In an earlier National Press Club address, Australian Prime Minister, Scott Morrison had unveiled the ambitious target of a national unemployment rate below 4 per cent. Regional Australia had achieved the outlined target in December 2021 itself, when its unemployment rate fell to 3.8 per cent. While low unemployment may look like a positive win, a deep dive into the labour demand-supply dynamics reveals that a labour shortage is impacting productivity. Australia has already faced labour shortages across the agriculture industry**, possibly leading to crop losses for farmers and price hikes for produce. To avoid a similar situation, it is critical to manage and balance the optimum labour demand-supply dynamics and employment levels for all types of jobs.
The State of Employment - 2021
2021 showed a distinct flex in regional labour markets, the unemployment rate fell to 3.8 per cent in regional Australia, and to 4.1 per cent in metro Australia. The region was running at full employment, with monthly regional job vacancies showing to be very strong, stemming from brimming labour shortages, starting 2021. 2021 exhibited a clear pattern of ever-increasing job vacancies – the number of job ads ballooned by 36 per cent from Dec 2020 to Dec 2021, and the number of vacancies grew by 35.7%. Over 2021, regional job vacancies have risen 45%, with growth through the year being relatively uniform, with most jurisdictions recording increases in vacancies in the order of 40% to 50%. Regional Victoria exhibited the strongest increase in vacancies at 63 per cent. In fact, four out of the five regions with the biggest jumps in vacancies from December 2020 to 2021, were Victorian: Geelong & Surf Coast (78 per cent), Gippsland (65 per cent), Ballarat & Central Highlands (63 per cent), Bendigo & High Country (50 per cent), and Darwin (49 per cent). Next to Victoria, the Northern Territory followed at 46.7% and Tasmania sitting third at 43.9 per cent. Regional WA and the ACT were regions that did not see such a high degree of increase****. Also, factoring in standard seasonal hiring shifts come December, all in all, regional job vacancies stood at 70,000 in December 2021 – a 6.8 per cent decline from November 2021 which stood at 79,000****.
A deep dive into the nature of vacancies in regional Australia reveals that the strongest demand was for professionals, accounting for about a quarter of all vacancies in December 2021. Technical and trade worker vacancies were the next largest group, accounting for 16 per cent of all vacancies, followed by community and personal care roles at 13 per cent of all vacancies.
The root cause for the Crises
Much of the labour dynamics have been pandemic-induced. Jo Palmer, Founder and Director of Pointer Remote Roles, believes that the trend for remote working would “for sure” be contributing to ever-increasing job vacancies*. According to him, much of the labour movement is owing to a demand for flexibility, often looking for roles that work from a remote location. Dr Kim Houghton, chief economist at the Regional Australia Institute and lead author of the Regional Australia Institute’s job vacancy report, was seen quoting that, “The overall driver of these low unemployment numbers and rapid increase in job advertising is because the total size of the employment pool has been so diminished by the closing of international borders*”. According to Houghton, there is a lot of variation across the regions, with some still at 7-8% unemployment and others under 2%. One of the contributing factors may also be that there’s exists a huge gap between people in the city and the country gaining a university degree, and an ongoing brain drain as regional students move to cities for education and continue to work there.
The Outlook for 2022
There appears a need to bring in additional lower-skilled or unskilled labour supply. Certain policy measures as below may support this move, such as the easing up of domestic and international travel restrictions, and certain new incentives being offered to lower-skilled overseas migrants such as international students and backpackers. Yet, more measures are necessary to fill in the skill gap, some being, the availability of quality post-school training and learning across regional Australia and adequate housing mix and housing availability.
Challenge or Opportunity?
While low unemployment rates are usually perceived as a positive indicator of the labour markets, Houghton presents a dichotomous view. The lower unemployment figures seem to be a positive outcome for regions which have experienced “stubbornly high” unemployment rates, such as many locations in New South Wales and Victoria which have seen higher population growth than job growth. However, for many inland locations where unemployment rates have dipped under 2% i.e. “chronically low”, employers may be left without a talent pool to fill in, making it difficult for employees to retire or leave the workforce. This can especially affect regional businesses, with business owners having to take on more allied tasks, thereby impacting the overall organizational productivity. Such a cascading effect across region/s can eventually hamper the productivity of the entire region.
As the pandemic-induced factors begin to mellow from 2022, we may expect some labour dynamics to normalize. However, proactive action in terms of adequate policies and facilities around labour needs such as education, housing, talent mobility, etc. will prove crucial in overriding this challenge and maintaining a healthy balance of labour distribution. Private and public organizations must come together to draft and decide, in the common interest of both people and businesses, and national industry growth in the right direction.