Did the Jobs and Skills Summit hit the right mix?

Rebecca Archer 

Welcome to navigating the new normal Grant Thornton's podcast exploring trends in business and the marketplace. I'm Rebecca Archer. And today I'm joined by Thomas Isbell partner and global mobility and international employment tax specialist. And Matt Darby partner and National Head of retail and consumer products industry at Grant Thornton, the government announced a few initiatives at the Jobs and Skills summit in early September, some which will have long term effects and some to plug the immediate gap in Australia's access to talent and skills. So what are they? And how will they potentially shape the October federal budget? Welcome, Tom and Matt.

Thomas Isbell 

Thanks, Rebecca, for having us. Thanks, Rebecca.

Matt Darby 

Nice to be here.

Rebecca Archer 

So this summit was last week as we're recording this podcast. What was the whole point of the Jobs and Skills Summit? And what were some of the key outcomes?

Thomas Isbell 

Yeah, thanks, Rebecca. So I mean, if we think about what the summit was, I mean, it was a gathering of government, employers, unions and the broader community to come together and try and build a bigger, better trained workforce, hopefully boost real wages, hopefully boost living standards, and hopefully create more opportunities for Australians. And it was quite an eclectic, I was reflecting on some of the outcomes, the earlier today, and I thought it was quite an eclectic bunch of people to come together. And I was actually thinking about this in a personal capacity. And thinking, you know, my colleagues have come together and had this summit. And they've actually really come up with some quite concrete policies, which is really refreshing to see, and some policies that I think will drive some, hopefully some great outcomes for Australia. But it's really pleasing to see such a diverse group of people agree on some great outcomes. Some of these that I thought were quite noteworthy, one that's quite close to my heart is the migration ceiling for permanent migrants has been lifted in 20, to 23 to 195,000, then there's going to be some policies focus on participation from underemployed members of the community, which, of course, is very important, something that's quite refreshing to see is there's going to be a review of workplace relation laws, including the bargaining agreements, which, you know, I don't think anyone would argue is not without real merit, we're going to be extending the visas and speeding up the visa processing times, which, you know, again, really close to my heart, because that's been quite a hinderance to operations, were another really great initiative that I saw with international students, they're gonna get an extra two years to stay in Australia and you know, hope that we can encourage a skilled pipeline of workers into the future, apparently, we're only getting about 16% of our international students convert into permanent migrants, which is really low in comparison to other countries. So that I think is a really great initiative and build some pipeline for the future, which, you know, that type of future thinking is really key to these types of initiatives and these summits to more noteworthy outcomes. I think, spine from 75 mil of the national housing infrastructure facility will be available to invest in social and affordable housing, you know, that's obviously key to the distribution of any good workforce is making sure that they have the right accommodations available to them. And another really important one is pension, it's going to be able to work more hours and additional $4,000 before losing their benefit entitlements. That one, I think, you know, it was a real key driver, because through COVID, there was a massive outflow of workers from the population, especially in that sort of, you know, older of their careers, the latter part of their careers. So, you know, anything we can do to encourage participation at that level, I think is is a great initiative.

Rebecca Archer 

Matt, anything to add there?

Matt Darby 

You know, obviously, I'm going to talk about everything from a lens of my industry, which I care about deeply. And we focus on heavily at Grant Thornton. I mean, it just stinks. Statistically, some of the things that are going to happen out of the back of the summit are going to have a bit of a short term impacts to the industry in a positive way. It remains to be seen what happens longer term because some of the workforce challenges that we're facing into, in certainly in consumer and retail industries are somewhat almost generational in nature, in terms of the types of workforce that we're looking at, but you know, we employ, roughly speaking 1.3 million people, I think it was at the last statistic in retail and which is 11% of the workforce nationally, which is, you know, huge. And you think about it retail affects every one of us every day in some way, shape or form. And, you know, 8% of that workforce is migrant typically, so those immigration changes are going to be hugely gratefully received. And then, of course, a large proportion of our workforce is, you know, over 30% of it is in that sort of generations, that arena, you know, up to 24 years old. And as well as you think about the other end of the equation, you know, being able to offer opportunities to older members of the workforce as well as is extremely important, because if you can't get those migrant workforce, team members in, in a short space of time, and the visa processing issues will of course really help with that, then we can supplement it with, you know, looking at the older generation and getting value from their experience. And, you know, and really benefit that sort of genuine diversity of the population being represented in our industry.

