Casual labour shortage a sign of problems to come

The news that the horticulture industry faces a shortage of about 30,000 workers to pick and pack the nation’s fruit and vegetables during the next six months quantifies a serious economic downside of COVID-19 — looming labour shortages in areas of need. On the face of it, this seems like a paradox given the problem of unemployment. But in the first report to put a number on the horticulture industry’s labour shortfall during the pandemic, a study by Ernst & Young for Horticulture Innovation Australia, reported exclusively by Rosie Lewis on Wednesday, highlights the reality.

Farmers and other stakeholders identified international and state border closures and visa restrictions as the main impediments to the recruitment of the casual workers. Cairns and Wide Bay in Queensland, Shepparton and northwest Victoria, Coffs Harbour, Grafton and the Murray region in NSW, and the southeast of South Australia will be among the areas hardest hit. Victoria and Tasmania are facing some of the worst shortages due to their high levels of labour-intensive crops such as table grapes and berries. Farmers are warning of major price hikes and shortages if the problem is not solved.

The labour shortages, in turn, will impede farmers’ ability to invest and spend in their regions. “Australians haven’t shown themselves to be interested in harvest work in general,” one grower told the survey. “I think the economic situation will need to be quite dire before unemployed people in cities have the impetus to look for work in the regions and relocate as needed.” That is despite real unemployment believed to be around 13 per cent, including discouraged jobseekers not actively looking for work because their workplaces are on hold or closed down.

The shortage of pickers and packers is one facet of a wider challenge arising from the pandemic. The nation’s future population will be smaller and older than previously assumed because of the sharp drop under way in net overseas migration, Josh Frydenberg said in a pre-budget speech to the Australian Chamber of Commerce and Industry last week. With borders closed to foreign tourists and students, and temporary residents leaving our shores, population growth will fall to its lowest level in a century.

It was expected to slow, the Treasurer said, from 154,000 in 2019-20 to 31,000 in 2020-21. Migration eventually would return to the levels the nation was accustomed to, he said. But lost migrants would not be replaced: “And given our migrant workers tend, on average, to be younger, this will lower labour force participation and average hours worked across the economy into the future.” The loss of such a vital growth driver, as Australian Industry Group chief Innes Willox warned after the speech, will pressure companies and governments to lift productivity.

The nub of the problem, as Tom Dusevic wrote last week, is that coronavirus has derailed the “Big Australia” express. In an extraordinary turnaround, more people will be leaving the nation permanently in the next few years than will be arriving from overseas. Given Australia’s ageing population and skills and casual labour shortages, our diminishing size will be problematic for productivity, consumer demand, housing construction and investment, home prices, the residential property rental market and the tax base. The latter is likely to be especially problematic across the long term when set against the need for increasing health and aged-care spending. In 2015, the Treasury’s most recent Intergenerational Report noted rapid growth in the number and proportion of Australians aged 85 and older. It also predicted fewer people of traditional working age, 15 to 64. As a result of the immigration slowdown, Dusevic wrote, Australia’s population growth is expected to drop to 0.6 per cent this financial year, putting us among a group of ageing nations such as Britain, The Netherlands, Belgium, Spain and Norway. Italy and Japan are shrinking.

In the short term, as National Farmers Federation president Tony Mahar says, the EY report should act as a catalyst for state and federal governments to help farmers who need immediate solutions to harvest this year’s crop. Scott Morrison, sensibly, is considering expanding the seasonal worker and Pacific labour programs. Growers will be looking for action in Tuesday’s budget. And, despite the ravages of COVID, the government should resume our robust immigration program as soon as practical, with an emphasis on filling labour and skills shortages. Growing a bigger Australia has always served us well.