Recruitment does not mean the economic crisis is over

Employers may have started hiring again, but that doesn't mean the global financial crisis is over, writes Mike Taylor.

Are we there yet? That is the question those reading this week’s Money Management salary survey should be asking themselves.

Why? Because while there are signs that employers have resumed recruiting and that valued employees and candidates can command higher salaries, there are many who still question whether the recovery we have witnessed since the depths of the global financial crisis can really be sustained.

The latest data published by Plan for Life tells the story. Retail fund inflows recovered extremely strongly up until the start of this year but began to stall in the face of the bad news about sovereign debt. The March quarter data showed that inflows had grown by less than 1 per cent.

This data then needs to be viewed alongside the research undertaken by companies such as Wealth Insights, which suggests that while financial planners believe current conditions are reasonably buoyant, they remain concerned about the outlook over the medium-term — not least because of the Government’s proposed changes to remuneration structures.

The key differentiator between the 2010 salary survey and that of 2009 is that it is not being unduly impacted by large-scale retrenchments.

When we published the same feature in Money Management last year, jobs were continuing to be lost in the financial services sector. The larger institutions were trimming back and some smaller companies actually closed their doors.

The bottom line, therefore, is that while Money Management’s annual salary survey has painted a picture of recovery, increased demand and consequent higher salaries there remain large numbers of former employees looking to re-enter the market.

In circumstances where many of the employees who found themselves redundant in 2008-09 are now seeking to re-enter a recovering financial services industry, it is arguable that there exists no major shortage of skills capable of unduly driving up salaries.

It is indicative of the current mood in the financial services sector that while many executives are talking of recovery, a number of major companies are maintaining their freezes on wages and salaries — something which has placed renewed emphasis on bonuses.

Something not entirely reflected in the salary survey is the reality that while many salaries have remained frozen, the recovery in markets has seen six-figure bonuses resume.

It seems very likely that the Australian financial services industry has not yet reached full recovery, and that while employment in the sector has resumed, those making the hiring and firing decisions are doing so cautiously and highly selectively.