Rethinking Labour Sources to Address Staff Shortages

While all countries struggle to find sufficient staff to fill vacancies, Australia has been particularly impacted in filling lower skilled roles as an outcome of extended border closures during Covid.  In the past, industries such as restaurants, retail and farming have relied on overseas labour from Pacific nations, foreign national university students, and backpackers.  Coupled with a 15% decline in skilled labour migration and a falling birth rate, Australia is a highly developed nation without a large enough population to drive the economy.

In the weeks leading up to the Australian Government’s Jobs and Skills Summit, creative approaches to address the skills shortage arose.   The Australian Retailers Association proposed a review of the minimum working age to tap into the large cohort of young teenagers to fill 40,000 retail vacancies.  Rules vary across states, with some jurisdictions having no minimum age, while others currently restrict work for under 15’s to ‘light duties’ (such as a paper run or babysitting).  

A more likely source of labour is the cohort of aged pensioners.  Eligibility for a government aged pension commences at age 66 but is asset and income tested.  Pensioners can earn just A$480 per fortnight before their pension is reduced.   As a result, Australia has around half the number of workers aged over 65 in comparison to Japan, New Zealand and South Korea.  Ahead of the summit, the National Farmers Federation put forward a submission for pensioner work earnings to be excluded from the income test for a period of time to help farmers fill the staggering labour gaps in fruit and vegetable picking.

Outlook for Employers: The Summit decisions included a one-off income credit for Pensioners, allowing them to earn an additional A$4,000 in the coming financial year without any impact to their pension.  With the cost of living increasing rapidly in Australia, it is expected many pensioners will take the opportunity to earn additional income without compromising their pension payments.