And just like that, the year 2022 is wrapping up. It’s been a big year in defence industry recruitment; let’s take a look back at what changed, what we learned and what we can look forward to in 2023.
Five things that changed in defence industry recruitment in 2022
1. Organisations consider new ways to access talent as demand remains high
Most major acquisition programs are still hiring at a rate of knots, and demand for workers continues to grow. The Kinexus Hiring Intentions and Workforce Report, published in April 2022, reported that 3,700 new positions needed to be filled in defence industry in 2022. That comes off the back of similar hiring numbers the year before.
2. Salary and rate expectations sky-rocketed
Salaries increased by 2.2% nationally this year, as shown in our Defence Industry Insights 9th Edition. Salaries in South Australia experienced a higher than average increase (3.9%) and certain skill sets saw huge salary increases. The national number may sound modest, but demand for some skills in some locations has surged, with resultant salary increases. Software engineers across all locations have experienced significant salary increases, with the most significant increase in ACT, of 33%.
Expectations around contract rates have also increased this year, with many contractors asking for higher pay rates.
3. Defence industry employers pivot their strategies to secure the workers they need
There’s been no change in the level of competition for defence industry workers, and this has been compounded by the continued growth of adjacent industries that hire similar skill sets to defence industry. What has changed is the ability of some companies to attract, assess and integrate workers from adjacent industries. We encourage all employers to implement this into their workforce growth strategies.
Some defence industry organisations have also embraced the strategy of taking work to the workers this year, and have grown their workforces in non-traditional locations. South-East Queensland and Victoria have been the targeted locations, where organisations can take advantage of increased worker populations.
The decrease in attrition rates during the worst period of the pandemic has evaporated; attrition rates have now returned to 2019 levels. Companies are planning for around 10-20% turnover moving forward and are accounting for this in their hiring intentions.
A robust and effectively marketed Employee Value Proposition has been an important tenet of attraction and retention strategies for some time, but 2022 saw work-life balance cement itself into the jobseeker consciousness. Work-life balance, whether it’s defined as part time work, flexible work hours or flexible work locations, is now a primary factor in jobseeker decision making.
4. Hiring processes evolve to reflect the new hiring environment
Speed of recruitment processes has taken on a greater importance in the endeavour to hire suitably skilled workers, with employers recognising that applicants commonly have multiple employment opportunities to choose from. In these instances, it is typically the company that makes the formal offer first that gets the guernsey.
Counter offers have become more common, and are a symptom of companies needing to retain their workers. Being able to effectively deal with counter offers is an important skill to learn. For advice on this tricky topic, contact us.
5. Growing and nurturing a contractor workforce provides access to a new pool of workers
Kinexus research showed that 51% of the defence industry workforce would consider taking a contract role in the near future. As industry confidence grows, more workers are finding the perks of contract work harder to resist. These include improved work-life balance, increased variety of work and great pay rates.
This shift in worker outlook has led to changes in how employers view the contract workforce. Some organisations, especially larger organisations, now recognise that accessing a contractor workforce provides access to a different (and previously untapped) pool of workers.
Moving away from a last resort mentality, contract workers are now being considered as a strategic enabler to the delivery of project milestones, rather than just-in-time gap filling measure.
As hiring permanent workers continues to be challenging, some forward-thinking organisations are creating strategic contractor workforces that sit alongside permanent workers and outsourced work packages. We may see this business model – a combination of contracted in/out, own, hire and buy – be adopted more broadly in the future.
What’s coming in 2023?
An outcome of the Defence Strategic Review
The Defence Strategic Review that got underway this year will conclude in early 2023. The general consensus is that the outcomes will not impact any major programs currently underway. Instead it will focus on what new capabilities need to be invested in from here, namely autonomous systems, munitions and cyber.
Whilst it is a good idea for Defence to consider the makeup of their overall workforce capability, the growth needed means it will be difficult for it to develop the workforce it needs without significant service provider support. Whilst the Review may well recommend an extended APS workforce, this will not be possible in the short term and will not be extended at the expense of service providers.
The Review may put some pressure on contract rates due to the value for money reviews that make up part of it. There will be no decision on Land 400 Phase 3 until after the conclusion of the Review.
In 2023 Australian defence industry should receive a clear direction on our pathway to nuclear powered submarines. A welcome next step, this decision is likely to stimulate a lot of hiring when it is handed down.
Defence industry employers remain hopeful that the AUKUS agreement might see governments facilitate the movement of workers between countries, leading to a greater sharing of ideas, skills and technology.
The rise of space
The defence space sector is likely to grow next year, as the industry anticipates a decision on project JP9102. The defence space sector currently makes up just 2% of the total defence industry workforce; expected hiring on the Defence satellite communications project in 2023 will increase this considerably.
More competition, less choice
Competition for workers is already at the highest we’ve seen in decades, and this will not change in the next year.
19% of the defence industry workforce are currently contracting, and we anticipate this will increase in 2023. For those organisations unwilling to consider building a contractor workforce, they will quickly find that they are discounting an ever-increasing number of suitably skilled workers.
Increasingly, employers will need to mould their employment offering to the preference of the worker rather than the other way around. Many contractors are set up to work from home, with their own technology, licenses and software. Considering the possibility of remote workers (contract or otherwise) will further broaden an organisation’s talent pool.
Despite a shift to more contract workers in 2023, there is no guarantee that contractors will be more readily available. In this current climate, very few workers are immediately available and we have seen time-to-hires of over two months for contractors of certain skill sets in certain locations. The contract market tends to be tightest in the ACT where contracting is most prevalent. Long wait times can be relieved by open dialogue with recruitment partners so that they can commence talent pooling activities as soon as possible.
It is only through innovative approaches and close recruitment partnerships that the current worker shortage can be successfully navigated into 2023.
Wishing you a safe and enjoyable holiday period, with best wishes.