Rebecca Archer 

And, Tom, you mentioned the change to the migration cap. Now, we have seen overall migration capped at 160,000. Since 2019. Again, just to reiterate, at the Jobs and Skills summit, the government announced they would be raising that cap to 195,000, to help combat the immediate skills and labour shortages. But I'm curious, is that going to be enough to bridge the gap?

Thomas Isbell 

I mean, it's a step in the right direction. And you know, what, what I don't want to do is, you know, reflect on what's come out of the summit with a negative time. So the answer to that is probably not, I mean, if you think about the job vacancy numbers at the moment, they're around 480,000. And we've got the total number of unemployed is 470. If all of those people were skilled in the right areas, and willing to work and able to work, we still wouldn't have enough people. And of course, we know that the reality is not entirely reflective of that we do have the highest or second highest sorry, skill shortage in the OECD with a with an unemployment rate of 48 year low of three and a half percent, you know, it's a step in the right direction. And these numbers reflect permanent migration. So you know, even with the increase in that cap, that doesn't mean you're going to have another 35,000 workers sitting on your doorstep looking for jobs tomorrow, because there's going to be temporary entrants that are taking up a lot of those visas. So again, you know, I think that it's a step in the right direction, but it's not necessarily going to, you know, cure all our shortages overnight. It's funny, because whilst the Grattan Institute did some research on this, and they said the overall permanent migration, it's 200,000 would make a relatively small impact on worker availability. What it actually will do is Chuck another $38 billion over the next 10 years into federal and state government coffers. So yeah, that's, that's a nice, nice outcome. But yeah, I don't think that it will necessarily solve solve all our ills overnight, shall we say that that I mean, that is going to be, I suppose, a long term structural issue. And it's funny, because another interesting fact that I was reading just prior to this, this podcast was apparently net migration over the last several years, it's been somewhere around negative four and a half percent. So when you add that to the outflows from the workforce during COVID, and you know, all those other issues that we've read about with, with people taking early retirement and relocation, we do have quite a substantial shortage to deal with. And

Rebecca Archer 

overall, when looking at the outcomes from the jobs summit, do you think it hit the right mix? I mean, are there any sectors that maybe it left out that are really struggling at the moment?

Thomas Isbell 

My perspective, I think that they don't feel like big numbers, when you look at them individually? They've allocated another 4700 spaces to healthcare 6100 spaces for vital infrastructure projects and 6800 of the tech sector. You know, if I was to just be talking to my client base alone, we could probably feel troubles. And in terms of, you know, is there industries that have left out? Well, you know, to Matt's point about the level of resource required in retail, my understanding is a lot of that over the years has been, you know, somewhat filled by backpackers and working holidaymakers. And unfortunately, we do still have some, I suppose, structural issues in the tax system where backpackers are discriminatorily taxed, which is quite unfortunate. And there was some high court cases that look like that might move in a different direction. So I'd really like to see, you know, it becomes more attractive to to those backpackers and those Gen Zeds that wish to come to Australia. And I'd like to see more more initiative on that front.

Rebecca Archer 

I think, Matt, anything from you on that one?

Matt Darby 

Well, I think I try not to comment on industries that are outside of my area of specialisation, too much. What I will say in terms of the skills that we're looking for, you know, Tom's mentioned, you know, sort of digital slash tech, latest tech capabilities are very much a focus of our industry and therefore, access to those skill sets, both locally and internationally is extremely important. You know, we compete with other industries looking for the same talent and the same talent pools are similar. But would we argue that retail here has a as a as an attractive pool versus financial services and or government? In some instances? It depends on your viewpoint for me, of course, I'd say absolutely. But, you know, for others, that may not be the case. So it's not just a case of attracting skills, both locally and internationally, because, of course, we're a global workforce now, in many, many ways, shapes or forms. I mean, there's practical realities to that. But, you know, accessing skills, globally is one thing that we're looking at as an industry. But then the fun part is, you know, can we retain that interest when, you know, the competition looks at it as well. So, you know, it's it's a genuine concern, but the movements from the site have been right. And of course, the presence of major retail at the summit was extremely important.

