Labour market shortages are having a huge impact on three out of every four businesses in Canterbury. Photo / ChristchurchNZ
OPINION:
One thing you will have heard over and over again and from every sector in every part of the country this year is the business community talking about how difficult it is to find staff. There are simply not enough people to supply the demand needed to keep manufacturers fulfilling record-level orders, patron-based businesses ticking over to meet domestic and now international visitor demand, and the classic example of fruit being left to rot on the ground because there are not enough hands to reach into the trees to pick it.
It is not just a New Zealand issue – it is a global issue. Fruit is rotting on the ground across the Tasman in Australia, too. The week before last it was also reported in the United Kingdom that labour market shortages have resulted in $115 million in wasted fruit and vegetables.
So, what exactly is going on? Why do we suddenly have a global shortage of workers despite low unemployment rates – where have all the people gone? And what can businesses do about it?
It all started long before Covid-19 hit our shores and it begins with boomers. We have an ageing population, that quite rightly so, is retiring. It is estimated that by 2034 we will have 1.2 million people above the retirement age compared to 800,000 today. Fewer people will be working, as demand for goods and services increases, and therein lies the first challenge. At a population level, we have fewer people to fill more jobs.
Covid-19 then came along and sped the process up. For many on the verge of retirement, the lockdown lifestyle became permanent. For others not quite at that age and stage, lockdowns provided a taste of a different way of working. The necessary shift for many to a remote-working model led to a seismic shift in employee attitudes and priorities around work-life balance.
Adding to that, were two years of lockdowns, restrictions and confusion disrupting the labour market. The dependable and depended-on stream of seasonal workers and healthcare providers – dried up instantly. For two years, their families were not allowed to join us here in New Zealand, causing many of those workers to leave. And who can blame them? But we needed them to stay, and we actually need them back.
Many who have remained in our existing workforce are feeling the pressure, the mental and physical health impacts of staff shortages, doing more with less, and operating under a constant sense of uncertainty and change. Together, all of these factors impact our overall labour market and our ability to bridge the gap between supply and demand.
There is no singular fix, to what is now a complex and difficult situation for almost every business, whether it is a short-term issue right now, or one that may continue to have an impact into the medium to long term, causing many to rethink their long-term resourcing strategy.
The current situation is that for most businesses, three out of four according to the Canterbury Employers' Chamber of Commerce Regional Business Survey, labour market shortages are having a huge impact. They are preventing growth and preventing businesses from opening at normal operating hours and at normal capacity all across the board. Vacancies that would typically take a matter of weeks to fulfil are now taking months, and it is now five candidates going for a role instead of 50. The market is no longer in favour of the employer and we all have to think differently about how we approach resourcing, what our industry/employer brand is in the marketplace and whether there are viable alternatives to people.
Some sectors are also experiencing their own unique challenges. Manufacturing is booming down in Canterbury, orders are coming in thick and fast but the orders cannot be fulfilled due to a lack of staff.
Hospitality, despite alert level and traffic light restrictions no longer existing and tourism back on the cards, cannot find enough staff and unfortunately, the consequence is that the overall level of service at patron-based businesses is declining. At a time when these businesses should be ready to make up for the past two years of pain, many are struggling to get sufficient staff to keep the doors open throughout the entire week. Going out for dinner and having a subpar experience is now the expectation, not the exception, and that is a shame.
In construction, building consent levels are out the gate, yet there are not enough qualified builders to construct in a timely manner, not to mention the supply chain issues that are also causing havoc. It drags everything out and increases the cost – just take a look at our stadium – and it affects our productivity as a nation, which is already not something that we can be proud of.
There is an expectation that this will get worse before it gets better. Businesses are not expecting much to change over the next year, and with the borders reopening, demand in some sectors will go through the roof – tourism and hospitality in particular – and if the staff are not there to operate, we are going to be in for a rough ride. Earlier this year, Lincoln University projected that 10,000 new workers would be required in the Canterbury region per year to fill the gap. I suspect that figure is now much larger.
So, what is the solution? We often point toward immigration as the singular solution to all of our labour market constraints. "Open the borders and let them in!" some have shouted from the rooftops, and that policy position right now, as we reboot our economy after two years of pain, has its place. We do need more people to pick fruit, operate machinery and work in healthcare; however, we must acknowledge that we are now in a highly competitive global market, where other countries including our neighbours across the Tasman, have an advantage.
Higher wages, more affordable housing, and smarter cities are making it more difficult for New Zealand to compete. Our provincial regions, in particular, are feeling this harder than others. We have to offer some point of difference and it has to be palatable enough to brush aside the negatives and the challenges that other countries handle better than us.
The immigration changes of late, in the view of the business community, have not really changed all that much. It feels like all we are really doing is shuffling the deck chairs and whilst that will alleviate some pressure on some businesses, we have yet to see a comprehensive plan from the government on addressing the bigger picture of a dwindling workforce that has a changing composition and changing requirements. We need the long-term plan that will set us up for the future, not the easy short-term tinkering of immigration settings and expecting that to make a difference.
There has been a huge emphasis put on apprenticeships and training which is to be applauded, however, we have to accept that even with this in place, we are and we will continue to be short of people both right now and in the future, so what are the other options and considerations we need to be thinking about?
There is a trend developing where Kiwis are becoming less inclined to work in manual jobs. Factory work and getting up at 5am to milk cows is not necessarily considered the attractive job it once was. Changing the flow of immigration is not going to change that.
Our workforce and the definition of work is also changing, and our approach to the workforce as businesses must change as a result. We need to start thinking about what needs to be done, what type of worker, what level of skill is coming through the pipeline, and what other options may be available to get the work done to adapt the way in which we operate.
It is no longer a given that by creating a job or having a vacancy, it will be filled. The government found this one out with their work schemes during the Covid-19 era. Take Jobs for Nature, for example, creating a job for someone to go and shoot wallabies in the Waimate District does not necessarily mean that they will. Businesses need to think about that as well and think strategically about what the workforce will look like in the future.
Education is quite possibly the biggest problem that few are talking about and Covid-19 has unfortunately disrupted the education sector in a manner that has disadvantaged many of our youth. There is an increased spotlight on education outcomes and some difficult questions being asked about just how well prepared the next generation is as they exit the education system. Literacy and numeracy rates have plummeted. Truancy levels are through the roof.
Addressing this may well be equally or more important than immigration because this is our future workforce – the ones that will lead and shape our country in the years to come. It is a workforce that must be well equipped to deal with modern-day workplaces and societal expectations and to think about running our businesses, communities and countries in a very different way moving forward.
Businesses have the opportunity to lead the way and take the first step. We cannot afford to wait for the government to come up with a solution. Businesses need to address how they operate and think of alternative ways to do so that might not require the same level of staff. People are in short supply and based on global labour market shortages, we cannot see it improving anytime soon.
Automation and robotics are both solutions that are available right now, especially for both manufacturers and those in the primary industries; however, we also know that one of the most significant issues for small and medium businesses is access to capital which is needed to make this transition. The Government needs to work with businesses in tandem to help unlock access to capital in order to accelerate this and not only help find solutions to our current labour market constraints but also address our country's appalling productivity issue.
For those demanding more immigration, maybe the answer is not only to bring in more people. Maybe it is also about pulling every lever possible - by developing different ways of operating, investing in existing people, utilising technology and focusing on education. Something to ponder.
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