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Australia enjoyed improving business conditions, healthy employment numbers and a stronger economy in July with the ICT sector doing well with a rise of 11% in executive job demand, according to a new study.
The executive job demand report for July by recruitment firm EL Consult reveals a good monthly result for ICT, with the sector only trailing in performance behind marketing and the management sector.
And EL singles out ICT as one of the business and industry sectors attracting an uplift in capital investment on the back of low interest rates.
EL Consult managing director Grant Montgomery also says that due to the changing and expanding nature of the ICT role in business and industry, good IT executives are becoming more valuable to businesses.
{loadposition peter}But he cautions that, despite this, the ICT sector is finding it difficult to pass the top of its yearly trading range.
The EL index reveals, however, that in July losses in the ICT sector in the ACT and Victoria were more than balanced by gains in other states, NSW among them.
For July, across all business and industry sectors, EL reports a 12% boost to the highest level in five years as the conditions for Australian business continue to improve on the back of global economic improvements.
And according to Montgomery, the index is a strong predictor of general economic trends as executives are employed ahead of economic upturn and “are the first to be laid off when things turn sour”.
“The EL Index has correctly predicted the rising economic conditions that have occurred over the last 3 months and is predicting further improvement right through to the end of the year,” Montgomery says.
“The trend is patently up. It is at its highest point in five years, which coincides with other business indicators now catching on with the EL Index to show confidence levels in, some cases, reaching nine-year highs.
“Usually such positive indicators like this create more speculation that the Reserve Bank might increase interest rates to stop any inflationary pressures.”
“But I believe that the Reserve Bank is conflicted about the potential of slowing the property market to move much in this direction.”
Montgomery also says that while the bank’s monetary policy levers do not have as much impact at the current low interest levels “they would be also concerned that any higher interest rate speculation would push up the Australian dollar, as it did recently, choking off exports and encouraging imports”.
And, he notes that low interest rates are having a great effect on business investment, including in the ICT sector.
“As confidence has improved since the GFC, many companies have taken the opportunity of low interest rates to invest in capital including information technology as can be seen by the rapidly growing ICT sector.“
Montgomery observes that other surveys such as the NAB survey of business conditions is detecting the strengthening economy too, with its latest figures now at their highest point in nine years.
“And what about wage growth?” Montgomery questions. “A favourite discussion here and internationally is why wages growth has not moved substantially for some years.
“It is worth noting that executive salaries do not fall into the ‘wage’ definition and in fact have continued to rise.
“In my view this is not some sort of worker conspiracy but a factor of increasing communications technology and loss of bargaining power by the wage earner.
“While executives can and are highly mobile between industries and with internet access do not even need to commute to an actual place of work, this is not the case for the worker. A company today has a very clear choice of paying higher wages in Australia and becoming uncompetitive or subcontracting their production to low wage centres such as China and India.
“Overall management may still reside in Australia and enjoy higher living standards and employment on costs but the worker when such displacement occurs must retrain quite substantially into industries such as hospitality or health or be unemployed.”
According to Montgomery, the days of continuous wage increases “on the back of vigorous industrial bargaining really finished in the early eighties and any company that awards wage increases without clear productivity improvements is doomed to failure”.
“A clear example of this was the car industry which was simply uneconomic without massive government subsidies.”