have frozen salaries and 15% have enforced salary reductions. A further 13% of companies have also introduced reduced working hours as a cost reduction strategy. Business attitudes vary across the Asia Pacific region in relation to salary freezes implemented as an alternative to job cuts. Asia Pacific survey responses reveals, 48% of respondents in Hong Kong and 35% in Australia have implemented salary freezes, which is significantly higher than Japan.
Despite the drop in hiring activity, quality bilingual candidates remain in short supply in most industries. The pool of active job seekers has increased but in the majority of situations the most talented and well regarded professionals have been retained. These workers remain cautious about changing jobs despite early signs of market stabilisation. To attract them, employers need to offer competitive salaries and demonstrate the role is secure with the opportunity for career growth.
Our forecast for the next 12 months is for a gradual increase in hiring activity rather than a sharp recovery. Employment tends to be a lagging indicator and jobs growth will only occur after sustained improvement in consumer and business confidence. The second half of the year is likely to see moderate improvement off a stable base, with new job creation a more realistic proposition for early 2010. We anticipate salary levels will remain constant or increase marginally for people who remain in their roles. Those who change jobs can expect an average increase of 5-10% although the stability of the role and opportunity for progression are also key consideration points.
