Supply and Demand Theory back-firing on Human Resources in Procurement

Economic theory states that where supply is low, demand will be high.  The underlying premise is that a higher premium is paid for those high demand commodities where supply is low.  For the last couple of years, we have seen this trend play itself out time and time again when it comes to salaries paid for human resources.  However, statistics for the first quarter of this year are turning this theory on its head!, ” Priscilla Gibson MD of Tech-Pro Personel tells SmartProcurement.

To put it mildly, the market is facing a bit of a stalemate.  Why do I say this?  Quite simply – no-one wants to budge when it comes to salary.  Employees are wanting more, and employers are wanting to play a lot less. Demand for skills is at an all time high.  Supply is at an all time low.  Negotiations are resulting in a lose-lose for all.

Companies are becoming reluctant to pay high premiums for skills.  Where in the past, roles would be regraded;  salaries restructured or sign-on bonuses paid, companies would now rather not fill the position than have to pay salaries they regard as ‘above market related’.  Many have openings that have been vacant for a year or more.

Candidates on the other hand, would rather remain with their existing companies than sell themselves short.  And most will stay with their existing employer even when not counter-offered!  It appears that money has become the most important determining factor when changing jobs.  Gone is the focus on career development, training, or exposure to latest technology.

So where does this leave us as a nation?  Going nowhere fast!

We have a great pool of exceptional talent and skills arriving from our neighbours daily.  Even though the government has introduced new immigration laws that make it easy to recruit these skills, most companies are reluctant to tap into this supply (for various reasons).

Technology is changing so rapidly, that most people are finding it difficult to keep up to date with the latest trends in their discipline.  Training budgets are being cut, meaning that individuals are having to source and pay for training themselves.  Even though most skills involving new technology pay higher salaries, individuals are reluctant to sacrifice in the short term.

So we are at a stalemate.

What is needed to break this quagmire is concrete evidence about current market salaries.  Hence the development of the 2008 Salary Survey in conjuction with SmartProcurement and Purchasing Index.  We believe that once both parties are provided with correct data, there will be more willingness to be flexible.  So please participate in the attached survey – it will be for your benefit.

Priscilla Gibson
Brand Manager
Tech-Pro Personnel
Tel: 011 514 0463
Cell: 082 808 7754

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