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  • Writer's pictureEdwin and George

EGM Insights: Jobs growth - we have a problem

There’s a strange thing happening in the global economy.

Four weeks ago, ‘the Financial Times’ published this article:

Where have all the workers gone and will they ever come back?’

Welcome to one of the more curious Covid developments.

‘A spate of labour shortages in rich counties right across the world – leading to an assortment of baits, bonuses and benefits that would seem preposterous a year or so ago.’(1)

Take the sunny state of Queensland.

Job vacancies: 40% higher today than a year ago. (2)

Welcome to paradise campaign:

‘Queensland Premier calls on Australians to work in paradise, with new jobs campaign’– offering A$1500-00 in cash plus subsidized travel to take a job in the tourism sector battered by labour shortages. (3)

In Arizona – US$ 1500-00 sign on fees are common across industries – companies, including McDonalds, raising wages in desperation.

In London – ‘competition is red hot,’ say the Recruitment and Employment Confederation.

‘Recruiters are even struggling to recruit recruiters’ – wow, imagine that.

It’s now common for companies to offer cash to customers who recommend workers who join up.’ (4)

We are pulling free from restrictions – and everyone is recruiting at the same time.

Australia’s economy is growing again. A report by Deloitte finds:

The Australian economy is back to its pre-pandemic size, after growing 1.8% over the first three months of the year and 1.1% over the past 12 months - one in five global economies to achieve this - Taiwan, China, New Zealand, Vietnam, Australia. (5)

But there are big issues looming.

Australia is in the grips of a labour shortage - as the pandemic border closures stem the flow of workers from other countries.’ (6)

‘Data reveals there are 287,000 unfilled positions which translates to the highest job vacancy rate ever.’ (7)

‘Jobs website Seek posted 220,000 new job ads in April – the highest in the online employment platform’s 23-year history – but applications per ad have fallen to almost a decade low, underlining the issue in the market. The number of job applications is the lowest since 2012 – falling in 25 out of 28 industries.’

More than a quarter of Australian companies are struggling to find suitable staff, with a lack of applicants cited as the main reason vacancies remain unfilled.’ (8)

Think back to the recent Federal budget, Treasurer Josh Frydenberg justified big spending increases on the basis he needed to stimulate economic growth – to boost jobs and reduce unemployment.

The reality on the ground is the opposite – if the existing job vacancies across the country had been filled, the unemployment rate would be much lower than before the pandemic.

‘Australia has a lack of workers – not jobs.’ (9)

The slow rollout of vaccines and delay in opening international borders is making the problem worse.

What if all the support for the economy actually gets us to the stated goal of full employment? We’re already at 5.1 per cent unemployment - lower than before the pandemic – a rate rarely seen for over a decade.

The problem: We’re hurtling towards a point where worker shortages become a real issue in many industries.

Labour shortages are reported in: transport, hospitality, construction, engineering and science. Other workers in demand include sales and business professionals. (10)

Our big reserve of spare workers – the rest of the world – is closed - and will be until our borders open.

The time is getting ever closer when we will need to crack open our borders and let people in. That means we need a much stronger vaccine rollout. At the moment we are miles behind the leaders. We are ahead of Japan and New Zealand, but that’s not much to boast about.

The alternative will be more and more farmers who can’t find people to pick their fruit, and companies that have to hire staff who are not qualified for the job. And the sooner we need the borders open, the more we need a big share of all Australians vaccinated.’ (11)

A recent survey suggests, however, that one-third of Australians say they’re unlikely to get vaccinated.

The caution mostly centres around side effects and a lack of urgency given Australia's low infection rates.

But hesitancy threatens to frustrate plans to open its borders - which are due to remain shut until mid-2022. (12)

  1. Financial Times, 30th May 2021

  2. Sydney Morning Herald,28 May 2021

  3. Queensland state website, 20th May 2021

  4. Financial Times, 30th May 2021

  5. Deloitte Access Economics, January 2021

  6. The Guardian, 2 June 2021

  7. The Guardian, 2 June 2021

  8. Financial Review, 23 June 2021

  9. The Conversation, 23 June 2021

  10. ABS, December 2020

  11. 20 June 2021

  12. BBC website, 20 May, 2021

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