As we enter the beginning of the new financial year, Employment Office have decided to take a quick look at the conditions that are currently influencing the HR market, as well as the trends for the upcoming financial year.

At the moment, the Australian economy is relatively sound and relatively strong in comparison to last year. We have an unemployment rate of around 5% (ABS) and we also have a booming mining sector.

This is supported by Human Capital magazine's recent study of more than 600 Australian owners and decision makers of small to medium businesses which found that almost 4 in 10 businesses believe they are performing better now compared to this time one year ago, with one third stating that they feel more confident about the year ahead than last year. Consequently, hiring confidence has returned, but skills shortages in the $70 - $120,000 per annum remuneration bracket are beginning to emerge, with 6 in 10 Australian businesses stating that they are struggling to find appropriately skilled staff.

With hiring confidence in mind, CareerBuilder have reported that 24% of employers plan to hire full-time employees in 2011, up from 20% in 2010, while 58% anticipate no change in staff levels and 11% are unsure. Among the employers who plan to increase their full-time employees in 2011, Sales has been found to be the most popular industry, as businesses are focusing on expanding their customer base and market penetration. In general, it has been found that hiring is gradually improving among companies of all sizes. Thirty percent of large business owners, 27% of medium business owners and 14% of small business owners plan to increase full-time, permanent numbers in 2011.

Once again however, in a survey from the Australian Institute of Company Directors, it was identified that over 54% of Directors reported that skilled labour shortages were the main challenge facing Australian businesses, with most Directors believing that this will give way to wage, inflation and interest rate rises. Australian business leaders are focused on the skill shortages acting as a risk to their business, and therefore it is predicted that HR functions are going to see much more demand as a result.

As a result, in 2011, we will see an increasing amount of pressure to attract, place and retain the top talent across industry sectors. More and more companies are starting to realise that the conditions of the past few years have created an environment where many of their top producers are now, or will be, looking for new positions. While businesses clearly understand the importance of retaining and up-skilling existing staff in an improving environment, HC Online survey results show that few organisations have structures in place to help this occur.

If the shortage of skills does become more marked in the coming year, it is your top employees who are most likely to be tempted elsewhere. Giving staff an incentive by showing your interest in their career will deliver long-term benefit to the business and save you from losing a critical skill set, and the best way to retain skills and knowledge is to treat your staff right through regular reviews, ongoing career development plans and appropriate training.

Lastly, the number of people that are now using social media is way up and will continue to grow, so recruiters will not be able to ignore the power of being a part of the online community.

If your organisation needs help in attracting, screening and retaining skilled labour, Employment Office can help.