Christopher Niesche: Australia emerges out of lockdown – and into a labour crunch


As Australia emerges from lockdown, it is rapidly becoming apparent there aren’t enough workers to power the country’s post-Covid recovery.

Restaurants around the country are cutting back opening hours and putting up prices to cover the higher wages they have to pay staff.

Some restaurants are offering sign-on bonuses of up to A$2000 to bar staff and waiters – unheard of in a poorly-paid sector like hospitality – but are still not having much success in hiring workers.

Much of the shortage is of course due to the global pandemic and Australia’s closed borders.

There are about 300,000 fewer foreign students in the country now compared with at the start of 2020.

Additionally, many of the backpackers who came to Australia on working visas left when the pandemic began, and their numbers haven’t been replenished.

For businesses, it’s a problem that will require them to either curb production or pay higher wages, which will eat into their profits.

For workers, however, there has never been a better time to have a job or be looking for a job.

Look at lawyers, for instance. In the past couple of weeks, two national law firms have raised lawyers’ salaries by 10 per cent and were quickly followed by another national firm which bumped up salaries by 15 per cent.

Workers in many sectors are in the strongest bargaining position they’ve been in for years.

A survey by Westpac last week revealed Australians are more confident about holding on to their jobs than at any time since the mid-1990s.

Australia has had stagnant wage growth for many years, as employers increased the casualisation of the workforce and kept a lid on local wages by bringing in foreign workers who were happy to accept their employers’ meagre pay offering.

Employers have been aided and abetted by the government, which has eroded the industrial relations framework to discourage collective bargaining by unions on behalf of workers.

Many Australians have not had a meaningful wage increase in a decade and living standards have stagnated.

The hospitality sector’s staff shortage is the most visible manifestation of the worker drought, when our favourite restaurant closes for lunch service or bumps up the price of a steak by $5. But it exists across the economy, in sectors including construction, logistics and IT.

The resources sector is particularly constrained. There are anecdotal reports electricians who previously might have earned A$100,000 a year for working in a mine are now earning base pay of A$130,000, which can be bumped up to A$190,000 or A$200,000.

The Australian government is reopening the border for foreign workers, for instance, introducing a new visa to allow foreigners to work on Australian farms – another sector of the economy that can’t get enough workers.

But the big question is whether this will solve the problem.

The staff shortage isn’t just an Australian problem – it’s global.

Britain is suffering its own shortage of workers now that supply of staff from the European Union has been cut off post-Brexit. There is likely to be a flow-on effect, with fewer backpackers coming down under if they can stay at home and earn a good wage.

There are, in fact, likely to be a few young workers going the other way. Hospitality companies in the UK are offering flights, accommodation and even European tours to Australians willing to work for them.

And US law firms are attracting young lawyers from Australia with salaries double or triple what they’re earning at home. A senior associate with five years’ experience would expect to earn about A$160,000 but, with the right sort of corporate legal experience, could earn almost triple that in the US.

The staff shortage exposes the flaws in Australia’s employment policies. It’s easy to top up the supply of workers with foreigners when everything is ticking along nicely. But talent is increasingly mobile and when there’s a global staff shortage, competition for works also becomes global.

The government and employers might have to invest more in training and developing local staff and pay better wages, particularly in poorly paid sectors such as hospitality, child care and aged care.

For the economy as a whole, higher wages are a double-edged sword.

Workers are also consumers, and they will have more money in their pockets to spend on goods and services.

But the question is whether or not they will have anything to buy.

They can spend their money in shops only if there are enough truck drivers to deliver the goods to the retailers or enough shop assistants to sell them.

Likewise, if restaurants can’t find waiters to take orders and carry plates to diners, they’re unlikely to see much of the workers’ extra money.

The staff shortage is looming as the biggest threat to sustained economic growth in the wake of the global pandemic.

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