CONTINGENT JOB INDEX Quarterly March 2018
About Kinetic Super Kinetic Super is the industry fund that s passionate about keeping people connected to their super. For over 25 years, Kinetic Super has worked throughout Australia across various industry sectors. Today, Kinetic Super manages in excess of $3billion in retirement savings and operates for the benefit of over 250,000 members. With low fees, a history of strong long-term investment performance, a range of investments and great value insurance, Kinetic Super is committed to providing quality products and services. Kinetic Super challenges attitudes towards super and helps people bring the same energy and control they have for their life, to their super. Kinetic Super the super that moves with you. Contents Methodology 3 PART THREE Industry Analysis 8 PART ONE National Job Index 4 PART FOUR Regional and State Analysis 10 PART TWO Occupational Analysis 5 State and Territory Specific Analysis 11 2 March 2018 Contingent Job Index
Methodology The Kinetic Super Contingent Job Index measures and tracks advertised vacancies in print newspapers, digital advertisements on major job boards, employer career portals and recruitment company web sites. Measurement of vacancies is critical because it is a lead indicator of what is likely to happen in employment in the future. The change in demand for flexible employment opportunities (temporary, contract and casual) is then calculated over 12 months and each quarter. We also measure the proportion of flexible job opportunities versus permanent fixed vacancies, as a percentage. Our methodology is to extract job advertisements in real time over the internet 24/7. Our research covers around 4,000 sources in Australia on a continuous basis. Advertisements are de-duplicated twice once to eliminate any advertisement run on the same source in the last 30 days and secondly to eliminate an advertisement already extracted from an alternative source. The Kinetic Super Contingent Job Index starts at a baseline of.00 in November 2013. Temporary, contract and casual jobs 8.6 % CONTINGENT JOB INDEX SINCE FEBRUARY 2017 152.85 WHITE COLLAR CONTINGENT JOB INDEX ACHIEVES NEW RECORD HIGH 29.7 % QUEENSLAND ENJOYS LARGEST CONTINGENT JOB SHARE March 2018 Contingent Job Index 3
PART ONE National Job Index 8.6 % National increase in contingent jobs since February 2017 The demand for temporary, contract and casual workers decreased this quarter, with the Kinetic Super Contingent Job Index dropping from 155.62 to 154.73. The slow start to the year was due to numerous drops across most blue collar industries and occupations. Nationally, South Australia and the Northern Territory saw the substantial growth in contingent job vacancies from Q4 2017 wiped out, not just in the last quarter but in the month in February alone. While the Kinetic Super Contingent Job Index fell this quarter, it is still 8.6% higher than a year ago. Despite the lacklustre start to the year, we expect the demand for contingent staff to increase in 2018. Job Index National 160 140 120 80 60 40 35% National 30% 25% 20% 15% 10% 5% 0% CHART 1 National Contingent Job Index Proportion of national contingent jobs versus permanent 1.2 % Proportion of contingent job advertisements last quarter The proportion of job advertisements for contingent employment arrangements fell 1.2% to 27.3% in the February quarter. It is important to note that this fall is more a reflection of strength in the permanent job market rather than a decline in contingent employment. The Contingent Job Share is now 0.7% lower than a year ago. The increase in the Contingent Share of 2.7% over two years and 4.0% over three years is more illustrative of the trend towards contingent workforce solutions. CHART 2 National proportion of contingent job opportunities relative to all job advertisements 4 March 2018 Contingent Job Index
PART TWO Occupational Analysis The Blue Collar Contingent Job Index fell by a worrying 7.1% in the last quarter. The Index has seen three successive monthly falls, although some of this fall has a seasonal element, especially over the December and January holiday period. The Index is still 7.1% higher than a year ago, however it has yet to recover the level of demand seen last November when the Blue Collar Contingent Job Index peaked. In contrast, the White Collar Contingent Job Index saw a rise of 1.2% in the February quarter to achieve a new record high of 152.85 thanks to six consecutive monthly rises. However, those rises were getting smaller each month. Impressively, demand for white collar jobs is 9.4% higher than a year ago and a staggering 41.9% higher than February 2016. Job Index 180 160 140 120 80 60 40 20 0 Blue Collar White Collar 152.85 White Collar Contingent Job Index increased 1.2% to achieve a new record high CHART 3 Contingent Job Index High Level Occupational Analysis Contingent jobs by occupation In the February quarter, the share of both white and blue collar contingent jobs, compared to permanent jobs, continued to fall. The White Collar Contingent Job Share shed 1.2% in