2008 was a challenging year for the Asia Pacific region. In the first quarter we were in the midst of a significant skills shortage in many sectors, with significantly low unemployment and employers finding it increasingly difficult to attract people in the face of tough competition.

Twelve months later and while unemployment in the region has not spiked in the same way as other countries, such as the United States, Europe and the UK, the global financial crisis that took place in the second half of the year has reverberated through the economies in Asia Pacific.

As a result, business confidence is slowing, sectors such as the banking and finance sector have been hit hard and companies operating in the resource space face a bleak 12 months ahead as the Chinese economy they rely upon cools down.

A year ago, the word ‘recession’ would have been far from the lips of many in the business community. Today, economists are openly forecasting economies in the region will succumb to the fate of many other economies and shrink over the next two or three quarters, before regaining some ground towards the end of 2009.

So what does 2009 hold for employers in Asia Pacific? Are there signs of recovery and how will employers ensure they come out of the downturn relatively unscathed?

Tough in the short term

In general terms economies (and employment which is inextricably linked) are cyclical in nature. In a tightened economy, permanent full time employment typically decreases, the number of vacancies drops dramatically, the hiring decision process is lengthened considerably, job offers are rescinded and candidates sit tight in their positions until conditions begin to improve.

History proves that after a slump, a rise will follow, and the economy will be no different in the long term. While businesses will continue to feel the pressure of a slowing economy in the short term we should expect to see things improve towards the end of 2009 as the global economy starts to get back on its feet.

In this economy, the temptation for employers is to react to the current environment by cutting costs and reducing their headcount. Organisations need to be careful not to cut back too sharply, because as the upturn begins they will need to begin rebuilding their resources, and it is much easier to decrease a talent base than to build one.

Before taking drastic measures, organisations should think laterally about other cost-cutting measures. What fixed costs can be turned into variable costs by outsourcing non-core activities? Would employees consider working on a part-time, freelance or temporary contract? A number of organisations are encouraging a four-day working week by reducing the employee’s salary accordingly or asking them to utilise their annual leave by spreading it throughout the year? Some companies have been encouraging staff to take a year’s sabbatical to travel or continue their studies and hold their position for when they return. It’s about maintaining goodwill with people so that they can employ them again on a full-time basis when the company is in growth mode.

Despite the gloomy predictions there are signs of improvement on the horizon and businesses are beginning to respond. After months in a holding pattern, where companies either implemented a hiring freeze or reviewed current head count levels, we’re already starting to see some bright lights and optimism in the first quarter of 2009. Businesses are realising that now the New Year has arrived they have to get back to running their business to ensure they are in a strong position by the end of the year. This means new strategies need to be implemented and employees need to be in their jobs to execute these plans.

Even those sectors hardest hit in 2008 are taking a more positive outlook for 2009. It has been well documented that the banking and financial services sector in particular has taken a beating over the past 12 months, but we're already hearing good signs from employers in this sector, particularly for the second and third quarters.

The slowdown will still have a marked effect on the challenges employers will have to deal with in 2009. The 2008 Randstad Employment Trends Survey found the biggest challenge for Australian employers was attracting the right people while in the midst of an extreme skills shortage. 12 months on and the 2009 Survey (to be released in April 2009) has found that attracting staff has fallen sharply on the priority list of employers and the biggest challenges in 2009 will be managing internal change issues (such as redundancies) and keeping a close eye on staff costs and productivity. We expect this trend to continue for some time until businesses feel they have the confidence to go back out into the market and start hiring again.

For those industries that might not yet be in a position to start growing their headcount, 2009 will see companies continue to adapt their employment strategies to best fit their current situation while they wait for conditions to improve and for their confidence to return.

We are already seeing this reflected in a further trend towards businesses employing part-time and temporary workers in reaction to uncertainty over the economy in the months ahead.

Many employers are bracing against the world-wide economic turmoil by moving towards temporary staff rather than hiring full-time employees. This change in strategy provides employers greater flexibility in their workforce and allows them to grow their headcount in the short term when their business demands.

While there is no doubt there are still challenging times ahead, it is up to every employer to weather the storm and rise above it. Employers need to take the right steps to ready themselves for what is still to come.

But whatever the economic ups and downs that 2009 will bring, one thing is certain – human capital will remain the most valuable asset in a business. If employers wish to make 2009 a successful year for their business, despite the economic turbulence, they will need to ensure they continue to evolve and innovate, especially in these less predictable times. People will be looking for strong leadership to ensure they navigate the business through this cycle so when the economy picks up towards the latter part of the year they are in the right position to capitalise and grow as they enter 2010.

Debra Loveridge is the Chief Executive Officer of specialist recruitment group, Randstad Pty Limited. Since acquiring Vedior in 2008, Randstad is now the second largest staffing and HR services company globally, with over 34,000 employees working from 5,400 branches and inhouse locations in 53 countries. Randstad provides work for more than 700,000 people every day.