Rebecca Archer 

Now, is there anything else that the state or federal governments or even private sector, corporates can be doing to try to bridge the gap in the skills shortage?

Thomas Isbell 

I think about that, in the context of, you know, what I'm seeing a lot of, to Matt's point, there's a lot of innovation about how we resource roles. And obviously, the type of role that you're trying to resource depends on the type of innovation that you might look to fill those roles to fill that shortage or lemonade. A really good point that matches touched on then is, you know, looking at that international talent pool. You know, there's probably not many organisations that aren't, you know, implementing some form of work anywhere, type initiative now. And they've been obviously quite a hot topic in the press and taking the AFR over recent years. And we spend a lot of time working with our clients to develop structures that allow them to onboard talent in jurisdictions that they traditionally wouldn't have done. So. You know, I suppose one of the things that an employer can do is they can look to, you know, for certain roles and certain types of role, they can look to move into more geo agnostic type hiring policies, and having structure in place to deal with that. And the federal government, you know, there is the other end of the spectrum as well, of course, and I think something that we don't necessarily do super well, is utilising migrant short term migrant workforces, you know, you look at some of our competitors in the region, and I use inverted commas, like Singapore, Hong Kong, they have structures in place that are already implemented to utilise those short term migrant workforces, you know, there's obviously social questions around that, which isn't for me to comment on, but certainly a commercial level, I would like to see, you know, some sort of good policy around that. And you know, how businesses especially in retail, hospitality, childcare can access that type of resource. I think that'd be quite refreshing to see if business. And again, I know I'm banging the working holiday time again. But, you know, access accessing those working holiday visa resources, I can be really quite clear to some of those industries that I mentioned, being able to have them here on a, you know, a relatively easy structure will be useful as well. Currently, I think we're limited to working for six months for one employer, and it's only limited to a year and then they have to do certain things to get second year. You know, if we could make that a little bit easier. I think that, you know, it'll allow us to access some resources on that.

Matt Darby 

One of the things that were retail and consumer good businesses or consumer facing industries that, you know, like, like the ones I focusing on, we've always innovated and evolve, because as customers, we're continually changing our needs and demands and requirements. It feels like daily at the moment, as we react to, you know, issues in the economy, issues in our lifestyle, issues relating to global pandemics, you know, all of those sorts of things, we, as retailers, we need to react to that. So what's happening in our industry is that we're not we're not blind to the workforce challenges, what we're doing is actually thinking about those from a strategic sense. So, you know, the, I guess the innovation is more around having a a connected workforce strategy that aligns to your customer value proposition or your business strategy, or whatever you want to, you know, refer to it as your vision, if you like. And that workforce strategy is important, because what it's doing is giving you a longer term horizon to think about, well, if we achieve our vision, our three to five year vision, what are we going to look like in terms of a workforce, what skills, what capabilities do we need, what are we going to own and what are we going to borrow in terms of, you know, those capabilities were thinking more or are around, you know, is it a meaningful work? activity that are asking people to do does it align to their values of team members what in terms of that evolution, and simplifying really the work environment, so where we can introduce technology and you know, data driven decision making, and all the other kind of new digital technologies that have evolved, you know, leveraging the cloud, wherever possible, all those, you know, good things, to really create a more simplified version of the working environment and take, you know, the mundane activities out, automate those where possible, and have the team members focusing on, you know, that that sort of customer service proposition, and things that really matter that require that unique skill set that individuals bring, and then reflect your brand in that way. And so, you know, leveraging the sort of digital natives looking at sort of open working types of approaches, and but retaining that customer obsession that we've got, and of course, we've got to consider, you know, that greener working environment that that we're all looking for, as major in, you know, corporates and players in the industry, we have to reflect the needs of the community, and our workforce, and be relevant to to what they expect from us. So that, you know, all in those areas, you're going to see, you know, great innovations from from our industry along those lines.

Rebecca Archer 

And, Matt, you have already outlined the great importance of the retail sector here in Australia. I'm guessing the lack of workers has been really hard on that industry. What are you hearing in terms of the sentiments currently in this sector?