the three months to February, taking it down to 28.4%. This is still 0.3% higher than a year ago but the lowest percentage since December 2016. The long-term trend still suggests that contingent employment in white collar occupations will continue to rise. The Blue Collar Contingent Job Share fell by the same 1.2% margin. The trend for blue collar is less ambiguous. It has now fallen by 2.1% over 12 months and even by 0.9% over two years. Over this two year period the Blue Collar Contingent Job Index has risen 35.5%, so it is the greater strength in the desire of employers to hire permanent staff that is bringing the contingent share down. 35.5 % Blue Collar Contingent Job Index has risen 35.5% over two years Job Share Blue Collar White Collar 30 25 20 15 10 5 0 CHART 4 Contingent Job Share High Level Occupational Analysis March 2018 Contingent Job Index 5
5.3 % The Clerical Contingent Job Index was the best white collar occupation performer this quarter This February quarter, the Contingent Job Indexes for all white collar occupations rose except for Sales. The Sales Index fell by 12.9% in the three months. This can be primarily attributed to seasonal factors. The Index peaked in October and then retreated until just prior to the holiday period, where it increased considerably in the build up to Christmas. Demand also picked up by 3.0% in the month of February, although the Index is still 3.1% lower than a year ago. The big performer this quarter has been Clerical. The Clerical Contingent Job Index rose 5.3% in the last three months. The Index is now on 167.12, remarkably high but interestingly not yet back to the record level seen last May. The Contingent Executive Index has been very interesting to observe. It fell 2.0% in February breaking a bull run of five successive rises, each one since November a record. The index rose by a net 11.3% over the six months and is now only marginally lower than its January peak. It is thought provoking that contingent employment is rising at Executive level but falling in less highly skilled areas. Contingent employment is also gaining momentum in Professional occupations. The Professional Contingent Job Index rose just 1.1% in the quarter, enough to establish a new record high of 152.55. The annual growth rate of 11.3% is the second highest of all occupations. Job Index Clerical Executive Professionals Sales 200 150 50 0 CHART 5 Contingent Job Index by White Collar Occupation Over the last quarter, all forms of Blue Collar occupation continued to see decline in their Contingent Indexes. Labourers were the least hard hit, shrinking by just 2.0% in the last three months. It remains the highest Blue Collar Contingent Index on 198.08. It has been above or close to the 200 level since September 2017 but there is no clear indication as to its future direction. Machinery Operators and Drivers also escaped the quarter relatively unscathed, falling just 2.2%. In fact the last 12 months have been extremely strong with its Index rising 24.1%. Despite the summer season lull we expect further expansion in contingent workforce demand in 2018. In stark contrast, both Community and Personal Services and Technicians and Trades experienced considerable drops in contingent demand in the three months to February. They fell 10.8% and 10.0% respectively. The former remains well adrift of all other indices. It fell to 120.96 in February, its lowest point since May 2016. Technicians and Trades have fared a lot better over the longer period. Contingent job opportunities are 7.7% higher than a year ago. Vacancies peaked in November last year and only faded after that, although low demand may be due to seasonal elements. The months ahead will reveal whether this is the case or if the change is structural. 6 March 2018 Contingent Job Index
Job Index Community and Personal Services Labourers Machinery Operators and Drivers Technicians and Tradies 200 150 50 0 120.96 Community and Personal Services fell 10.8% to its lowest point since May 2016 CHART 6 Contingent Job Index by Blue Collar Occupation Over the last 12 months, the Contingent Job Share has fallen across all major occupational groups. Blue Collar occupations have fared worst Technical and Trades falling 2.6% to 22.3%, not unexpected given the weakness in contingent demand for these occupations. The Community and Personal Services Contingent Job Share has fallen by 2.8%, for similar reasons. Even the best blue collar group Labourers fell by 1.5% in 12 months, more than any white collar occupation. The largest fall amongst White Collar occupational groups was Sales. The Sales Contingent Job Share fell 0.9%. This leaves the Share on 14.6%, the lowest of all occupations by some way. We anticipate this will improve during the year. The Clerical Job Share has been growing the most consistently year to year but it too slipped in the last 12 months by just 0.3%. As the drop was only marginal, it still has the highest penetration of contingent job vacancies with 33.8%. The Professional Contingent Share also decreased but by just 0.2% in 12 months. At 30.3% it is the only other group to exceed the 30% share. The closest blue collar occupation is Machinery Operators and Drivers at 29.5% share. February 2014 February 2015 February 2016 February 2017 February 2018 40% 30% 20% 10% 0% Clerical Community and Personal Services Labourers Machinery Operators and Drivers Executive Professionals Sales Technicians and Tradies 30 % Clerical and Professional jobs were the only groups to exceed a 30% share CHART 7 All Occupations proportion of Contingent job opportunities relative to all job advertisements March 2018 Contingent Job Index 7
