Budget 2022: 'Plenty to like' for employment market

Tuesday’s Budget resulted in a mix of winners and losers, as Treasurer Josh Frydenburg set down the Government’s financial priorities ahead of the upcoming federal election.

One area that received significant attention was the employment market, with many of the forward estimates based on a projected record-low unemployment rate of 3.75 per cent by the end of this year.

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Yahoo Finance spoke with Kevin Alexander, managing director of leading recruitment business Adecco Australia - one of the biggest members of industry body RCSA – to get his views on whether this was achievable, and how the Budget had been received by the sector.

Win for young Aussies and IT security professionals

“There was plenty to like for our industry on Tuesday night," Alexander said.

"We felt it was a strong budget for job seekers, with a particular emphasis on youth development due to the incentives for apprentices."

His comments refer to the newly announced Australian Apprenticeships Incentive System, a $954 million commitment to provide support for employers and apprentices in priority occupations.

The scheme will give employers a $15,000 wage subsidy for each apprentice they hire from July 1, 2022, as well as delivering $5,000 in Government funding for the apprentice themselves, aiding cost-of-living expenses in the early days of their careers.

Another area where Alexander saw benefit for the employment market was the $9.9 billion allocated for Australia’s intelligence and cybersecurity industry.

“The cybersecurity initiative will create an estimated 1,900 jobs in Australia, many of which will attract high salaries,” he said.

The project, to be known as REDSPICE, will be the largest ever investment in Australia’s intelligence and cyber capabilities and will double the size of the Australian Signals Directorate (ASD).

The ASD is already a key player in keeping Australia safe from cyber terrorism, which is increasingly an issue now that hostile governments are alleged to be operating in this field.

The creation of jobs in this highly specialised growth area will be a boon for Australian IT professionals, although Alexander cautioned that “demand may exceed supply” in the short term.

Skills shortages not addressed

The theme of Australian employers not being able to identify suitable talent was the one area Alexander highlighted as a budget disappointment for his industry, with the lack of action on skills shortages a concern.

“We would have liked to see more to address the skills shortages that are developing as a result of record-low unemployment,” Alexander said.

One potential reason for such skills shortages in the Australian market is lower net migration due to the recent pandemic.

“Government estimates net migration won’t return to pre-pandemic levels until 2025, which means overseas labour won’t be able to completely solve the skills shortage in certain areas,” he added.

Without a consistent flow of skilled resources from overseas, many employers will be forced to rely on the local market to hire the skills they need.

While this is likely to drive long-overdue rises in Australian wages, this may result in unintended consequences.

One real-world example Alexander highlighted was an Australian IT business he was recently speaking with, who had one of their software engineers resign.

“This organisation explained to me that, due to the difficulty in replacing that individual in Australia, they had made the decision to hire the role in the US instead, based on cost and availability issues locally,” he said.

It’s a story that may well be repeated in high-demand areas in the coming months, and not one that Australia can ignore.

Strong jobs growth to continue

Despite these concerns, Alexander was upbeat on the prospects for employment growth in the next six months, feeling confident the historic-low unemployment figure could be reached by the turn of the year.

“All the signs we are seeing point to continued strong growth in employment and participation,” he said, adding that Tuesday’s Budget had, on the whole, reinforced this opinion.

With the prospect of lower unemployment due to strong jobs growth, Australia seems well set to rebound from the economic shock of COVID.

However, this growth in employment will need to be balanced with ensuring employers are able to source suitable labour in order to capitalise fully on the benefits that such low unemployment will bring to future budgets.

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