EGM Insights: Jobs - prepare for take-off...but what about us?
"2021 will be the year when change at work accelerates. The drive for workers to decide where to work, how work is done, how they’re treated and developed is higher now than any other time in labour market history. We will all be better off as a result.’"(1)
We stand by what we said.
But what we didn’t forecast is this:
“2021 will be a year of economic recovery and job growth – not of recession and job losses as pundits suggested.”
A wonderful world of work – jobs are coming back. (2)
Labour is gaining the upper hand – workers the world over have a terrible year but the future is bright (3).
Economists say that unemployment is quick to rise and slow to fall. It takes a few minutes to clear your desk and pick up your personal belongings - finding a job takes time. Bosses are slower in hiring than firing.
The speed of the turnaround taking place in the jobs market is, therefore, very impressive.
Consider the evidence:
Quotes from business magazines and newspapers in the last few days:
In October, the IMF warned that the virus would cause lasting damage to the world economy, with any recovery being ‘long, uneven and uncertain.’ Yet the forecast released this week is very different. Economic assessments of rich countries have been revised sharply higher. It’s remarkable how quickly the consensus has shifted in 6-months.
By 2024, the IMF believes that the world economy will be stronger than pre-pandemic.
Autumn's (Australia’s Spring) economic predictions were an “intellectual failure”. This is not the same as the financial crisis. This crisis is different. (4)
Strong US job growth in March fuels optimism on recovery.
America's post pandemic boom has begun. (5)
America creates more than 900,000 jobs in March – the figure being the strongest since August 2020. The trend suggests things are going to get much better.(6)
High frequency economic data shows an increasing trend - restaurant bookings, people at airports and railway stations, hotel bookings are all rising quickly. People are venturing out – and spending. (7)
Australia’s unemployment drops to 5.8% as recovery strengthens.
‘The Australian jobless rate is tumbling as rising sentiment combined with government stimulus is accelerating economic recovery - with employment returning to pre-pandemic levels.
There is a V shaped recovery taking place - with the unemployment rate already below that forecast by the Reserve Bank for the end of the year.
In an optimistic scenario, Australia’s unemployment rate could be 4.75% by the end of 2022. (8)
Job vacancies are at a 10-year high. They’re 20% more now in Australia than one-year ago. (9)
Open Table, an Australian restaurant booking service, report that attendance at restaurants is rising. The first two months of 2021 by an incredible 65% than before the pandemic – borders are closed, people are spending locally.
As one couple put it: ‘we had some spare money so instead of wine, we ordered martinis – we had seven each.’ (10)
The economic recovery is picking up pace – globally and at home.
There are dangers ahead
The pandemic may take off again – as new variants develop.
For Australia – relations with China and the end of the JobKeeper scheme spell trouble.
Australia’s closed border impacts net migration – potentially slowing economic growth.
The past year has seen much talk of ‘zombie businesses’ propped up by government.
payments. We are about to find out just how many walking dead are out there. (11)
Wage growth is anaemic in Australia (forecast at a record low of 1.2%p.a.) – leading to lower participation in the jobs market and talent shortages. (12)
Automation: ‘the boy who cried wolf?’
There’s evidence the idea automation will take away jobs is overrated:
Gartner research shows that imports of industrial robots to the US fell by 3% in 2020.
Sales at Rockwell, the largest provider of industrial automation, fell by 5% in 2020.
A survey by UBS showed no increase in automation by firms across Germany, Spain, France and Italy.
Countries with high levels of automation are the ones with the lowest unemployment (Japan. South Korea) – boosting arguments that higher levels of automation actually increase the number of human jobs (by lowering costs of production, automation ultimately increases demand for goods in the economy).
Jobs in sectors where human contact is vital are growing - education, healthcare.
Companies are finding automation difficult – it was hard enough to determine which processes to automate before the pandemic in complex operations. It’s harder now with remote and hybrid working.
Companies hold back capital spending when uncertainty is high. (13) and (14)
It would be wise to stop fretting about the future of work. Given the history of failed predictions, it’s hard to take a worst case scenario on jobs seriously.
But what about the jobs position in South Australia?
With its effective handling of the pandemic, South Australia sprung back to economic life and got ahead of the pack.
New jobs in South Australia increased by a nation-leading 11.3 per cent in the ten months since last April - above the national average of 9 per cent, according to ABS Labour Force data.
March 2021 figures for South Australia show that the unemployment rate fell to 6.8% from 7.1% in February. (15)
So progress - but don’t get carried away as a new report by Deloitte casts doubts.
South Australia has ‘spent many of its tickets’ in attempting to recover from the pandemic – with the usual challenges of stagnant population growth and dwindling business investment in the background.
The state has already achieved the bulk of their recovery, with South Australia’s economic comeback already slowing and set to be more of a grind in the coming months.
Tariffs on wine imposed by China don’t help.
Unemployment is predicted to drop to 5.9 per cent next year and down to 5.2 per cent by 2024-2025.The state’s economic growth will be steady but below the national figures, with a growth rate of 3.5 per cent forecast for next year before gradually declining to 1.8 per cent by 2024-25. (15)
On population growth, South Australia is facing a longstanding structural issue.
