Jobs rush in Covid rebound: RBA tips ‘bounce back’

Pent-up demand in the two largest states will drive an economic surge this year as Covid-19 restrictions ease, Philip Lowe says.

Philip Lowe says ‘as vaccination rates increase further and restrictions are eased, the economy is expected to bounce back’. Picture: James Brickwood.

Pent-up demand in the nation’s two largest states will drive an economic surge in the final months of the year as Covid-19 restrictions ease, with employers embarking on a hiring spree ahead of a wave of spending from consumers freed from lockdowns.

Reserve Bank of Australia governor Philip Lowe on Tuesday forecast a “bounce back’’ in the economy and a strong jobs market over the next few months on the back of the relaxation of Covid-19 restrictions.

Flagging a mounting demand for workers, Dr Lowe said the bank’s liaison program and job vacancy numbers suggested “many firms are seeking to hire workers ahead of the expected reopening in October and November”.

With hairdressers booked out until November and tourist operators enjoying a surge in bookings, employers who have borne the brunt of Delta restrictions are scrambling to secure staff ahead of what they hope will be a bumper Christmas and holiday period.

NSW will begin to ease Covid-19 restrictions from next Monday as the state hits its 70 per cent vaccination target. Victoria and the ACT are due to progressively lift restrictions later in October, with Victorian kids returning in stages to face-to-face learning from this week, and in NSW from October 18.

Pubs and restaurants will open in NSW from Monday and large employers will begin reopening CBD offices within weeks.

Merivale head of human resources Jessica Furolo said the giant pubs and hotels group was “moving full steam ahead with the reopening of our venues”.

“We would typically be recruiting for the peak summer period, but right now we’re looking for more than double the amount of staff than what we would have pre-Covid,” Ms Furolo said.

Hundreds of thousands of workers have been stood down in recent months as a result of stay-at-home orders that at one point covered more than half of the population.

In a statement accompanying the RBA board’s decision to hold rates steady at 0.1 per cent, Dr Lowe said on Tuesday despite an anticipated “material decline” in GDP through the September quarter, “as vaccination rates increase further and restrictions are eased, the economy is expected to bounce back”.

His comments came after Seek revealed that the number of NSW job ads on its site had surged by 20 per cent in September. The Seek figures also revealed a 30 per cent jump in hospitality and tourism vacancies nationally, while retail job ads climbed by a fifth.

CBA head of Australian economics Gareth Aird agreed that activity would bounce back quickly once restrictions were lifted.

“There’s definitely a lot of pent-up demand – lots of people who want to get back out and do things,” Mr Aird said. “And when a whole lot of businesses that were closed reopen, you are going to have a sharp adjustment upwards in activity.”

If Queensland and Western Australia extend border closures, however, it would have a dampening effect on the recovery.

Mr Aird said the sugar hit of removing restrictions could quickly wane as half of the country learns to live with the pandemic and Covid-free states such as WA keep their borders closed.

“That means it takes us a bit of time to get back to what we had when there wasn’t any Covid in the country,” he said.

Dr Lowe also said while “many businesses are now planning for the easing of restrictions and confidence has held up reasonably well … there is, however, uncertainty about the timing and pace of the bounce-back and it is likely to be slower than that earlier in the year … Much will depend on the nature and timing of the easing of restrictions on activity,” he said.

With house prices up 20 per cent over the past year, Dr Lowe also hinted that regulators would target the adequacy of “loan serviceability buffers” as part of an anticipated crackdown on risky mortgage lending in coming months.

Dr Lowe noted that the “Council of Financial Regulators has been discussing the medium-term risks to macroeconomic stability of rapid credit growth at a time of historically low interest rates”.

“In this environment, it is important that lending standards are maintained and that loan serviceability buffers are appropriate,” he said.

Innes Willox, the chief executive of national employer association Ai Group, said businesses in locked-down states had been careful where possible to hold on to staff, despite the hit to their revenue as a result of the severe health restrictions.

Mr Willox said the anecdotal evidence and job vacancy data “suggest that many businesses are looking to add to their work forces”, despite the blow to revenue as a result of Delta restrictions.

“At the same time, employers are preferring to reduce hours rather than put off employees in the expectation that activity will pick up quickly once restrictions are eased,” he said.

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said firms were already struggling to get the workers they needed.

“Reopening a business after lockdowns is not as simple as flicking a switch – it will take time for a business to get their employees back and therefore operate at full capacity.

“While expectations for future hiring remain positive, businesses across the country are facing skills and labour shortages not seen in decades.

“When demand for workers cannot be met domestically, we need to ensure migrants can get into the country to satisfy shortages.

“Indeed, our international borders must reopen as soon as it is safe to do so.”

Ms Furolo said for Merivale, recruiting chefs “continues to be a challenge”.

“This was certainly the case pre-Covid, but the shortage has been magnified with borders closed as international workers make up such a significant portion of the talent pool.

“We recently went live with a campaign in the UK and received more than five times the number of applications we are currently receiving locally,” she said.