Much has been discussed about the “Great Resignation”, with recruiters lamenting the diminishing supply of talent posing serious economic risks. Amidst the doom and gloom, current economic signs do point to a glimmer of light at the end of the talent crunch tunnel.
With the VC boom coming to an end, VCs like Sequoia Capital and Y Combinator are warning of choppy waters ahead. The second quarter of 2022 foresees a drop of 27% in funds invested in start-ups compared to the first quarter, and down 25% from the same quarter last year. The boom that pumped money and talent into start-ups has passed its peak.
What does the VC boom fall mean for the talent market?
Fintech and tech start-ups are likely to be among the hardest hit, due in part to the inflated valuations many enjoyed during the pandemic. All of this points to bear-market conditions for start-ups that could last for years. As the money dries up, coupled with the rising cost of living and a sluggish economy, the focus will be on cost-cutting and possibly lay-offs to survive, meaning there will be an influx of talent joining the ANZ talent pool.
Governments worldwide have also been quick to roll out talent attraction schemes to remain competitive. Australia is well-placed with The Global Business and Talent Attraction Taskforce, which has hubs in locations like the United States, Britain, Hong Kong and Singapore, to recruit skilled workers to Australia from around the world. There is also the global talent visa designed to attract highly skilled professionals to live and work in Australia permanently.
Following a week-long Jobs & Skills Summit which concluded on 2nd September, the Australian government announced it would increase its intake of permanent immigrants to 195,000, (35,000 more than last year) to help businesses with talent shortages. These numbers underline the urgency in sourcing talent to support Australia’s economic growth.
While all of this is good news for an economy where businesses are grappling with a talent crunch, government-level initiatives only provide incentives on a macro scale that allow for country-to-country competition to attract talent. ANZ businesses need to stay competitive on a company-to-company level for a more holistic approach to talent attraction. Many companies are now raising salaries as their key talent retention and attraction strategy.
However, the ongoing global reassessment proves that money is no longer the only driving factor for employee retention. After lengthy lockdowns during the pandemic, the world has significantly changed, with work arrangements evolving and employees’ values shifting. Gone are the days when pay raises and promotions are the yardsticks for career success.
How can businesses navigate the muddy waters?
Employees now prioritise freedom and flexibility, with hybrid and remote work arrangements being the preference. Remote working arrangements, once frowned upon by sceptical employers, have become an entrenched and in many cases, expected, perk of modern workplaces. Globalization Partners’ 2021 Global Employee Survey revealed that employees are more likely to stay at companies that are making remote work a permanent fixture.
Technological advances and work process automation have combined to empower remote work. The past two years of a Work-From-Home movement has proven that this model functions just as well as the traditional model. Employees expect the same – as long as they continue delivering results, they demand flexibility around when or where they work. Remote hiring has become an alternative to address the talent gap, and it is a permanent solution.
For ANZ companies, the advent of remote working arrangements has also opened up wider talent options for businesses to look at hiring staff remotely, outside of their operating cities or even in countries beyond their region that are within a reasonable time zone.
With the help of an Employer Of Record (EOR) such as Globalization Partners, Australia and New Zealand companies can easily hire staff from overseas in a legally compliant manner without the need to set up a subsidiary or business entity in other countries. In the race for talent, many smart employers are already leveraging the Employer Of Record model to recruit the staff they need now, rather than wait for govts to bring candidates to them.
This point is corroborated by the 2022 Globalization Partners CFO survey which found that there is near-universal agreement among CFOs that the ability to capture market share through global expansion is a hot button for their stakeholders. CFOs remain surprisingly bullish on growth, with about 77% of CFOs in APAC feeling their long-term plans will stem around expansion into new countries to expand business opportunities and find new talent.
Specifically for Australia, new data shows that 69% of small-to-medium Australian businesses plan to operate outside of Australia by 2027. Using an EOR can be a very smart expansion and talent management strategy for Australian businesses. Australian businesses simply need to shift their perspectives and re-strategise to navigate and tackle the global talent crunch.
The recent Australian labour statistics have been looking positive, with the unemployment rate progressively dropping from 5.11% in 2021 to 3.4% in July 2022 – the lowest since August 1972. This number points to people re-entering the workforce again post lockdowns and post-“The Great Resignation”. ANZ which places a premium on the quality of life and work-life balance, is set to be popular destinations for the skilled workforce globally.
With Australia and New Zealand businesses realigning themselves to a new set of values to be competitive in retaining and attracting talent as well as the proactive government-level initiatives, the talent outlook for the ANZ region is actually looking optimistic.