How many employers plan to increase or maintain headcount in 2023?

Despite fears of a recession, 75% of employers in Australia plan to increase or maintain their headcount this year, according to a new study from Robert Half.

Broken down, the survey of over 300 respondents revealed that 36% of employers are targeting a permanent headcount hike this year, while 39% plan to maintain theirs.

"Despite fears of a recession, the job market is expected to remain strong in 2023, especially for specialised professionals with in-demand skills. Where employers were once paying huge amounts to get staff through the door to meet surging demand for their skills, now they are making less 'panic hires' and shifting their focus on boosting the productivity of their existing employees," said Nicole Gorton, director at Robert Half.

"At the same time as 'right-sizing' their businesses, heavy goal setting off the back of 2022 has seen many businesses set ambitious growth targets, meaning headcount is necessary in achieving those growth initiatives.”

Businesses need to stop trying to outbid one another for talent in order to avoid a wage inflation outbreak, according to Westpac chief economist Bill Evans.

Contract, tech positions

In terms of contract positions, 23% of employers plan to add new ones to their team this year, while 40% said they want to maintain contract headcount by only filling vacated positions, found the Robert Half survey.

"Utilising contract talent as a measure against potential recession and staying flexible in a time of economic uncertainty is a strategic way to access skills in the market when it suits their business," Gorton said.

Australia's technology sector is expected to lead the hiring initiatives this year, according to the report, with 39% of CIOs planning to increase permanent headcount and 37% to maintain it.

The strength in hiring is attributed to the high demand in skills and planned digital transformation projects for improvements in data usage, customer experience and artificial intelligence, said Robert Half.

Alternatives to layoffs

Despite the strength of hiring this year, several employers are taking a cautious route amid fears of a potential recession, the report revealed.

Instead of implementing layoffs — as seen at employers such as McDonald’s and Amazon — more employers are leaning into alternative ways to cut costs, including restructuring departments (27%), postponing projects (26%), and freezing salaries (22%).

Only 24% of employers said they will implement a hiring freeze, while 16% said they would resort to layoffs, according to the report.

"Even though this is a minority of companies, extensive thought is needed when deciding to issue layoffs as it can tarnish future attraction and retention strategies," Gorton said.