How can we alleviate the skills shortages that plague Australia?

Wherever I travel these days, entrepreneurs tell me crazy stories about the skills shortage.

There is the unnamed and recently renovated hotel that advertised 80 new jobs and received eight applications. The chic, unnamed French restaurant removed half of its tables because it didn’t have enough staff. Four of the last eight hotels I stayed in apologized for cleaning the rooms only every third night. One luxury resort offered a free cocktail at the bar if you omitted the daily cleaning. I’ve talked to IT and consulting companies that don’t even bother to advertise jobs because it’s impossible to find employees anyway. A real estate company outsourced most of its repetitive digital tasks to the Philippines.

Let’s quickly summarize why there is a skills shortage in the first place.

How can we alleviate the skills shortages that plague Australia?

Our economy grew despite COVID-19, global supply chain bottlenecks, and geopolitical tensions. That’s welcome news. The only problem is that we were forced to stop importing workers abroad.

Pre-COVID, Australia took in 180,000 net new migrants each year. The first year of the pandemic saw a net loss of 90,000 migrants. The trend was weaker in the second year, but you get the gist: tens of thousands of workers who would normally have come to Australia didn’t.

In the beginning, this was not a problem. People who would otherwise have been unable to access the labor market found work, and many labor-intensive industries were still restricted by COVID-19 regulations. Now that restrictions have been lifted, sectors that had to temporarily let go of workers cannot find new workers. Airports and hospitality are probably the most obvious examples.

How do we deal with skills shortages? We squeeze more productivity out of existing population groups, educate our young people, stimulate migration, and invest in automation.

How do we make our current employees more productive? Well, you just work more hours for the same pay – congratulations, you are now more effective economically. We will also tap into parts of the labor market that are underutilized.

Now is the time for job placement to shine. Hopefully, the current skills crisis is an incentive enough to train disadvantaged workers and give them a chance to enter the job market. This can be a unique opportunity to break the cycle of intergenerational unemployment in some families.

The graph below shows that Indigenous people, people with disabilities, and people with poor English skills are two to four times more likely to be out of work or study than people who do not fit into either category. As a nation, we must encourage these underprivileged people to get to work – it’s the right thing to do, morally and economically. Isn’t it nice when these two things go hand in hand?

It is clear that investing in our young people by pushing as much as possible through universities and, especially through vocational training, will help improve the tight labor market. This is also a good excuse to advocate for universal free TAFE education in Australia again.

Traditionally, when we wanted to increase productivity, we enticed more women to enter the labor market. Adding an extra income to a household helped families financially and pushed us towards greater gender equality, but it was a quick fix to make the economy more efficient.

Looking at recent data on female employment rates, we have to conclude that not much more needs to be done to get more women into work. The biggest lever left would be to make childcare free for everyone so that more women can return to work full-time – this works in my home country of Germany. Still, it is a costly undertaking, and I decided to make TAFE free in the previous paragraph…

Skilled migrants are slowly returning to Australia, but even if we hit pre-pandemic levels tomorrow, we will miss two years of migration uptake. The skills can, of course, be improved by importing workers from abroad. Remember, we were used to having employees delivered to our door like you order Uber Eats for dinner.

The federal government even increased the number of skilled migration visas to be handed out to 90,000 annually. The capable visa program tends to help healthcare, engineering, and professional services much more than hospitality or logistics (airports, warehouses).

So far, we have decided to leverage existing populations to mitigate skills shortages, invest in our youth and encourage more migration.

We have another suggestion to talk about automation.

Many still fear that automation, robotics, artificial intelligence, or algorithms are job killers that make society worse. If we let more of our workloads be handed over to machines and programs, much of the workforce would have nothing to do and eventually clog up social support systems.

I don’t think that’s the case at all. Work, like life, always finds a way (to fill our days and keep us busy).

via GIPHY

Let’s look at the example of secretaries. There are no more young secretaries in Australia. The age profile below shows that no new employees are entering the profession. Obviously, you might say. Bosses have learned to type, and Outlook manages calendars for you. No more secretaries are needed. If this story is true, where are angry secretaries’ hordes roaming the streets? They are nowhere to be seen because that didn’t happen.

Certainly, machines and algorithms have taken over many of the secretaries’ duties. But it did not lead to the extinction of the secretary profession. On the contrary, the work underwent collective retraining and rebranding. Offices today employ personal assistants or office managers instead of secretaries. These women (it’s okay to say women here because more than 97 percent of all these jobs are held by women) are now doing more valuable tasks at work; they have more responsibilities and are paid more.

As predicted by the anti-automation brigade, automation changed the secretary profession, but it did it for the better. Work has found a way. The result of automating tasks previously done by secretaries turned them into economically productive and wealthier workers.

The beauty of high-skilled jobs (especially jobs in trade, healthcare, and construction) is that there is an almost limitless demand for them. I would like to see many low-skilled jobs automated. We wouldn’t lose jobs, but free up workers for middle-skilled jobs (here’s my free vocational training back on the market).

Our infrastructure investments are over 20 years behind where they should be, our poor qpoor-qualityng stock needs regular renovations and o, ur aging cthe country needs more health workers.

Automating low-skilled work will not leave people behind. It will make our economy more productive in the long run. In the short term, automation will be a lever that we can use to reduce the skills shortage.

The skills shortage will remain with us for quite some time; we must use all available levers to improve the situation.

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