In the last decade, there’ve been significant challenges with younger professionals moving interstate and not being replaced. Once border restrictions are lifted, there’s a risk that young South Australians will leave.
Worryingly, South Australia’s unemployment rose in some recent months even though there were less people in the labour market overall - that’s bad.
A tale of two cities:
And when it comes to job growth in Adelaide, it’s become a tale of two cities.
Australians were told at the beginning of the pandemic a year ago that we were ‘all in this together’. But a deep dive into Adelaide’s labour force statistics reveals a tale of regional differences - those living in wealthier areas fared much better on the job front than counterparts in disadvantaged parts of the city.
Remarkably, the number of employed residents in Adelaide’s wealthiest communities actually grew faster in the year to September 2020 than it did in the previous year. The opposite occurred in Adelaide’s most disadvantaged regions, with a significant decline in number of employed residents the common story. (16)
The pandemic response hit workers in some sectors particularly hard. Jobs with a focus on human interaction – accommodation, food services, tourism, retail, recreation and events.
A relatively large proportion of jobs in these sectors are low-skilled - and people are employed on flexible employment arrangements.
An EGM view:
The past 12 months have been interesting to say the least.
A year ago we were worried.
A global pandemic had been announced, the movie Contagion was on TV, we were in lockdown trying to homeschool, onboard new staff, check on contractors and take phone calls from clients that were putting recruitment on hold.
Companies were instantly making cuts: people were being put on part time hours, they were being forced to take leave. Others lost their jobs. We struggled to understand how we could qualify for Jobkeeper as a young fast growing organisation. We had a decision to make - do we follow the masses and risk negatively affecting the lives or our people?
We stuck to our values to help us in our decision making process (Courageous, Curious and Authentic) and put our people first. (17)
April was one of our worst months on record but May and June were above expectations. Our faith in our people, and our clients (and country) was being rewarded. (18)
Jobkeeper made it extremely tough to find people interested in taking temporary casual appointments.(19)
After the main South Australia lockdown organisations had to adapt and made huge steps on workplace flexibility - it bought some loyalty.
The closure of international borders was the biggest impact. We had one assignment where the candidate was due to start in March 2020 where we did an international search - the successful candidate started in December. The lack of international talent has been felt tremendously. (20)
The result of a lack of supply?
It’s been harder to find great people
Salaries have gone up
Australia didn’t really feel the effects of the GFC with regards to the labour market compared to other organisations. I remember in 2008 a friend, Jack, from University who I played cricket with at OMT Cricket Club started his dream role at Lehman Brothers.
I saw him on BBC news that evening on his first and last day - they day the bank collapsed and he lost his job.
In the UK during this time permanent recruitment decreased but temporary and interim roles were in high demand as organisations needed work delivered but didn't want to commit long term.
Expecting to see this trend in Adelaide we were astounded that we experienced the opposite in 2020 - our temporary roles decreased but our permanent roles increased dramatically.
2021 and beyond?
The “War For Talent” was thrown around a fair bit in 2010 in the wake of the mining boom. We see this “war for talent” increase in intensity for 2021. It’s harder to find great people. It’s harder for recruiters to do their jobs. The archaic reliance of advertisements to find the perfect people has well and truly diminished.
What this means for you
Talent Acquisition is a full time role. It’s a full time science and a full time craft. Sure there is absolutely a place for in-house generalist teams but in order to find brilliant talent in specific roles you need to engage with those specific networks and talent pools, otherwise you’re relying on pot luck when you look to build your teams.
There will be a lot more focus on leadership and your people will have more say - in a candidate driven market they vote with their feet.
Old fashioned “rule by fear” which encourages discrimination bullying and harassment in the workplace will hopefully be driven out.
We’re seeing the outcomes already with some of our clients who are building high performing teams - places where people feel safe, valued, engaged and productive.
We’re excited at EGM. We spoke 4 years ago about the Future of Work.
The rate of change in the workplace is visibly accelerating. (21)
We’re now well and truly in the Now of Work and can see a workplace where everyone benefits.
EGM blog, 21 Questions for 2021
The Economist, 9 April 2021
The Financial Times, 10 April 2021
The Financial Times, 10 April 2021
New York Times, 2 April 2021
The Washington Post, 5 April 2021
The Economist, 9 April 2021
Bloomberg.com 29 March 2021
The Conversation, 3 February 2021
The Economist, 9 April 202
Sydney Morning Herald, 31 March 2021
The Guardian, 12th April 2021
Robots threaten jobs less than fearmongers claim, The Economist, 9 April 2021
For an argument that automation will provide more human jobs see: What’s the future? Tim O’Reilly
In Daily, 20 March 2021. The report referred to is ‘A bump in the road:’ Deloitte Economics
In Daily, 20 March 2021
EGM blog, Our Values, 2021
EGM blog, There’s no such thing as ‘company culture"... but yours still might be awful, 2021
JobKeeper: Why some people don’t want to return to work, Australian Financial Review, June 2020
“Australia’s population shrinks for the first time since WW1 as COVID turns off immigration tap”, ABC News, March 2021
EGM Partners: The Future of Work, 2017 (www.egmpartners.com.au/future)