The Labour Shortage: What's Causing It and How long Will It Last?

[25/03/2022]

Almost every industry in Australia is dealing with the pressure of the current labour shortage. Some of the worst-hit industries include hospitality, farming, manufacturing and, of course, construction.

As of March 2022, Australian unemployment sits at a record low of 4% - a number previously only reached once before - just before the Global Financial Crisis. Since records began in 1978, unemployment has never been lower than this level. 1




Impacts on the Construction Industry

The shortage is poorly timed for construction, with record numbers of new home commencements in 2021 and plenty of construction ongoing into 2022.

According to NAB, a shortage of tradespeople accounts for 35% of the current shortage, with larger construction companies feeling the shortage the hardest. 2




What's Causing the Shortage?
Closed International Borders
Typically, the international tide of migration brings in a steady stream of workers into the Australian Labour market - but with the pandemic that stream has been cut off.

Closed borders and stiffer visa requirements have severed the supply of international candidates for both skilled and unskilled roles and are the biggest factor in the current shortage of labour. 3


Low Uptake of Apprenticeships
Apprenticeships increased by more than 60% between the 2020 and 2021 financial years from 214,930 in 2020 to 341,385 in 2021. However, these numbers are well short of 2012 apprenticeship numbers, which for a time neared half a million. 4

Gary Workman, Executive Director of the Apprenticeship Employment Network, said that he has struggled to fill more than 1000 apprenticeships and expects the situation to worsen in the coming months - in part due to the limited migration. 5




How Long Will It Last?
Unfortunately, the Labour shortage won’t be ending anytime soon, at least according to Committee for Economic Development economist Gabriela D’Souza. “We do have an estimate that the government hopes to resume its NOM (Net Overseas Migration) figures back to 235,000 by 2023 - 2024.” 6

This would put an end to the crisis somewhere near 18 months from now at the earliest - so settle in.

 


Sources

1. & 5. Michael Janda & Rachel Puppazoni "Unemployment falls to record low, hours worked recover from COVID-19 Omicron variant." ABC News, Published March 17, 2022. 

2. John Buckley "Australia's labour shortage tightens its grip across all industries, new analysis finds, as tradies become some of the most sought after workers." Business Insider Australia, Published January 2022.

3. Lindy Alexander "4 reasons your job ad is attracting fewer applications" www.seek.com.au, Published October 2021. 

4. Julie Hare "New apprenticeships jumped 60pc, but thousands of jobs remain unfilled" Australian Financial Review, Published January 27, 2022.

 

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