We might see a tight labour market again in a few months

We mighT see a TighT labour markeT again in a feW monThs: bjorn jarvis, abs

bjorn Jarvis, Head of Labour Statistics, Australian Bureau of Statistics talks to People Matters about the key shifts in Australia’s labour market trends and what the outlook for 2022 looks like By bhavna Sarin

Bjorn Jarvis is the current Head of Labour Statistics at the Australian Bureau of Statistics (ABS). Passionate about storytelling through statistics, Bjorn has been with the ABS since 2005, and has worked in a broad range of roles across labour market and population statistics. He is regarded as one of Australia’s leading experts on measuring changes in the labour market.

In this exclusive conversation with People Matters, Bjorn highlights the key shifts in Australia’s labor market trends and what the outlook for 2022 looks like.

As we enter the final quarter of 2021, how would you characterise the labour market in Australia?

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market has generally been very resilient to the challenges of the pandemic, though some industries and groups of people have been exposed to the impacts of the challenges more than others – such as people in customer facing service industries.

Across the board, many labour market indicators had already recovered in the first half of 2021, before the recent Delta outbreak and its lockdowns and restrictions. This should bode well for a reasonably rapid recovery through the end of the year and into 2022.

Recently we did some analysis of the extent to which people had retained attachment to their jobs during the lockdowns, with the data encouragingly showing that much higher numbers of people had held onto their

jobs through the Delta lockdowns, compared to earlier points in the pandemic. This suggests we could be back to a relatively tight labour market in a matter of months, which may not be good news for employers looking for people.

The hours that people work has seen the greatest change during the pandemic, and really highlight how different this period has been from labour market shocks in the past. Hours worked in Australia fell by 9.6 percent during the start of the pandemic and 5.6 percent during the recent Delta lockdowns in New South Wales, Victoria and the Australian Capital Territory, with much larger falls within each of those three jurisdictions. These falls in hours have been much greater than the falls we've seen in employment and jobs.

We have seen high numbers of people working reduced or no hours, but have also seen how quickly hours build back up after lockdowns ease and end.

Have we seen any evidence of the ‘Great Resignation’ in Australia?

We haven't yet seen any strong indication of a 'great resignation' occurring in Australia, but we will be interested to see what the November Labour Force statistics show, when they are released in December.

Job mobility was lower than usual during the first year of the pandemic, so we may see some catch-up in the coming months, as people who put off changing jobs now make a move.

That said, we haven't yet seen a large increase in people who expect to change jobs in the next year. The numbers in May and August of 2021 were similar to last February, just before the pandemic hit.

It’s also important to remember that job mobility in Australia has been trending down for decades. If we do see people being more mobile over the coming months, it will definitely be against the long-term trend.

What do the numbers show about difficulties in filling jobs in 2021?

Demand for people has never been higher than it has been during 2021 - across all industries and states. To put this in context, by August 2020 the number of vacancies was already back to the same level as February 2020. By early 2021 they were much higher than they’d been before the pandemic - for some industries more than double! Apart from a drop early in the pandemic, there has generally been a higher proportion of employers recruiting than we’d

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normally see. Just before the Delta outbreak, 22 percent of Australian businesses had at least one vacant job – which was double what it was before the pandemic (11 percent).

Around the start of the Delta outbreak, around 27 percent of businesses were reporting difficulties finding suitable staff, which was a greater challenge for large businesses (43 percent) and medium-sized businesses (45 percent), compared with small businesses (26 percent). closed international borders as a limiting factor.

Interestingly, some employers also noted that the job location, type of job offered and conditions on offer - including pay - were also a problem in attracting talent. It will be interesting to see the extent to which employers make changes in what they’re offering, in response to this.

Heading into the Delta outbreak, when the labour market was tight, a reasonable number of employers were planning to staff up group in Australia, accounting for 26 percent of employment during the pandemic and 25 percent just before the pandemic. This was up from 22 percent in 2011, 19 percent in 2001 and 17 percent in 1991.

This increase in professional jobs is just one indicator of the extent to which the Australian workforce is becoming more highly skilled over time.

In addition to being the largest group, it is also still the fastest growing group. Professional occupations increased by 21 percent over the five years before the pandemic - more than double the growth rate for all other occupation groups (9 percent) and almost double the rate of growth for employment as a whole (11 percent).

People’s hours have been hit hard during the pandemic, but the hours worked by professionals have been impacted much less than the other occupation groups. Even during the Delta outbreak hours worked by professionals did not fall by much, compared to most other occupation groups, and especially when compared to the falls in hours at the start of the pandemic.

Of the businesses who were struggling to find people, around three quarters (74 percent) pointed to a lack of job applicants and around two-thirds (66 percent) noted that the applicants they had didn’t have the required skills or qualifications. Close to a third (32 percent) of them identified (23 percent), retrain existing staff (22 percent), increase staff hours (17 percent) and/ or re-arrange job roles and responsibilities (16 percent).

What is the outlook for professional jobs in Australia?

Professionals continue to be the largest occupation

Do you think many people will continue to work from home in 2022? Will this be something that more employers offer and support as an

ongoing way to attract and retain talented people?

It will be interesting to see how the pandemic changes working from home and other forms of remote or multi-location work. With many more people and businesses having had experience during the pandemic, we could see a much higher proportion of people doing it – and businesses offering it - beyond the pandemic.

People often forget that work from home was already on the rise before the pandemic. Around 30 percent of employed people were regularly working some of their week from home in August 2015, 31 percent in August 2017 and 32 percent in August 2019.

This jumped quite dramatically in the pandemic, even in the early stages, in step with restrictions. By late April 2020, around 46 percent of employed people were doing some work from home – and this was noticeably higher for women than men (56 percent of women, compared with 38 percent of men).

We’re in the process of looking at the data for the Delta outbreak now, which we will publish in December. It will also be something that we’ll see in 2021 Census data, when it’s released next year – particularly for people who were in Sydney in August.

What key trends do you predict will shape the labour market in 2022?

The questions we get asked for statistics on tend to provide a good sense of the key emerging trends in Australia.

There will continue to be plenty of interest in how employers and employees respond to the likely tight labour market conditions By LAtE APRIL 2020, ARouND 46 PERCENt of EMPLoyED PEoPLE WERE DoING SoME WoRK fRoM HoME – AND tHIS WAS NotICEABLy HIGHER foR WoMEN (56 PERCENt) tHAN MEN (38 PERCENt)

during the post-Delta recovery period, particularly while international travel is still building back up. It will be interesting to see how this plays out in terms of job mobility and the extent to which pandemic working arrangements will continue and potentially accelerate changes in the workplace that were already happening before the pandemic, like more people working from home.

Wage growth has been relatively low in Australia for a while now, so it will be interesting to see the wages that are offered and sought in 2022, particularly if the Australian labour market goes back to being tight and employers find it difficult to fill jobs.

Lastly, Australians have generally taken less leave during the pandemic, so we might see higher than usual numbers of people taking holidays in 2022, particularly during January. I’m looking forward to taking some time off!