PART THREE Industry Analysis Contingent demand in the Healthcare Sector has contracted consistently over the last 12 months 9.6% in the last three months, an astonishing 28.2% in 12 months. At least after four months of serious decline, February saw a small but significant and hopefully sustainable improvement. It is interesting to note that the decline is not dissimilar to the Community and Personal Services occupational sector trend. But the two must not be confused as Doctors and Nurses and Allied Professional roles sit in Professional occupations. 6.2 % Professional Contingent Job Index grew surprisingly Public Sector contingent job opportunities have also softened in recent months. The fall in the February quarter totalled 8.3%. Of this, 7.2% was just in February and represents a very slow start to the year. We believe this should improve. Conversely, the Professional Contingent Job Index grew a surprisingly strong 6.2% in the February quarter. This reverses a static 12 months where demand rose just 2.9%. The Index is now on 127.64 but still slightly below the September 2017 record of 129.42. We expect this record to be exceeded in the months ahead. Job Index Professional Services (incl. ICT) Health Care and Social Welfare Public Sector Education and Training 180 160 140 120 80 60 40 20 0 CHART 8 Contingent Job Index by select industries (1) Over the last three months, the Retail and Wholesale sector fell 15.1%. We saw a similar fall in 2015/6 and to a lesser extent in 2016/7. However, this disguises a surprisingly strong February. The index rose 10.2% reversing some of the substantial falls seen earlier in the quarter. While this is not uncommon, the speed of recovery is. This bodes well for the sector and may well reflect the disruption evident in the retail sector. Arguably the best news is the continued recovery in the Mining, Construction and Utilities sector. The 12.2% rise in the three months to February heralds a record high Contingent Job Index of 159.93 for the sector. That s nine rises in 10 months and growth of 53.0% in just 12 months. Manufacturing and Supply Chain is also in record territory. Its Index is now on 169.53 reflecting an annual rise of 14.1%. What is also impressive is that the Christmas period and the early part of the year tends to be weaker for Manufacturing and Supply Chain. That s not been the case this year. We ve seen significant growth in the quarter suggesting a strong year ahead. Job Index 200 Financial and Insurance Services Mining, Construction and Utilities Manufacturing and Supply Chain Retail and Wholesale 159.93 Mining, Construction and Utilities contingent index increased 12.2% reaching a record high this quarter 150 50 CHART 9 Contingent Job Index by select industries (2) 8 March 2018 Contingent Job Index
Contingent job share by industry Mining, Construction and Utilities has had the largest increase in Contingency Share in the last 12 months with an increase of 2.3%. It is now also the sector with the largest increase over four years with an impressive growth of 10.3%. This is fascinating as one would have traditionally associated Mining and Construction with a higher than average contract and casual workforce before the broader recognition of contingent workforce solutions. It s now 35.6% of all job advertisements in the sector, the second highest to Education and Training on 47.8%. One of the more interesting changes is in Manufacturing and Supply Chain. We reported that contingent demand is at record levels, yet their Contingent share fell by 3.5% over 12 months. This infers that demand for permanent staff has grown even faster. The Healthcare and Social Welfare Contingent Share has fallen the most in the last 12 months by 4.1%. But looking at the four years of data to February 2017, it looks to be the one out of step. If you ignore last years figure, the long-term trend in contingent staff in the sector is growing consistently. 47.8 % Education and Training has the highest proportion of contingent jobs 50% February 2014 February 2015 February 2016 February 2017 February 2018 40% 30% 20% 10% 0% Professional Services (incl. ICT) Public Sector Health Care and Social Welfare Education and Training Financial and Insurance Services Manufacturing and Supply Chain Retail and Wholesale Mining, Construction and Utilities Other CHART 10 Industries proportion of contingent job opportunities relative to all job advertisements March 2018 Contingent Job Index 9
