By Adam Boyton and the Recruitment and Employer Needs Analysis team.

At a time when the unemployment rate is at its lowest level since August 2008 and recruitment levels are at record highs, many employers are reporting difficulty in filling vacancies. The National Skills Commission measures recruitment difficulty through the Recruitment Experiences and Outlook Survey (REOS), an ongoing survey of employers across Australia, but what does “recruitment difficulty” mean? And what does it tell us about the state of the labour market?

The “recruitment difficulty” rate is one of the most cited outputs from the REOS, however it is also one of the least understood. This article steps through some survey data to explain what it is measuring and how it can be interpreted.

The 'recruitment difficulty rate' is the proportion of recruiting employers who experienced difficulty hiring. Importantly, the recruitment difficulty rate doesn’t relate to all employers, just those currently recruiting or who had recruited in the previous month. “Difficulty hiring” is a subjective measure for the employer to assess.

The following two graphics provides more insight into the data from May to December 2021 for both Capital Cities and Rest of State areas.

Structure of REOS data - capital cities (employers surveyed from May 2021 - December 2021)

Structure of REOS data - rest of state areas (employers surveyed from May 2021 - December 2021)

Employers are asked if they are currently recruiting or had recruited in the previous month – those that answer ‘yes’ are identified as “recruiting employers”.

• As shown in the graphic above, over May to December 2021 an average of 43% of employers in Capital Cities were currently recruiting or had recruited in the previous month, while in Rest of State areas 47% of employers were currently recruiting or had recruited in the previous month.

Recruiting employers are asked if they had difficulty filling their most recent vacancies. Some (very busy) employers can recruit more than once in a single month, but the REOS only collects data from their most recent recruitment.

• From the graphic above, of those employers that were recruiting over May to December 2021, 51% of employers in Capital Cities experienced difficulty in their most recent recruitment, while in Rest of State areas it was 58%.
• That then corresponds to an average of 22% of all employers in Capital Cities who experienced recruitment difficulty (43% of employers in Capital Cities were currently recruiting and of those, 51% of employers experienced difficulty in their most recent recruitment) versus 27% of all employers in Rest of State areas that experienced recruitment difficulty. 

The survey also records the time taken to fill vacancies and the time since employers started trying to fill vacancies. This gives an indication of employers having difficulty, but still managing to fill their vacancies.

As the graphic shows, of those employers that cited recruitment difficulty in Capital Cities:

• 19% of employers nonetheless filled vacancies within a month
• 23% filled vacancies but it took longer than a month
• 20% had not yet filled vacancies but had been looking for less than a month
• 37% had unfilled vacancies for more than a month.

In Rest of State areas of those employers that cited recruitment difficulty:

• 16% of employers nonetheless filled vacancies within a month
• 25% filled vacancies but it took longer than a month
• 18% had not yet filled vacancies but had been looking for less than a month
• 41% had unfilled vacancies for more than a month.

Putting all this together means that for Capital Cities, over May to December 2021, an average of 43% of employers recruited in a given month, with 51% of those experiencing difficulty in their most recent recruitment, and 37% of those being unable to fill their vacancies for more than a month. All up that corresponds to 8% of all employers.  In Rest of State areas this rises to 11%.

While there is undoubtedly a shortage of skilled workers available to fill vacancies in some occupations, and workforce shortages in some parts of the country – made more acute by the impacts of the Omicron variant of COVID‑19 – that’s not necessarily the case across the entire economy.

Recruitment difficulty doesn’t mean that positions go unfilled. That said, some employers who fill jobs within a few weeks do indicate that they found it difficult to recruit staff with the right skills. This may mean employers have had to comprise or be more flexible in who they hire – such as hiring less experienced applicants and training on the job, or changing the nature of a role to suit those applicants that are available.

The survey adds context by also asking employers why they think they are experiencing recruitment difficulty. The most common reasons employers give when asked about hiring difficulties include not enough applicants, or a lack of suitable applicants, a lack of technical skills or a lack of experience. In regional areas a relatively high proportion (21%) of employers cited their location as a barrier.

Reasons for recruitment difficulty - by region type

While recruitment difficulty is undoubtedly a serious issue for a number of employers, there is also an element of a silver lining to this cloud. That silver lining is that recruitment difficulty is not just a function of mismatches (e.g. employers seeking skills in short supply or employers and potential employees being located in different parts of the country), but that recruitment difficulty is often highly correlated to the general strength of the labour market.

That is, when more employers are seeking to hire staff, it quite naturally can become more difficult to find the right employee before they are snapped up by another employer.

Therefore, with the unemployment rate at a low level and job vacancies much higher than prior to the pandemic, at‑least part of the recruitment difficulty being cited by employers will reflect the strength in the jobs market.

For more information about the Recruitment Experiences and Outlook Survey, see the NSC’s Labour Market Insights page.