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The recent labour market squeeze has employers and employer groups predictably call on the Federal Government for more, and faster, immigration to assist them employ the workers they need but (supposedly) can’t find.

Immigration has been one of the primary policy levers used by (predominantly) first-world governments to expand a country’s labour supply.

Employers much prefer an expanded immigration program to other forms of expanding the labour supply because it takes the onus off them to change their existing thinking and practises.

Immigrants to Australia are, largely, grateful to be here, ready to work, keen to work, largely ignorant of minimum wages and conditions and are reluctant to do anything that might jeopardise their pathway to permanent residency or citizenship.

The way some of the media report the ‘labour supply crisis’ you could be excused for not understanding the other option available to local employers to attract people to enter (or re-enter) the labour market.

Australia’s labour force participation rate is 66.7% meaning one-third of Australia’s working-age population (those aged 15 and over) is not currently employed or not actively seeking work.

The 33.3% of Australia’s working-age population who are not in the labour market would primarily be identified as one of the following:

  • Retired (the largest group, at 37% of Australia’s non-working population over the age of 18)
  • Student
  • Career break
  • Unpaid carer
  • Unpaid home duties
  • Incarcerated
  • Unable to work due to sickness or a disability
  • Disillusioned or discouraged

By contrast, New Zealand‘s labour force participation rate is 70.9%.

To put that into context, if Australia had the same participation rate as New Zealand we would have approximately 880,000 extra people in the labour market.

To provide additional context 548,100 people are currently unemployed in Australia and we have a labour market with over 420,000 vacancies.

Even if Australia’s participation rate rose only one percentage point (to 67.7%) that would still represent an additional 210,000 immediately available workers.

When you consider that over the past twenty years the average annual number of immigrants (of all ages) to Australia has never exceeded 200,000 you can appreciate that seemingly small changes to the participation rate make a big difference in terms of the number of people available for work.

The best news is that official data confirms that, theoretically, those 880,000 Australians are potentially available.

The most recent ABS data (2019) on barriers to labour market participation reveals that 5.02 million Australians are not working and don’t want a job and 1.04 million people are not currently in the labour market but would like a job.

The challenge for all employers is to eliminate, or at least reduce, the barriers preventing even a minority of those 1 million potential workers from securing appropriate work.

Some examples of eliminating, or reducing, those barriers to enlarging the labour market ‘cake’ are:

  • Prison-to-work program: Yesterday the Victoria government announced it is pairing up with private businesses in a new initiative, dubbed as the Post-Release Employment Opportunities programme, to help prisoners get employed once they are released from prison. The initiative enjoins a number of textile and food wholesaling businesses. These businesses are expected to employ up to 225 individuals when they leave prison and return to the community over the next two years.
  • Return-from-parenting incentives: Last week the New South Wales government, announced it was continuing, and improving, its Return to Work program with additional funding of $32 million. The program will support eligible women cover the costs of common financial barriers like wardrobe, technology and training in their transition back to employment. The $5000 grants will be allocated with the impetus to boost women’s success and economic participation. The NSW government launched the program during the height of the pandemic with a $10 million investment, which saw 1500 women qualify for grants. According to the government, 65% of those women entered new jobs.
  • Remote work: The immediate PR success of AirBnB’s recently announced ‘live and work anywhere’ employment policy was dramatically highlighted by the reporting of more than 800,000 people flocking to the AirBnB careers page subsequent to the announcement. It’s not too much of a stretch to imagine that some (not insignificant) number of those page views were from people currently not active in the labour market due to a lack of physical proximity to a place of work offering jobs that match their skills.
  • Flexible work: Distinct from, but related to, remote work is the issue of greater flexibility around start and finish times, whether it be remote or on-site work. I am sure every person has at least one person in their life who would be happy to return to work if they were offered an appropriate job containing flexibility with respect to the days and time of being ‘at work’.
  • Help with childcare: In the aforementioned ABS data “Financial assistance with childcare costs” was the top ranked incentive (49% rated this “very important”) for all people considering rejoining the labour market. “Access to childcare places” was the number 1 factor for women.
  • Raise pay: Raising pay does more than satisfy the need of those working to receive adequate compensation for their labour it also acts as a market signal to encourage people to enter the labour market. Every incremental dollar provides the unseen tipping point for labour force expansion as the costs of commuting and/or childcare (as examples) become worth incurring for some number of previously inactive workers. 
  • Rethink hiring stereotypes (especially age): Bunnings recently publicly celebrated the 91st birthday of their oldest employee, Harold (pictured above), who works at their Canberra Airport store. Having started working life in 1947 as a fitting and machinery apprentice, Harold joined Bunnings four years ago, aged 87. How many other employers would seriously consider hiring anybody over 70 let alone an 87 year-old? The best part of this story is that Harold is still working at Bunnings four years later – no job hopping or retirement for Harold! The ageist mindset of far too many employers prevents them recognising the many thousands of older Australians who, if given the opportunity, would most likely prove to be valuable and loyal employees.

Given the importance and projected growth of the female-dominated industries; Healthcare and Social Assistance; Retail; and Education (our, respectively, largest, second-largest and fifth-largest employing sectors nationally) the importance of growing the labour force organically, especially increasing female participation, is a critical task for governments and, just as importantly, employers.

The role of recruitment agencies in this challenge is not insignificant. To date, private recruitment agencies have been focused almost exclusively on sourcing active workers; the new frontier for agencies to consider is the role they can play in finding and enticing, inactive workers back to the labour market.

There is much to be gained by doing so.

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