Matt Darby 

I mean, we're all aware of it, because we all shop, right? So I can't think of any situation that I could outline that any of us as shoppers, whether it's shopping for day to day groceries, or those more discretionary items, or the large spending items such as you know, home renovations and automobiles or other right, we've all experienced in the last few months and impacts in some way, shape or form of, you know, the workforce challenges. And I think we understand and appreciate that to a degree and what we're doing in our industry is not shying away from that owning it as a as an area that we need to work on. We're still there to provide that customer experience that we're famous for. And so what we're doing is not necessarily apologising for the fact but recognising that, you know, in some instances, the service proposition isn't what we would like for right now. But we're making material changes to ensure that, you know, it's a short lived phenomenon rather than it becomes inbred into our into our proposition,

Rebecca Archer 

do you have any examples of how retailers are innovating or what they're changing or doing in order to cope with the lack of workers, whether those workers are just not available, not applying for those jobs, or in fact, are getting sick? And they're not able to front up to work because of either COVID infections or the flu?

Matt Darby 

Numerous is the short answer, but some of the some of the examples would be, you know, looking at the supply chain considerations, for example, having perhaps a more agile approach to that supply chain and thinking about supplementing, you know, perhaps products that we would have got from further afield from, you know, more locally, but of course, we need to ensure that that's, you know, that supply line is available to us, there may be costs associated with that. Now, we necessarily passing those costs on to the consumer in all instances, not necessarily, right, we're being smart around what we do with that. But of course, you know, we can't, we can't be completely indifferent to, you know, the kind of the challenges that these bring automation within the value chain. So that can be, you know, and everyone's heard about the audio automation and the sort of distribution centres and within supply chains, we're looking at, of course, the rise of digital helps in many way, shape or form, it does mean that we as customers can self serve in a lot of instances. So we're introducing technology solutions, not just within the supply chain, but also at the the front of house within the store to think about reducing the impact on team members. And having team members provide that specialists service that really important customer touch point, rather than sort of mundane activities, perhaps you know, realising how much stock you've got in store and or processing, cash payments or others having customers self help in terms of ordering either through extendable aisles or other digital screens in store. So there's numerous changes to our environment, many of which you'll have seen the beginnings of, but there's a an acceleration of that too. because we are, you know, to that workforce strategy and Strategic Workforce Plan that we're helping our clients create our retail clients create, you know, that aligns to those changes that are happening within the, you know, the fabric of the business as well. And the idea is that the workforce aligns to all of those changes, whether they're technological or economic, economically driven, or even in sciences is geopolitically driven.

Rebecca Archer 

We also saw the government announced $1 billion in joint federal state funding for fee free TAFE in 2023. How much impact do you think this is going to have on the sectors that are really in need

Thomas Isbell 

465,000 Feel free TAFE places, you know, that's obviously a significant uptick in, you know, the education that's available. And my personal view is that anything that we can do to, you know, increase the level of education within our workforce is only going to help productivity, but that would be the extent of my view on that.

Matt Darby 

The The interesting thing I would add to Tom's point is that, as I've just mentioned, you know, that workforce evolution requires rescaling and retooling of team members. So, you know, team members that may have been used to working in one way do need to evolve and part of the workforce plan for the next few years isn't, you know, it is about retention is is about re skilling, it is about repositioning workforce, it is about making sure the team members have the skills and capabilities to do the jobs that we need them to do over time. And so that evolution is really important, it's as important as the sourcing side of things, and ensures that we all evolve as as humans as people as well. So you know that the the threat of AI and automation is something that's valuable. And that can work alongside and allows us to focus on the things that matter. And that that skills evolution is, is super important.

Rebecca Archer 

And that actually feeds into my final question for your vote, if so, we have already talked about a little bit the future of work, it's a term that's often thrown around a bit of a buzz phrase, I guess, now, especially within the media. But the meaning behind it is, of course, very, very real. With worker demographics, shifting the rapid rise of technology, as you were just mentioning, and that's allowing businesses to innovate and, you know, look at just how COVID has changed the way we work. Where can we expect or where do we need investment to really future proof Australia?

