1.0          Introduction

This week we will see a bunch of people get together at the 2022 Jobs and Skills Summit to discuss how to address the shortage of appropriate workers many businesses in the Australian economy are facing.

This get together is by special invite only.  Regular business owners and other interested parties  will only get a chance to formally put their views forward to Treasury, sometime later this year.

And as not being one of the invited people, I thought I would share my thoughts on the Jobs and Skills Summit and some ideas to help address the shortage of appropriate workers.

My first concern about the Jobs and Skills Summit is that it may just end up being a talk fest with nothing concrete coming from it that actually helps business in the short term.

Yes we need some changes long term, but right now if small business can’t survive in the short term, what is the point of looking long term.

And I am worried that this talk fest may result in more red tape placed on small business owners.  Making it harder and more cumbersome to employ staff than it already is for these business owners.

If I was in charge of the Jobs and Skills Summit, I would have the first session focused 100% on solving the immediate problems facing many employers in finding appropriate workers.  And to me this is simply around:

1. How do we grow the pool of workers available; and,
2. How do we get more people in the pool of workers actually working.

Here are some of my thoughts on these 2 areas for consideration at the Jobs and Skills Summit.

2.0          Increase the Workforce Pool

The question here is how do we grow the pool of workers available for business owners.

Time and time again, I see reports asking for the Government to lift the migration cap.  To me this is very naive and I expect will likely achieve very little.

2.1          The “Brain Drain” is hurting business owners

If we look at the June 2022 Australian Bureau of Statistics (ABS) data on permanent and long-term arrivals and departures you will see that whilst June 2022 permanent and long-term arrivals are up 11% on June 2018, permanent and long-term departures are up 36% on June 2018.    The net adds of arrivals over departures in June 2022 is less than half of what is waw in June 2018.

What does this tell me?  We are starting to see a “brain drain” from Australia as people locked down over the past couple of years want to live and work in other parts of the world.  And who can blame them.

In respect of the “brain drain”, I am concerned we are already too late.

We can’t undo past lockdowns stopping Aussie workers leaving.  They are now “escaping” looking for other opportunities.  And if places like the UK are experiencing workers shortages, there is no end of opportunities for them to pack up and go.

We need ideas and ways to entice Australian trained skilled workers to stay on Australia.

2.2          Make Australia a place workers want to come and live in

We can’t undo past decisions to kick out non-resident workers.  These people have left and I doubt many would come back and risk suffering the same treatment.

But for others who did not suffer this traumatic experience, we need find ways to make Australia a place workers want to come to live in.

Just increasing the intake quota of foreigners is not enough.  What are we offering these new arrivals?

When my father and my in-laws arrived in Australia, they were placed in accommodation and provided assistance to settle and find places to live and work.  But where is this now?

And if places like the UK, New Zealand, Singapore and others, offer incentives to foreign workers, we need to match and even beat these.

The view of Australia being a great place to live has been sullied over the past couple of years and we need to find ways to both attract new workers and help these new arrivals settle and quickly enter the workforce.

2.3          Reduce the cost to business owners for visas for foreign workers

One of the ways to entice workers to come to Australia is to offer people permanent residency in conjunction with their job and employer.  But this can be an expensive exercise for a small business if they want to help the worker.

The last time I costed this for a business owner, it was going to cost them over $20,000 for their first employee under a Class 186 visa.  Of this over $15,000 was going to be paid to the government.

So one way to entice employers to bring in foreign workers with the offer of permanent residency would be to reduce the costs of such visas and / or remove any fringe benefits tax on this.  This is something simple and easy to do.

Interesting enough as part of this process the employer needs to pay the ENS Skilling Australia Fund (SAF) levy of either $3,000 or $5,000.  And this money is supposed to be used by the Government to grow the number of apprenticeships and traineeships in Australia.  Be interesting to see how these finds are actually used.

3.0          Get more people in the pool of workers actually working

In the July 2022 ABS jobs data, the job participation rate was 66.4% in total (70.2% for men and 62.2% for women).  And whilst this is near a record high, it still means that 33.6% of the working age population in Australia is not engaged in the workforce (either as already working or looking for work).

So one way to help ease the ease the pressure on Australian business is to identify ways to improve the participation rates in Australia.    In other words get more people working.

3.1          Women in the workforce

Women’s participation rate is less than 90% of men’s participation rate.  Putting it different way, if the female participation rate could be increased to the same as for males, that puts another 900,000 females in the workforce.

So the question is how can we do this?

3.1.1      Child Care

One of the biggest issues is the cost of child care.  From what I can see the average cost of child care per day in my suburb is $144.  This is about the same per day cost as sending your child to an average private high school.

Yes we can support parents by providing child care subsidies, but from what I can see, as you increase the subsidy, so does the cost from the provider so the parents remain out of pocket.

In my view one of the downsides of the current child care system is that they generally are early learning / education centres.  Whilst this is great in concept, it just adds costs. My daughter was involved in a child care centre for a while and she rarely did face to face time with the kids.  Instead she spend the bulk of her time ensuring compliance programs were being met, proper learning outcomes were being delivered and reporting on these learning outcomes.  That was a complete salary that some one had to pay for.

Why can’t we have a two tiered system.

One level is the existing early learning / education systems.

Another level is a basic child minding system which has a lower cost structure and focuses more on play and social interaction.  When I was a kid, people had access to child minding without having to go to one of a purpose built child care centres.