PART FOUR Regional and State Analysis 9.1 % Victoria/Tasmania Contingent Job Index hit a new record high of 197.19 It s very interesting to note that the graph for South Australia and Northern Territory looks peculiar! After recording substantial growth in contingent job vacancies in Q4 last year, it has all been wiped out not just in the last quarter but just in the month of February. A similar situation arose in late 2015/early 2016. The combined number of advertisements for these stats is approximately 5% so movements can be volatile. A few more months of data is needed to determine whether this trend will set in or if it s more a case of statistical noise. New South Wales/ACT commands the largest block of the national job advertisement population. The recent contraction in Contingent Job Index is unquestionably a matter of demand softening. The February quarter fall was 6.3%. These falls even push the annual fall into negative territory by 0.2%. This is a small decrease in an otherwise strong employment market. The slack is taken up by further growth in Victoria/Tasmania where this quarter s growth was a phenomenal 9.1%. Unsurprisingly the Victoria/Tasmania Contingent Job Index is on a new high of 197.19. The index looks very likely to exceed 200 in the next few months. The mining rich states of Western Australia and Queensland have also had great quarters contributing to their excellent 12 months growth. WA rose 5.2% in the three months to February, enough to set a new record Index of 168.48. Twelve months growth of 26.1% is well over the national average of 8.6%. Queensland grew by 3.4% in three months and by 22.5% over 12 months. The Contingent Job Index for Queensland also established a new record in February but, at 113.24, is still some way behind all other regions. Job Index NSW/ACT QLD SA/NT VIC/TAS WA 200 150 50 0 CHART 11 Contingent Job Index by region State/Territory analysis 29.7 % Queensland enjoys the largest Contingent Job Share Queensland has also enjoyed the largest increase in its Contingent Job Share. The 1.8% rise in twelve months raises its share to 29.7%. ACT remains the region with the highest Contingent Job Share. This has risen to 39.5%. The rises in 2015 and 2017 have been marginal but the rises in 2014 and 2016 were substantial. With the weighting in the ACT towards Federal Government employment, this suggests deliberate steps by the public sector towards contingent workforces. The overall national fall in Contingent Share of 0.7% has been heavily weighed down by contraction in the most populated states. NSW has decreased by 0.8% over that period and Victoria by 0.7%. February 2014 February 2015 February 2016 February 2017 February 2018 40% 30% 20% 10% 0% ACT NSW NT QLD SA TAS VIC WA CHART 12 State and Territory proportion of contingent job opportunities relative to all job advertisements 10 March 2018 Contingent Job Index
State and Territory Specific Analysis Western Australia Continues to boom with Contingent Job Vacancies rising 26.1% year on year. Northern Territory Has the second highest Contingent Job Share 31.8% but this has fallen 4.7% in a year. Queensland Has enjoyed the largest increase in Contingent Job Share. The 1.8% rise in twelve months raises its share to 29.7%. New South Wales Contingent Job Index fell 0.8% in twelve months and its Share also fell 0.8% to 24.7%. South Australia Contingent employment fell sharply in the last three months, its share down a massive 6.5% year on year. Victoria Contingent Job Share slipped 1.3% in twelve months to 26.3%, more a reflection of the strength in permanent employment. Tasmania Has the lowest proportion. Its Contingent Job Share is 20.5%. Australian Capital Territory Remains the region with the highest Contingent Job Share. This has risen to 39.5%. March 2018 Contingent Job Index 11
For more information please contact jobsindex@kineticsuper.com.au Kinetic Superannuation Ltd (KSL) (ABN 14 056 917 303 AFSL 222590 RSE L0000352) is the Trustee of Kinetic Superannuation Fund (KSF) (ABN 78 984 178 687 RSE R0429) which includes Kinetic Smart Pension (KSP). This information is of a general nature only and does not take into account your personal objectives, financial situation or needs. Before making a decision about Kinetic Super or Kinetic Smart Pension you should obtain and consider the relevant Product Disclosure Statement (PDS) for these products, and any Incorporated Information, and also consider your personal circumstances. For a copy of the PDS, call us on 1300 304 000 or visit the Kinetic Super website, kineticsuper.com.au. Kinetic Super Contingent Job Index HRO2 Research Pty Ltd. The Contingent Job Index is produced under licence from the research house HRO2 Research Pty Ltd. Kinetic Superannuation Ltd accepts no liability for its accuracy and opinions. Ratings and awards are just one factor to consider when choosing a super fund. For further information about the methodology used by Chant West, see www.chantwest.com.au. SuperRatings does not issue, sell, guarantee or underwrite this product. Go to www.superratings.com.au for details of its ratings criteria.