Fall in executive demand has ‘bottomed out’ — index

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Fall in executive demand has ‘bottomed out’ — index

The demand for executives in Australia has bottomed and won’t get any worse in the current economic downturn, according to a respected index.

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The demand for executives in Australia has bottomed and won’t get any worse in the current economic downturn, according to a respected index.
 
Grant Montgomery, managing director of the executive search firm E.L Consult, which researches and publishes the E.L Index, said executive demand is ‘as bad as it is going to get’.
 
‘Executive demand is at an inflection point,’ Montgomery said.
 
Streamline costs
 
‘Businesses are taking the opportunity to streamline their cost structures by getting rid of underperforming executives along with any other expenses that don’t immediately impact business performance.'
 
‘Indeed it is a very strong chief executive who will be able to put up a board proposal for increased management, no matter how good the business case, even though it is now a buyer’s market for superior talent.'
 
‘Like the stock market, executive demand traditionally overshoots both the top and bottom ends of the market.’
 
Improvement in 4th quarter
 
Montgomery said that with the strong fundamentals of the Australian economy, the increasing international optimism and the ‘almost comical stimulus spending by governments around the world’, his company’s modelling still firmly shows that executive demand will improve considerably by the fourth quarter this year.
 
‘At which point many companies will be rushing to re-employ some of the talent they are now shedding,’ he said.
 
‘And given that executive employment leads general employment we believe that the unemployment rate will bottom and start to improve three to six months after that.'
 
‘Stock markets internationally have already risen more in a month than any time since 1933, and international commodity prices are strengthening.'
 
Confidence the biggest issue
 
‘Clearly the situation is still fluid but fewer commentators are predicting the worst is still to come. The biggest issue that remains to be addressed is confidence.’
 
Montgomery said the E.L Index has been collecting data and analysing trends since 1992 and has been shown in a number of university studies to be an accurate predictor of general economic trends.
 
The E.L Index fell 8% in April compared with the previous month, losing half its first quarter gains.
 
Newspaper advertising down 41%
 
Montgomery said that overall, the current economic crisis has caused a downturn in advertised executive positions of 41% over the last two years, but the level of executive recruitment advertising in newspapers has fallen 74% in the same period.
 
By comparison, the level of executive advertising online has fallen only by 10% in the same period.
 
‘The downturn has been the final impetus for advertisers to turn away from expensive newspaper display employment ads, and those clients using recruitment consultants are scrutinising the disbursements of the consultants more carefully,’ Montgomery said.
 
Rise in on-line ads
 
‘No doubt the continuing rise of on-line advertising through portals like Seek and Career-one is having a massive impact on the revenues of traditional recruitment newspapers like The Age and The Sydney Morning Herald, who are finding fewer recruiters prepared to buy the big quarter- and half-page spaces they once did.
 
‘Newspaper advertising is now much more a question of company promotion and less important in recruitment of the best candidates.’
 
In March, all Individual market sectors lost ground, mainly due to losses in the government sector.
 
Grabbing market share
 
After leading the increases in demand in February, marketing was again the best-performing sector thanks to rises in the business sector. This is a lead sector showing some companies are now gearing up to grab market share from weakened competitors and indicates cost-cutting is being replaced by strategic planning.
 
Management was the second-best performing sector, while engineering and information technology continued to struggle.
 
New South Wales had a second consecutive strong month, being the only large state to record a positive result compared with the previous period (the Northern Territory also recording a positive result).
 
All other states and territories were negative. Two out of the five industry sectors picked up in New South Wales, including the leading sectors of engineering and marketing (up 22% and 19% respectively).
 
In March, the losses were dominated by a reduction in print-based advertising.
 
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