JACKSON HEWETT: Lack of skilled staff brings worker drought, keeping employers in the slow lane

The nation’s employers continue to be thwarted by a lack of skilled staff, still looking for workers to get the job done.

The latest figures from the Australian Bureau of Statistics showed there were nearly 340,000 unfilled jobs in May, up 2.9 per cent on the previous quarter.

The private sector is particularly feeling the pinch, with 300,000 jobs unfilled, up 3.2 per cent.

With unemployment near record lows, there are almost two jobs for every unemployed person, well down on the post-pandemic high of three jobs per unemployed but still very robust.

According to Callam Pickering, APAC economist at job site Indeed, businesses are still trying to make up for collapse in available workers that followed the pandemic.

“So many Australian companies were operating below capacity coming out of the pandemic, and even though the economy is weaker, they still need to play catchup on headcount,” he said.

Job vacancies remain structurally elevated across the economy, with Westpac noting they have held at 40 to 50 per cent above pre-pandemic levels for more than a year.

The strongest hiring activity is in labour-heavy sectors. Manufacturing job openings are up 20 per cent year to date, transport and warehousing roles have jumped 23 per cent, and construction vacancies surged 20 per cent in the past three months. Employment in retail, hospitality and healthcare also remains strong.

EmploymentHero, a payroll and HR software platform that processes more than one million paychecks monthly across 300,000 small and medium-sized businesses, reports strong demand across a range of roles.

Office administration jobs are up 16 per cent on the year, with average hourly wages rising 7.2 per cent to $48.30. Construction jobs on the platform are up 7 per cent year on year, with wages growing 8 per cent.

“Construction’s much-needed lift could help ease some of the productivity pressure and get us back on track to meet housing targets,” EmploymentHero chief executive Ben Thompson said.

Despite these wage gains and persistent labour shortages, many workers are staying put. Mr Pickering said job mobility was still below pre-pandemic levels, with people opting for security over a higher pay packet.

“There is a bit of a disconnect between how workers perceive the job market and the economy versus how it actually is,” he said.

“The best way to get a pay rise is to change jobs. But in this environment, people are choosing stability.”

Australian Industry Group chief executive Innes Willox said the construction sector in particular was being held back by a weak talent pipeline.

“The increase in construction vacancies this quarter bucks the national tide and shows the industry has a long way to go to meeting its workforce needs,” he said.

According to Jobs and Skills Australia, every construction trade occupation is currently in national shortage. Mr Willox said this had become one of the major blockages to productivity in a sector that has been on a steep decline since the pandemic.

New Ai Group research points to systemic problems starting in the apprenticeships system.

“Businesses are struggling to recruit apprentices, confront difficult to navigate systems, and face funding uncertainty regarding incentive schemes,” Mr Willox said.

“There needs to be a concerted effort to address workforce shortages afflicting the construction industry if we are to meet our national housing and infrastructure ambitions.”

Westpac chief economist Luci Ellis said the Reserve Bank remained wary of inflation pressures from a tight labour market, even with a rate cut on the horizon.

“The RBA may not be inclined to shift to an expansionary stance just because it starts cutting rates,” she wrote this week. “The jobs data suggest the economy is still running closer to full capacity than the GDP figures imply.”

Businesses are still in growth mode, it appears, with new ABS data on credit demand showing total demand for credit hit $136.1 billion in the March quarter, the highest since mid-2022.

Private non-financial businesses directed $45.9 billion of that into building construction, as well as machinery and equipment.

While the construction sector is waiting for boots on the ground, other firms are looking for labour-saving solutions while they wait for the supply of workers to catch up.