Thomas Isbell 

I mean, I think from my perspective, as I mentioned earlier, a lot of my time these days is working with my clients to formulate strategies that they can implement structure so they can be GRF Napa Gnostic in their workforce planning, that obviously has its own issues in terms of the future of work and the future of work for Australia and us as a destination location, should we call it. So I do think that we do need to take some steps in the right directions to make sure that Australia is and remains an attractive place for people to work, especially if they can work anywhere. One of my colleagues was quoted in the AFR recently saying Australia can't rely on its beaches to attract the best talent, which I sort of agree with that sentiment, but they certainly don't hurt being an inbound myself. But I think there's other things that I would like to do to make sure that we're attracting that, you know, that really sort of top level of talent. My focus, of course, is primarily tax. So you know, I'd really like to see some reduction in the tax burden, especially for those skilled individuals that are relocating to Australia, there's been a lot of winding back of concessions that used to be available. And it makes it very difficult now for us to subsidise and advance to subsidise the cost of those decades that we bring in some of that that's happening. I think that other issues that are probably extra to this, that you will see are important to people that are looking at Australia's destination might be things like strong policies and track record record on the environment, believe it or not, even in my domain, this is an area of conversation that, you know, does come up in day to day conversation, my clients, the cutting of administration, or red tape administration, and red tape, I think would be really useful. You know, again, if we're going to be that destination location for resources, then, you know, we need to be able to manage the administration of that, whether that's tax, you know, whether it's the Fair Work implications of, you know, managing those resources. And again, at the other end of the spectrum, creating policies to increase mobility for a migrant workforce, I think would be, you know, a key to many businesses across many industry sectors.

Matt Darby 

And Tom's covered most of the sort of the themes that are specific to consumer and retail industries and businesses the, I guess, you know, the there are sort of four or five major trends that we're reacting to as an industry alongside the current have sort of geopolitical and economic challenges. There's no doubt right, you know that the second half of this fiscal year and into next one is, is where we're going to see this sort of the effect of economic challenges right now. But we take that to one, well, we can't see either one. So if we consider that as well, as, you know, of course, the focus on customer, you know, the rise of sort of omni channel operations, and that sort of connected front, middle and back office, the continuing focus on margin, profit improvement, ensuring that despite those economic challenges, and changing customer sentiment, that we as businesses do still, you know, make a profit, of course, you know, we've got to do that and to continue to grow, and continue to pay employees, as well as our purpose. You know, we think about sort of the sustainability aspects of our business, you know, that sort of green connection, both from an environmental perspective, but also social and governance perspectives. And then, of course, the what I refer to as the third channel the growth in sort of the metaverse if you like, and what are we going to do in there? You know, there are all sorts of things that we as retailers need to think about, and are actively doing so. And we align that sort of to the dimensions that we think about the workforce in in relation to those. And if you like, the future of work is connected to those megatrends. And many of that is related to what Tom mentioned, you know, digitization, team member experience, connection, slash purpose at work, flexible locations, both locally and, and internationally, increasing diversity, although, you know, retail is typically very good, certainly at that front of house arena, but perhaps in other areas of their business, you know, diversity still needs to be a focus and inclusion still needs to be a focus, we won't ever take our eye off that as a focus. And then of course, green are working, and what that sort of aligns to as a, as a structural changes, we're focusing on our workforce across sort of five dimensions. Of course, I've mentioned capability. It's also capacity, you know, how many do we need and where and when composition? What does that look like in terms of skill sets and location, culture? And then Then lastly, cost? I mean, of course, cost is a consideration. But those four other things are sort of drivers culture way of working composition, capability, and capacity. So that hopefully that gives you an insight into our view of what the future of of the workforce looks like.

Rebecca Archer  

It certainly does. Now listen, if people are wanting to get in touch with you who are listening today and are interested in hearing more or learning more about specifically what you do and how you might be able to help them, how should they find you?

Thomas Isbell 

Contact details are on our website, I think has access to both our numbers and direct email addresses on there. Otherwise, our websites Contact Us facility, which you can utilise and always finds its way to the right person.

Rebecca Archer  

Fantastic. Well, Tom and Matt, thank you so much for sharing your expertise and specialist knowledge on these issues today. It's been really great to speak with you. Thanks, Rebecca.

Both

Thanks very much, Rebecca.

Rebecca Archer 

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