Hawai'i employers continue to struggle filling job openings as Hawai'i's jobless rate remains the lowest in the nation.

Hawai'i's seasonally-adjusted unemployment rate increased to 2.2 percent in January from 2.0 percent in December, according to figures released yesterday by the State Department of Labor and Industrial Relations.

Hawai'i's tight labor market is nothing new to for local businesses — January was the sixth month in a row the state had the nation's lowest jobless rate. The tight labor market is a boon to job seekers, but a bane to employers. However, the labor market is likely to loosen up this year as Hawai'i's hot economy cools in key sectors including tourism, real estate and construction.

That would be fine with Joe Ferrara, general manager for Consolidated Painting LLC in Kapolei.

"We're having problems finding skilled people," said Ferrara. "Last year we looked at 150 people just to find 30 qualified people."

In January the commercial painter boosted salaries by between $1 to $3 an hour to retain employees.

But raising wages isn't always an option for employers.

"You can't compete with the pay," said Stephanie Pietsch, co-owner of Wahoo's Fish Taco restaurant at Ward Gateway Center.

Pietsch said the restaurant has reduced employee turnover by creating a family-friendly work environment where employees are given flexible hours.

"I think what employees are feeling is they have the upper hand," she said. In addition to pay and benefits "people are looking at where do they want to go and where are they going to be happy."

In the case of the Holokai Grill restaurant, which opened Monday at Waikiki Beach Walk, the excitement of working in a newly developed area helped attract employees, said Slade Neeley, area manager for Holokai Grill as well as Tiki's Grill & Bar. Holokai Grill hired 120 workers in a two-month period. Among the added perks offered to employees — a $100 a month parking stipend. At the five-year-old Tiki's, which also is in Waikiki, employees can earn up to $150 in bonuses for employee referrals.

Wages and benefits have to be competitive with other restaurants to find and keep workers. However, restaurants cannot compete with other higher paying jobs in trades such as construction, Neeley said.

"That's something you can't do unless you charge somebody $20 for a hamburger," he said.

Nationally, the jobless rate went to 4.6 percent in January from 4.5 percent in December. Hawai'i's seasonally adjusted unemployment rate has been more than 2 percentage points lower than the U.S. seasonally adjusted unemployment rate since June 2006.

Utah and Wyoming both ranked second in January with jobless rates of 2.6 percent.

The biggest decline in jobs in January was in the government sector, where 1,100 positions were lost. The biggest gain was in the retail sector, where 800 positions were added.

Year-over-year, Hawai'i's seasonally adjusted job count has risen by 15,300 jobs or 2.5 percent, with the private sector accounting for 83 percent of the increase. Trade, transportation and utilities added 2,200 jobs, which was the biggest job gain.

Hawai'i's jobless rate is forecast to remain flat this year at 2.6 percent, but rise to 2.8 percent next year and 3.1 percent in 2009 as economic growth slows, according to Byron Gangnes, a University of Hawai'i economist. That will lead to slower job growth and a decline in demand for workers.

"We're going to begin to see this ease this year," Gangnes said.

A slight rise in the jobless rate isn't necessarily a bad thing for Hawai'i's economy, Gangnes added. That's because a low jobless rate can lead to higher labor costs, which translates into higher prices for goods and services. In addition, a lack of available workers can prevent businesses from expanding. However, a high jobless rate isn't good for Hawai'i either, Gangnes said.

"We don't know what the right unemployment rate is for Hawai'i, but certainly it is higher than 2.2 percent," he said.

With a jobless level of 2.2 percent even job placement and leasing firms face challenges. Honolulu-based employee leasing company JS Services Inc. has been looking to fill two clerical positions for six months, said owner Jack Schneider.

Schneider's clients, which lease employees from JS Services, face similar difficulties, he said.

"They're all having problems and it's basically preventing expansion and (creating) a loss of business," he said.

At human resources outsourcing agency Altres, "We're having difficulty finding employees same as everybody else does," said Mark Dawson, director of business development.

Apart from boosting wages and benefits, employers can attract and keep employees by offering continuing education opportunities.

Employees "are more likely to stay if they're given opportunities to grow," Dawson said.

At non-profit social service agencies staffing issues can be even more challenging, said Howard Garval, president and chief executive for Child & Family Service.

The agency copes by trying to provide a friendly workplace, flexible schedules and an opportunity to help people.

"The non-profit world has known for years that they have to be really creative because they just don't have the same resources to apply in retaining and recruiting staff," Garval said.

Reach Sean Hao at shao@honoluluadvertiser.com.