The rise and fall of labour pools and what it means for the property industry
The pandemic caused a shift in the workforce, prompting change in real estate needs.
There is one issue confronting the Australian property industry, and other sectors, too, and that is labour shortages. Business wants far deeper pools of skilled and unskilled labour dotted around the Australian continent.
But sadly this isn’t the case, and even with our now-opened borders, it doesn’t appear that labour shortages are easing.
So, where are labour pools deepest? What parts of the economy, and which cities and/or regions, offer the best prospects for recruiting labour? What are the jobs that are most in demand? And what does this mean for the property industry?
Let’s go to the numbers.
Dipping into unemployed labour reserves
In February 2020, one month prior to the start of the lockdowns, the Australian workforce stood at 13 million. In addition, about 761,000 workers were unemployed, delivering a national unemployment rate of 5.5 per cent.
Just over two years and a pandemic later, in May 2022, the workforce had increased to 13.5 million and the pool of unemployed workers shrunk to 538,000, or 3.8 per cent.
So, over the 27 months to May 2022, Australia added half a million net extra workers to the workforce, with 223,000 coming from the unemployed pool. And this number includes a net 73,000 drawn from the unemployed pool between February and May 2022. In other words, Australia’s unemployed labour reserves are currently being drawn back into the workforce at a rate of about 25,000 per month.
The balance of 277,000 workers making up the half-million net extra workers added during the pandemic must have come from a mix of cohort growth, increased labourforce participation, as well as some labour drawn from overseas (with borders opening in February 2020).
But fixing the aggregate sum of labour required by the Australian labour market is only part of the solution.
The real issue is getting deeper labour pools – from whatever sources – into the right locations and markets across the country.
The great job shift
It is evident from the quarterly job numbers estimated by the Australian Bureau of Statistics (ABS) that there has been a shift in the skills required by the Australian labour market.
Over the first 24 months of the pandemic, between February 2020 and February 2022, a time when aggregate jobs jumped 384,000, or 3 per cent, demand for human resource managers increased by 77,000, or 110 per cent (see graphic).
Also on the up during the height of the pandemic were general managers, up 62,000, or 121 per cent, and aged and disability carers, up 61,000, or 27 per cent.
Thereafter came accountants, up 44,000, or 25 per cent, and storepersons, up 40,000, or 32 per cent.
Three of these five pandemic-booming jobs require (or generally require) university training, namely HR manager, general manager and accountant. The other two require vocational and/or on the job training.
At the other end of the spectrum are jobs that have been shed, in net terms, over the first 24 months of the pandemic. This includes the roles of checkout operator, down 41,000, or 28 per cent, between February 2020 and February 2022, and livestock farmer, down 28,000, or 26 per cent, over the same period.
Then comes jobs like retail manager, down 27,000, or 11 per cent, cafe and restaurant manager, down 24,000, or 31 per cent, and bank worker, down 23,000, or 42 per cent.
This year’s post-lockdown recovery hasn’t resulted in the entirety of the pre-pandemic waiter workforce getting their jobs back. Rather, the waiter workforce in February 2022 was 128,000, down 19,000 from two years earlier. Clearly many of the 19,000 former waiters have found other jobs.
Another interesting category is the job of air transport professional, which has increased from 17,500 workers in February 2020, to 18,800 in February 2022. These figures suggest this workforce has recovered to, and exceeded, their pre-pandemic strength.
Bear in mind these job numbers are estimates based off surveys and are subject to revision and adjustment, but the overall thrust of the dataset and of the methodology going back 30 years and 120 quarters, is that the Australian labour market currently wants – and desperately needs – more skilled workers.
“More HR managers, fewer checkout operators” is the great Australian job-shift story when viewed through the lens of jobs-in-demand over the past two years.
Checkout operators are being replaced by scanning technology.
Bank workers have been replaced by electronic funds transfer capabilities. Livestock farmers are selling out to neighbours or to big corporates. There’s less requirement for retail managers as stores morph into big boxes with a single bank of self-scanning checkout kiosks.
Workers who previously worked in these jobs must reskill, upskill, and set about finding work in expanding parts of the labour market. This involves encouraging displaced workers to retrain in, say, aged care or to work in fulfilment centres as storepersons, or perhaps go to university or to trade school.
The demand for property shifts as a consequence of these deeper changes to worker demand. There’s no shortage of HR managers requiring commercial office space, even allowing for some to work from home. The same applies to general managers and accountants.
The surge in demand for storepersons, on the other hand, prompts demand for more logistics centres.
In many ways, analysis of the quarterly labour force dataset produced by the ABS, which tracks the rise and fall of jobs, should feed into the strategic thinking behind property businesses.
So, where is demand for workers greatest and weakest?
VESPAs in search of lifestyle (and serenity)
You will recall my acronym VESPA to describe those fleeing capital cities (especially Melbourne) during the pandemic, often taking their job with them. These were the Virus Escapees Seeking Provincial Australia. Well, we know where these VESPAs scootered to.
Over the two years to February 2022, the number of workers based on the Gold Coast jumped 38,000, or 11 per cent. This translates into a workforce expanding by roughly 1500 workers per month during the pandemic (see graphic).
I reckon at least some of these net extra workers are southern VESPAs taking their jobs north, perhaps to their holiday apartment.
Maybe the pandemic is creating VESPA vectors: pathways that take workers out of one region (eg North Sydney) and place them in another (eg Gold Coast).
But it’s not just the Gold Coast where the job market exploded during the pandemic. The Geelong job market jumped by 21,000, or 14 per cent, over this period, and the Southern Highlands and Shoalhaven (includes Bowral) region added 13,000 workers (with a job), or 22 per cent, to the locally-based workforce.
These destinations comprise equal parts provincial city and rural idyll, and offer seachange/treechange options to workers spilling out of, or indeed fleeing, capital cities.
The reason why this is The Great Job Transfer rather than The Great Job Generation is that most job loss over this period (24 months to February 2022) came from places like North Sydney and Hornsby, down 18,000 jobs, or 7 per cent. It isn’t knowledge workers from comfortable capital city locales who lost their jobs initially during the pandemic. This lot, I think, decamped (with job) up north.
Interestingly, there were double-digit percentage losses in the workforces in Shepparton (down 11 per cent) and Outback Queensland (down 15 per cent) over this period, largely due, I suspect, to seasonal workers and working backpackers “going home”.
This net loss of a fluid rural workforce has likely accelerated farming’s shift into mechanisation by agribusiness. It has also most likely left these regions with an intense requirement for labour.
So, what does this mean for property?
Conclusion
The first six months of the pandemic shocked businesses into restructuring both their workforce and ways of working (eg work from home), prompting demand for HR managers and laying off checkout operators. Over the following 18 months, the Australian market adjusted: waiters and checkout operators found other work.
Over the past six months since the most severe lockdowns ended, the economy recovered, and restructured businesses reopened only to find shallower pools of labour. Former workers had gone home, gone up north, found other work, or been replaced by QR codes and scanning technology.
The Australia labour market was always relatively stable; (young) skilled workers had always tended to remain in Sydney and Melbourne because, well, they offered the best job opportunities. But now these workers can work from anywhere.
There are still requirements for shops, offices and warehouses, it’s just that their formats, and maybe their locations, have changed.
These buildings will need to be flexible, digital, proximate to a labour pool, and capable of being marketed to more agile tenants. Whatever the megatrends, the underlying compelling logic driving the property industry is sound: businesses will always need workplaces to achieve the best outcomes.
Bernard Salt is executive director of The Demographics Group; research by Hari Hara Priya Kannan
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