I regularly receive questions from job hunters such as “How much time should I allow for finding a job?” or “How long can I be unemployed without damaging my future employment prospects?” My reply is almost always the same. How long can you afford to be unemployed?
One characteristic tends to distinguish the long-term unemployed from the rest of Australia’s newest jobless. It isn’t how many hours they worked at their old job, or what industry they came from, or not even their level of education. It’s almost always bad timing.
Don’t extend the bad timing
There is never a good time to lose a job and Australians are currently experiencing new realities as the growth period of the last 25 years and the decade-long big commodities boom from the early 2000s appears to have come to an end with large redundancies and layoffs being a daily feature across all industries and states.
I get involved in these types of discussions several times a month with job hunters who are keen to use redundancy payouts or savings coupled with unemployment benefits as a sabbatical. I cringe each time, knowing that no one really wants to hear what I have to say. Aside from the fact that using savings and unemployment benefits to fund a sabbatical can land you in hot water, you also risk creating more problems if you decide to delay your job search as you will inadvertently increase the risk of joining the ranks of the long term unemployed.
Most of my job hunters don’t appreciate that feedback, particularly if they are just coming to grips with their redundancy. Shock and anger (and possibly that redundancy cash infusion they just received) are often the triggers that drives job hunters to take an extensive time out from the job world. A break is good, but an extended one will more often work against you.
How long can you afford to be off the market?
Let me explain what I mean with a typical Aussie house buyer analogy. A job hunter is a bit like a house that’s for sale. If it’s on the market for too long, house buyers assume that something is wrong. So, when you decide to be ‘off market’ for six to nine months, or maybe even longer, then employers start to wonder the same thing about you. Our Australian job market is still relatively healthy, although weakening. The housing market is strong (perhaps too strong and ready for a correction… but that’s another story). So why would you be off the market for so long?
I accept that my analogy to a house may seem like a bit of a stretch, but let me help you with some numbers.
How long can you afford to be unemployed?
Altogether, 42 per cent of Australians’ salaries are swallowed by our mortgages, personal loans and credit card repayments (at the minimum). So past spending, curtailing our ability to afford the future, says Nicole Pedersen Mckinnon in her recent report on Australian debt addiction, becomes nearly unmanageable if you are unemployed. The typical Aussie now owes $357,500 on their mortgage, $3195 on their credit card and $18,000 on personal loans … a total of $378,695. Ask yourself how long you could afford to be unemployed with those types of credit obligations?
How much can an employer afford you?
If a company is going to hire a person for $50,000 a year base, it’ll have to pay benefits and overhead, and with training and up skilling, the actual cost can approach $100,000 a year. If the company’s goal is to have employees who stay at least three years, that’s an expensive purchase decision, more than double the average down payment for a mortgage on a house. So, wise hiring managers, the very people you most want to work for, are cautious when hiring … you could even say suspicious. If someone has been out of work for more than five months, many hiring managers can’t help but think, “I wonder what’s wrong? Why has everyone passed him or her over?” This is just one of many scenarios that play out in a hiring manager’s decision process.
So how long is a job hunters piece of string?
My experience with coaching job hunters suggests that you have about four, maybe five months after a layoff before companies question why you haven’t been hired. So, the time to start is now. I know that’s not the answer you necessarily want to hear.
You can always speak to a job hunter who’s been out of work for a year or more, and the idea of “taking time off to find yourself” suddenly looks silly as you see your savings dwindle, you eventually lose your home and, ultimately, if you find work you eventually end up in a job you are overqualified and underpaid for.
Our clients usually find work within 60 days. So, I suggest, that instead of taking a few months off to relax, you can organise an effective, lively and adventuresome job search while creating for yourself a pleasant break from your old work routine.
Use the time to meet people, to reconnect with old colleagues and to add to your professional knowledge. You never know, it can be an inspiring change from your old routine, but never forget that you’re working at finding a great new job. Start as early as possible. Reach out to us – we can help you get organised, nail that job search and find your next position.
All the best and remember to hunt wisely!