Last week, Jobs and Skills Australia (JSA) released its inaugural annual reports on the labour market and priority skills, sounding the alarm on “extensive skills shortages … not seen since the 1960s”.
But buried in these reports and the attendant news articles, there’s a startling finding that’s been largely overlooked. The government agency found that when a job ad fails to attract an appropriate candidate, the vast majority of recruiters and employers will re-advertise with the same pay and conditions or give up altogether, with only 1% increasing their payment offer to attract talent.
While JSA noted this was “surprisingly low”, it was actually a substantial increase from the 2022 result, when just 0.4% of employers adjusted advertised remuneration.
So who exactly are the ones lacking in skills — the workers or the bosses?
No-one wants to work (for measly wages) anymore
It is theoretically possible to have genuine skills shortages, where even if employers raise wages and conditions to their full capacity and offer as much on-the-job training as they can, there simply aren’t enough people with relevant accreditations and baseline skills to fill the gaps. And according to JSA, such instances account for some of the current advertising flops.
But while wages growth hit its highest level since 2012-13 in June, it has lagged behind where economists predicted it would be if businesses were rationally adapting to the booming jobs market. And the share of workers receiving on-the-job training fell from approximately a third in 2005 to 20% in 2022, according to University of Sydney research.
Most employers are cynically jumping on the “skills shortage” narrative to disguise their own frugality and laziness.
Even in instances where there aren’t enough qualified candidates, this is often caused by poor pay and conditions for existing workers, leading fewer people to gain the relevant qualifications. Why study for four years to become a nurse when you know you’ll graduate to an immense workload and an underwhelming wage trajectory?
Industry’s blame-shifting is partially abetted by JSA’s bet-hedging. Despite the agency’s chief executive Professor Peter Dawkins acknowledging that “upward wage adjustments could be used more”, it proceeds with a definition of “skills shortages” based on failure to fill roles “at current levels of remuneration and conditions of employment”.
The media then amplifies this framing, leaving their audiences suspecting that restaurants with long wait times for food and hospitals with overflowing ambulance ramps are the immutable consequences of complex systemic failures, when often the solution is firmly within managerial grasp.
Full employment isn’t meant to be easy
High employment is intended to make recruitment more difficult — it’s a feature, not a bug. If employers have to work harder to attract talent, they will eventually, reluctantly, offer prospective workers a better deal — and existing workers too, for fear of them leaving. We can see this now in the slow budging on advertisements — albeit from a shockingly low rate — and nominal wages. This redistribution would be greater if we had stronger unions and labour laws, but it’s present nonetheless.
Increased opportunities can allow workers to switch jobs to ones that better utilise their skills, in which they’re often more productive (something Australia hasn’t been good at facilitating). A virtuous cycle of more jobs, higher wages, more output and even healthy profits. What’s not to love?
Plenty, according to our recalcitrant corporate class. As economist Michal Kalecki theorised back in 1943, employers really don’t like their employees having this many options for this long. “The ‘sack’ would cease to play its role as a disciplinary measure,” he wrote. “The social position of the boss would be undermined.” In recruitment, one could add that fear of rejection is dampened and candidates start demanding higher salaries, or to work from home, undermining bosses’ privileged status as gatekeeper of scarce opportunities.
Hence why we see such bare-faced whingeing from the likes of Tim Gurner, the Melbourne-based property baron whose comments about needing to see “pain” in the economy went viral last month:
We need to remind people that they work for the employer, not the other way around. There’s been a systematic change where employees feel the employer is extremely lucky to have them, as opposed to the other way around.
Gurner might come across as a particularly cartoonish villain. But his message is echoed by thousands of employers in subtler language, as they manufacture a crisis out of the first mildly inconvenient labour market they’ve faced in half a century.
Sure, the government can encourage students into understaffed areas with incentives such as cheaper and more accessible qualifications. And bringing in younger skilled migrants to pay for our aging population will help too — though it’s justified on grounds other than business expediency, and Home Affairs Minister Clare O’Neil’s comments last week suggest our overall migration program is set to decline somewhat anyway.
But employers must also start breaking a sweat themselves. They will need to invest in more on-the-job training, and consider taking on “undesirable” candidates, including ex-prisoners, people experiencing homelessness and other stigmatised groups (another intended benefit of full unemployment).
And they’ll need to stop just copying and pasting the same old text on their Seek and LinkedIn profiles. You can’t just be fond of “competition” until it’s your turn to compete.
