Job vacancies in the Australian labour market have not just recovered from the Covid pandemic, they’ve doubled.
According to the latest Australian Bureau of Statistics release, there are 480,100 job vacancies in Australia, a 111.1% increase since February 2020.
In June unemployment tumbled to 3.5% as Australia approaches what is considered full employment, meaning almost everyone willing and able to work is in a job.
But which sectors are experiencing the biggest workforce shortages, and what is the cause?
Sectors feeling the squeeze
The sectors with the biggest absolute number of job vacancies are healthcare and social assistance (68,900), accommodation and food services (51,900), and professional scientific and technical services (42,900).
In terms of the growth in vacancies since Covid, arts and recreation leads the way at 250% of pre-pandemic levels, followed by accommodation and food services, then real estate. Construction rates highly by both measures, with 39,900 vacancies, 140% of pre-pandemic levels.
Calculating the vacancy rate as vacancies expressed as a proportion of total jobs, Jim Stanford, the director of the Centre for Future Work, said the sectors most strapped for workers are: administration and support (8.9%), hospitality (5.7%), wholesale trade (5.2%) and real estate (4.3%).
Demand ‘very strong’
Prof Jeff Borland, a labour market economist at the University of Melbourne, said demand for labour was “very strong”, driving an increased vacancy rate “across all occupations and industries”.
“We’re creating new jobs at such a rate, it’s taking time to hire and for the labour supply to catch up,” he said.
David Rumbens, a partner at Deloitte Access Economics, said a lot of stimulus had been pumped into the economy, including interest rates at near-zero, which had been “fabulous at protecting our full employment status” but “arguably revved up the economy at time we haven’t had the workers available”.
Migration freeze
Borland says the shortage is particularly acute in sectors that rely more heavily on temporary migrants, with food trade and preparation, hospitality, cleaners and laundry workers among the jobs that had the biggest growth in vacancy rates.
“There are vacancies everywhere, but in particular occupations this was super-charged by the withdrawal [during Covid] of temporary visa-holders, who made up a high proportion of the workforce in those sectors,” he said.
Rumbens said sectors were impacted by the two-year closure of Australia’s borders differently: finance, IT, insurance, mining services and public administration were “more exposed to a lack of skilled migrants”; while retail, hospitality and accommodation lost out due to a lack of international students and working holiday-makers.
Retirement
Prof Bob Breunig, a public policy economist at the Australian National University, said many older workers had “left the workforce during Covid-19 and decided they were happy not to come back”.
But Breunig doesn’t see a role for government in countering this, noting that the mature age worker tax offset, which previously benefited over-55s who stayed in the labour market, “was very expensive and had very little impact”.
Pay rate an issue
Breunig noted that employers failing to pay rates higher than awards minimums can result in workforce shortages.
“Many of these sectors have relatively rigid award settings,” he said. “People say, ‘Here is the award wage, that’s what we pay,’ then they don’t get enough workers.”
The labour economist David Peetz observed this in the agriculture sector, arguing that supermarket retailers put pressure on farmers not to raise prices, preventing them attracting more workers.
Stanford noted the four sectors he highlighted with the biggest vacancy rates all had “rapid turnover, none have experienced strong job growth, and all pay relatively low wages”.
“That reinforces the idea that it is precarity and instability that is causing high vacancies, not pure job growth or supply-and-demand imbalances.”
Pay is also low in sectors such as aged and disability care, which are struggling to find workers. Breunig said the challenge for these industries was either to improve the productivity of their workers or to persuade society that it should value and pay them more.
Skills mismatch
Rumbens said there was “always a degree of mismatch between the unemployed and job vacancies”.
He cited IT as an area Australia has chronically under-trained its workforce, relying on migration to plug the gap.
Breunig agreed, arguing that many Australians get university degrees and “not enough get vocational training relative to the number of jobs” in traditional trades, such as plumbers and electricians.
“Normally you’d think that higher wages in those trade jobs should attract more people to them but that doesn’t seem to be happening.”
Stanford said employers would have to “invest in retention, compensation, and training”.
Sick leave
Another intriguing – although untested – hypothesis, according to Borland, is that with double the number of people away from work ill relative to before the pandemic, employers may be “adding some jobs to make up for the fact that it’s persistent that some people will be away”.
“If you’re running a restaurant and have eight people working there, and one person is away every second week, or a supermarket, with at least one away every week – you may hire someone else to spread the work over more people.”
