Despite the positive economic outlook, the effects of the COVID-19 pandemic have been far-reaching and have had a lasting impression on one of business’s biggest resources – its people. Around the world, businesses are facing a staffing crisis with more work opportunities available than there are people to fill, this is particularly felt in the highly skilled sectors including the health, science and technology industries.
Here in Australia we are not immune and have also been experiencing staff shortages, particularly felt in sectors where staff have always been in greatest demand but needed the most such as health and aged care, as well as life sciences, technology, professional services, supply chain and service industries.
In addition to people taking more sick leave and undergoing mandatory lockdowns as a result of COVID-19, there has been a significant trend seeing people moving from cities to regional areas. This trend has had a major impact on the workforce, and with hybrid working now becoming more permanent allowing people to move out of the cities, Government has highlighted the migration to regional towns as an area that requires its focus.
Unemployment at a record low
The most recent unemployment figures have fallen to 4 per cent, the lowest rate since 2008, and the workforce participation rate has increased to 66.4 per cent. In the coming months, these rates are predicted to fall to 3.75 per cent for the first time in over 50 years. In December’s MYEFO update, these rates were not predicted until June 2023, proving the staffing shortage is escalating faster than anticipated affecting every industry, and at every level. This extreme workforce shortage is creating havoc for businesses across the nation’s critical supply chains, contributing to inflationary pressures, and Australia’s ability to attract investment.
It’s not all doom and gloom, the low unemployment rates are assisting to lift revenue for Government through taxes as well as reducing the amount of welfare payments. However the cost of living is reflected in the increase to inflation at 4.5 per cent, outpacing any wages growth, most recently reported at 4 per cent.
Technology at the centre of post-COVID workplaces
In response to COVID-19 snap lockdowns and self-imposed isolation, businesses have turned to technology to help their staff adapt to new ways of working. Staff are choosing to work from home as virtual meetings have now become the norm, and services like telehealth Doctor Appointments and online grocery shopping have reduced the need for face-to-face services. This new way of working and accessing goods and services relies heavily on technology and will continue well past the pandemic phase. This budget has seen the Government recognise the increased need for technology and in response they will reward certain businesses investing in technology by offering a $120 tax deduction for every $100 a business spends on training its employees.
For industries that rely on people, and where workers cannot deliver services from home, such as health, aged care and disabilities, this will not be enough and new programs need to be establish to attract and retain the people required.
The Budget has also allocated a $9 million spend for businesses to streamline on the job training to recognise international safety standards, saving businesses $136 million per year through reduced duplication and compliance costs.
In addition, the temporary full expensing and temporary loss carry-back measures introduced last year to assist businesses purchase equipment and invest in capital remain on track to create 60,000 jobs by the end of 2022-23.
Supporting migration bounce-backs
Our country is currently experiencing a brain drain. Due to reduced migration rates we do not have as many qualified people from a Science, Technology, Engineering and Maths (STEM) background to fulfil jobs in key sectors including in health, financial, advisory and support services. COVID-19 has caused a critical shift in the number of skilled arrivals, According to the 2022 Grant Thornton International Global business pulse, Australia’s availability of skilled workers is at 39 per cent, lower than Asia Pacific Average 57 per cent, and global average 57 per cent.
To attract talented individuals and international investment to Australia, the Government will provide $19.5 million over two years from 2022-23 to continue the Global Business, Talent and Investment Taskforce, as the renamed Global Australia Taskforce.
The Government has expanded on the adjustments made to the Employee Share Schemes (ESS) in last year’s Budget, by now removing the cap on the number of shares or options that can be issued, and increasing the value cap of shares from $5000 to a monetary cap of $30,000 per year. The Government has rolled these updates into the Budget Measures Bill, meaning they will be passed into law before the impending federal election. When it comes to ESS offering employee benefits including discounted shares in their company and share options, Australia has not been able to compete on an International level. These changes will boost our competitiveness in this space, and hopefully attract quality staff from other countries from all levels, and give start-ups an edge over more established businesses too.
Government needs to invest in education and pique an early interest in STEM
The technology sector is now the largest contributor to Australia’s GDP after mining and banking. With that growth comes increased demand for staff in the tech sector and the Government has been asked to create pathways for students to take these subjects in school and university to drive up the number of available graduates. There is a need to more effectively train Australia’s STEM talent to create a steady flow of quality and highly skilled talent coming through the pipeline.
Investment in STEM education will help Australia’s struggling health and aged care system which is buckling under the pressure of not having enough doctors, nurses and support staff to match its needs. Early intervention in education may encourage younger Australians to consider a career in health. Of equal importance is the need for these staff to be fairly remunerated once they are working in the field.
The Budget also announced the Australian space sector will get $65 million to invest in local jobs, technologies and businesses.
Re-Engage Younger Workforce and International Students
Compared with the start of the pandemic, there are now 300,000 fewer foreign students living in Australia which has had a severe effect on retail and hospitality. The international and domestic borders are now all re-open and Government relaxed certain work restrictions for a range of visas including eligible Student and Working Holiday Maker (WHM) visa holders, and extended visas for certain engineering graduates. However despite these measures, pre-pandemic migration levels are not predicted to return for years to come.
In an effort to increase workforce participation, the Government announced its ReBoot job program aimed at ‘disengaged’ young people to provide them with mentoring and hands-on learning experience to help them enter the workforce. The new pre-employment program will see a $46.8 million investment to try and get 5000 of these young people aged 15-24 years old into education or work. If these young people can enter the workforce the staffing crisis will be alleviated somewhat, income tax revenue will increase and welfare payments will decrease.
In addition to extending the Boosting Apprenticeship Commencements scheme, which was launched in the October 2020 Budget, the Government will invest a further $2.8 billion to grow Australian apprenticeships providing $5,000 payments to new apprentices, and up to $15,000 in wage subsidies for employers who take them on.
In addition, the Government has allocated $1.2 billion over four years for an expanded Transition to Work employment service for disadvantaged young Australians.
Encouraging diversity
The Government has announced an extended and flexible parental leave policy now offering 20 weeks of paid leave to be shared by either one or both parents as they wish, and a single parent can now take the full 20 weeks. The Budget also included access to leave for women who have experienced stillbirths or miscarriages.
Many private companies have adopted expanded parental leave policies to help both parents access paid parental leave. In many cases up to 26 weeks of paid parental leave is offered, which is above the Government’s new 20 weeks. In addition, private companies are now offering access to super, even on unpaid leave, which is not currently mandated by the Government. In March 2022, the Government introduced extended childcare benefits by increasing the Child Care Subsidy for families with more than one child aged 5 or under in care. To encourage more parents to re-enter the workforce, there is more work the Government could do to extend childcare assistance.
In addition, the Budget has allocated $44 million to encourage businesses to hire older people with disabilities offering up to $10,000 in subsidies for employers.
There will be no more COVID-19 driven sweeteners for individuals or businesses, such as continued support from the Government such as Jobkeeper, as it would do more harm than good in an economy that is already feeling pressures from inflation, interest and the rising cost of living.
This Budget has reinforced the Government’s commitment to keep people working, a 50-year record of unemployment of around 2 per cent would be an incredible achievement and is in reach based on the economic forecast. However, the measures proposed in this year’s budget may not be enough to assist struggling businesses to recoup the desperate resources they require for Australia to remain competitive.
