What’s the latest when it comes to the permanent and contract hiring markets across Australia and New Zealand? With a slowing market as a result of an economic downturn, the hiring landscape is shifting. We explore the latest trends in hiring across both groups, providing you with an exclusive look into what to expect for the year ahead.

A preference for perm

As a sense of uncertainty permeates the market, jobseekers are looking for greater stability in their roles, with many seeking out permanent or fixed term positions for greater job security. In fact, in a 2023 Talent survey, 34% of contractors cited that they were open to future permanent opportunities.

Katie Kemp, Talent Wellington recruitment expert sheds light on how this is playing out in New Zealand, “With cost-of-living pressures and post-election flow on, there’s an element of uncertainty for people and an increased focus on security in their work. The last six months or so has seen hesitation in the market coupled with work programme cancellation and an increase in the number of people available for this work. This combined with the pre-election dialogue on contractors and consultants saw some movement toward permanent roles for this sector and downward pressure on contractor rates”.

Stefanie Mortimer, Talent Auckland recruitment expert, also observes that jobseekers are seeking out greater stability in work and are opting for roles with longer tenure, “Stability and security continue to be important to candidates and longer-term contracting opportunities are much preferred.” In Australia, there’s a similar trend amongst contractors, with Talent Melbourne Managing Director, Simon Yeung predicting that, “Career contractors will look at permanent opportunities for security.” This desire for stability has seen a shift towards a preference for longer term or permanent working arrangements, particularly with rising cost of living pressures and an uncertain market.

Cuts to contractor spend

Looking at the contracting market, contractor spending cuts are occurring across a number of our regions. In NZ in particular, the government has announced plans to cut contractor spending over the next 4 years, with the goal of reducing current spend by 18%. Resultantly, the contractor market is starting to slow, seeing greater demand for permanent candidates instead. Looking at Talent’s hiring data from October 2022 to October 2023, federal and state government layoffs and hiring freezes across Australia have resulted in a 16% decline in contract hiring in this sector.

Talent Sydney Managing Director Matthew Munson comments on where spending cuts are occurring and the impact this is having on the local market, “The NSW Government continues to look to make savings through contingent workforce cuts. Some Government agencies have looked to make savings by implementing a max two-year tenure rule although this isn’t working too well as they struggle to backfill the IP with permanent employees or fixed term engagements.”

In New Zealand, it’s a similar story, with Georgia Hynes, Talent Wellington recruitment expert noting the effect of these cost-cuts and how organisations are attempting to keep their best people on board, “Demand for candidates is down and many contractors are not being extended. Government departments are also working on reducing contractor spend. Employers understand that career contractors are likely to want to go back to contracting once things pick up, so they’re more likely to come out with fixed term roles to prevent a sudden loss of IP.”

Looking ahead: what to expect from the employment market

What can we expect in the hiring market for the year ahead? Talent Melbourne Managing Director, Simon Yeung, observes that, “Employers, grappling with the need to curtail contractor expenditures and adhere to budget constraints, will encounter challenges in securing the necessary talent and expertise. As a response, some employers are transitioning contractors into permanent roles, although this may introduce retention issues as candidate rates fluctuate.”

The market however, looks to be recovering, with Talent Sydney Managing Director, Matthew Munson, noting that, “There are some positive signs the economy is finally improving, suggesting that investment and hiring will begin to recover in 2024”. What does this mean for both the permanent and contract hiring landscape? It’s anticipated that economic improvements will have a positive impact, seeing a steadying of both markets.

If you’re looking for top contract or permanent talent to join your team in 2024, we can help. Working with professionals in tech, transformation and beyond for more than 25 years, we’ve learned a thing or two about what they want. Get in touch to uncover how we can help you build world class teams.