And at the same time lets also:

• Expand the before and after school care facilities in many schools to be available all day.
• Find ways to support other family members (such as grandparents) to provide care.

3.1.2      Flexible Work Practices

When I ran teams of people, I loved employing women with children on flexible working arrangements.

Sometimes it was part time a number of days a week.  Often it was part time with start after school drop off and finish before school pickup.  Others, like my daughter (who is a primary school teacher) are job shares with another employee.

These staff were always loyal as these sorts of options were few and far between and allowed the mother to balance her need for caring for her children with earning sufficient money to live and enjoy life.

Where is the support for this style of flexible working arrangements.  Today on Seek less than 1% of jobs listed in Sydney were for job share.

We need to better educate employers about the benefits of permanent part time work (especially for working mothers) so that they become more open to different ways to fill the worker shortfall.

3.2          Pensioners in the workforce

Right now there are likely to be many people on the pension who would be happy to work more.

But they are concerned that the loss of part of their pension or part of the medical benefits associated with the pension from working more.

So they take the “safe” option and don’t return to work.

We need the Federal Government to have a real look at what can be done to get more people on the pension who want to work to back into the workforce.

The other side of this is that we need better education for both employers and younger employees about the benefits the older generation can bring to the workforce.  The aim of this is to reduce the amount of age discrimination that has been occurring in many workplaces.

3.3          Improved Health

In June 2022, according to the ABS data, the number of employed people working fewer hours than usual due to their own illness or injury or sick leave was 80 per cent higher than June 2018.

Whilst covid isolation will be a factor in this, it still goes to show that having healthy workers is important to reduce the level of absenteeism in the workplace.

Over the past couple of years, we have seen in main stream and social media constant marketing about vaccines and now covid medicines.

But where has been the education and marketing about improving your health?  I would argue just about non-existent.

And we are seeing the impact of this now.

According to the ABS the number of deaths that occurred between 1 January and 31 May 2022 and registered by 31 July 2022, are 16.6% higher than the historical average.  Diabetes related deaths are 20% higher than the historical average.  This will be taking more people out of the workforce than in previous years.

And in another ABS report, over 8 million people have reported a long term health problem.

We need the government to start spending money to educate people about the benefits of a healthier lifestyle.  The benefits to the economy go much further than reduced absenteeism.  It will reduce the resources required in our health system and allow for productivity increases in the workplace itself.

3.4          Stop Pushing University

Right now our schools are geared to churn out young adults to go to university as the focus in the last year of school is a university entry score.  It has nothing to do with how to survive in the real world.

Employers are often requiring university degrees as a basic entry requirement.  Which I find astounding for many roles.  In my last year of full time university, I only had 12 hours a week of classes and only went 2 days a week.  The rest of the time I goofed off and had a good time.  Not sure what that taught about being an employee.

Going to university means many of our young adults start their working life with debt.  And some of them spend several years at university only to realise they are in the wrong vocation anyway.

So, do we really need this focus on university degrees?

What about all the jobs that are less academia and more hands on focus, such as trades?  They don’t need a university degree.  But the stigma associated without having a university degree is possibly stopping people from following this option.

We need a school system that allows people to focus on non-university based career paths and people not be stigmatised for taking this path.

We need employers to realistically look at the entry requirements for workers.  Don’t try and make your job sound better by setting unnecessary entry requirements, often of which cant be met.

Wayne Wanders is an experienced Business Advisor skilled in analysing business financial performance and cash flow.  Contact Wayne below for a free no obligation session.

Contact Wayne Wanders for your FREE Business Survival Session

At the end of this session, you will have multiple ideas on how your business can survive and thrive in these uncertain times.

Simply fill in the contact form below or email me at wayne@aRealCFO.com.au or call me on 0412 227 052 to organise one of these obligation free sessions.

Wayne Wanders, A Real CFO

wayne@aRealCFO.com.au

The April 2021 Jobs Data released today is the first jobs data after the end of JobKeeper. 

At one level it looks like the end of JobKeeper did not have a big impact as the unemployment rate fell from 5.7% in March to 5.5% in April. 

But if you look behind the numbers you see a different story. 

Firstly, the number of employed people fell by nearly 31,000 between March and April.  Women suffered the worst here, with the number of employed women falling by over 36,000.    From a state perspective, the biggest job losses were in NSW which had nearly 37,000 less people working in April compared to March. 

Secondly, the total labour force fell by over 64,000 people between March and April.  This means that over 64,000 people stopped working, or stopped looking for work in April.  For people who were unemployed in March and stopped looking for work in April, they are no longer counted as unemployed. 

Thirdly, whilst the number of unemployed people of nearly 34,000 people in April, this can be reasonably attributed to less people looking for work and not actual job creation (especially as there are nearly 31,000 less people working in April).

My conclusion

I think the end of JobKeeper in March, has meant a lot of people gave up hope of getting work in April.

If you want a confidential discussion on your business situation, contact me below

Contact Wayne Wanders for your FREE Business Survival Session

At the end of this session, you will have multiple ideas on how your business can survive and thrive in these uncertain times.

Simply fill in the contact form below or email me at wayne@aRealCFO.com.au or call me on 0412 227 052 to organise one of these obligation free sessions.

Wayne Wanders, A Real CFO

wayne@aRealCFO.com.au