Understanding Inflation, Interest Rates and Recruitment

Inflation, interest rates and recruitment, what do they have in common?

Not much it seems or do they?

We know here in Australia inflation is nearly at 8%, unemployment continues to be under 4% and most organizations are concerned about having the employees they need to achieve their business plans in this financial year and the next.

This means recruiters will be busy, looking after their clients and ensuring they are able to deliver quality candidates. So, inflation and interest rates on the surface of it, are not going to have much effect on recruitment.

What you can be sure of is people will be seeking job security and income stability, if not growth, so they can manage rising costs.
The first half of financial year is past, calendar or half yearly bonuses and reviews have been completed. During coming months, discussions will be happening around salaries, bonus and incentive payments aligned to performance. This will bring promotion, career change and remuneration improvement. If employees find that there is change which they are not comfortable with they will investigate other options and alternatives.

This is likely to lead to better candidate selection options for recruiters.

It is always a good time to look after your employees. This has probably never been truer than in today’s market as we are talent poor which normally leads to existing and potentially new employees seeking greater reward as a result of the simple demand and supply curve effect.

On the other side of the economic equation with greater reward being demanded, employers need more return to compensate for paying higher compensation.

It is interesting that commercial returns have increased dramatically over the last few years through the move to hybrid, outcome focused, roles which has profitability in many cases at record levels. Assuming higher interest rates, high productivity, maintaining profit levels and paying talent more continue, the only commercial action is increasing pricing to cover the increased employment cost. This leads to higher inflation. So, there is a relationship between Inflation, Interest Rates and Recruitment

This relationship often and ideally needs to be managed effectively through talent experts such as recruiters or human resource professionals. Retention of key staff, attraction of additional skills and capability as well as an understanding of the economic landscape should be considered in every strategic business planning process.

To know more on opportunities across Australia, please call Peter Gleeson, Ian Stacy or Peter Tanner (03) 9190 8904 or visit tannermenzies.net.au