Tuesday, August 11, 2009

Job advertisement index

There has been a lot of talk recently about the job advertisement index. This index is being used by many to cement claims that the job market is starting to recover.

Sure, there is no doubt that there are jobs out there, but how useful or meaningful is the job advertisement index?

The index is made up of the number of jobs advertised on each of Australia’s three leading employment websites – sounds pretty straight forward, but is it?

The number of jobs advertised is not actually a correct or direct representation of the job market. In fact it could be argued that this index is completely meaningless!

Take the following scenario:

A company is looking for 1 new staff member. Firstly there is no way to tell if this is a newly created role or a replacement, but we’ll leave that for now.

So, the company may advertise the role on 1 or 2 of the websites. Having not had much success the company engages 3 recruitment companies to help in the search. Each agency places adverts for the same role on the 3 jobsites that feed the index.

Already we have somewhere in the region of 10 or 11 adverts for the same single job!

Now add this into the mix. Most recruitment agencies buy job ads in bulk from the major job sites. They work on a monthly subscription and in most cases if the jobs are not used up by the end of the month they are lost. This means that in times such as now, agencies may post multiple adverts for the same role. They may place jobs in different categories or re-word the adverts slightly to appeal to a different market.

This very simple example shows that the job advertisement index is, in fact, pretty meaningless.