90% of Australian employers expect staffing shortages in 2023

A survey commissioned by the Australian Industry Group has found that 90% of chief executives across the Australian economy anticipate staffing shortages this year.

The tight labour market, with unemployment down to 3.4%, has contributed to eight consecutive cash rate rises since May, as the Reserve Bank of Australia (RBA) unwinds emergency levels to counter soaring inflation.

According to the Treasury analysis, 234,000 more people were employed in November than when the Federal Government was elected in May, an increase of 1.7%.

Australia’s result to November beat all other G7 countries over the same period.

The strongest sectors for Australian jobs were construction with 99,000 extra jobs (8.4%), retail trade up 40,000 jobs (3.1%), and accommodation and food services up 40,000 jobs (4.4%).

The Australian Industry Group (AI Group) survey found that chief executives were optimistic, with 49% expecting stronger conditions for business in 2023 compared with 30% who predicted a deterioration.

AI Group Chief Executive, Innes Willox, advised that business leaders were “cautiously optimistic” with expectations “tempered by a number of supply-side concerns”.

90% of businesses expect to be affected by staffing shortages in 2023, which Willox said would be most keenly felt in higher-skilled occupations “but are evident across all skill levels, industries and geographic locations”.

To boost the workforce, senior executives expect to invest in more in-house training and raise wages.

Asked to rank the biggest “growth inhibitor” they would face in 2023, about 22% of chief executives ranked high wage costs first or second. Ai Group said that was “consistent” with RBA estimates of wage growth rising from 3.1% to 3.9%.

The greatest concern was about increased business costs – ranked first or second by 47% of chief executives – followed by skills shortages.

Willox noted “businesses are also expecting inflationary pressures of the past two years to continue, particularly for energy.

“Supply chain disruptions are expected to persist due to global challenges, despite easing of pandemic-era constraints. There are also emerging concerns around global economic headwinds; inflation and rising interest rates will see Australian economic growth slow in 2023.”

In 2023, the Federal Government has committed to introduce a new tranche of industrial relations reforms to legislate same-job same-pay in labour hire and minimum conditions in the gig economy.