Why we should be sceptical about skill shortage claims

Article by Caitlin Fitzsimmons courtesy of the Sydney Morning Herald.

Economists and experts say Australia’s workforce shortage could be filled by attracting workers with higher wages and recruiting from the underemployed, those with mild disabilities and pensioners.

Ahead of the Jobs and Skills Summit this week, the federal government faces calls to use the tightened labour market to fix low wage growth and access the 1.3 million who remain unemployed or underemployed, including 200,000 people with mild disabilities, and up to 400,000 people on the age pension who want to work more.

Yusuf Hussain, 71, would like to do more paid work but the loss of his pension is too great.CREDIT:OSCAR COLMAN

Professor John Buchanan, a labour economist at the University of Sydney, said the Australian Bureau of Statistics figures on unemployment and underemployment showed there was “no absolute shortage of labour”, though often people needed training on the job.

Buchanan said for decades employers had engaged in “labour market filleting” – referring to the best cut of steak – by employing the prime workforce of fit, healthy people in their late 20s and early 30s.

“People with disabilities cop it first but also younger workers who don’t have the years of gaining the skills on the job, and older workers who are written off,” Buchanan said.

Brendan Coates, economic policy program director at the Grattan Institute, said genuine skill shortages existed, but the term was overused.

“We should be fairly sceptical of a lot of the claims of skills shortages because a lot of them are based on asking employers ‘can you find workers at the prevailing wage that you’re offering the staff?’,” Coates said.

“The obvious answer a lot of the time is that wages need to rise in order to attract workers from other sectors.”

Coates said increasing the population through immigration could fill jobs in some sectors but would also create demand for jobs in other sectors and increase pressure on housing. He added that most skilled migration just involved changing the visa status of people who were already in the country.

National Seniors Australia is running a Let Pensioners Work! Campaign, pointing out that pensioners are discouraged from paid work because they lose 50c in the dollar once they earn more than the threshold, which recently increased to $190 a fortnight for singles and $336 a fortnight for couples.

In Australia, only 76,000 of the 2.6 million people on the age pension do any paid work. National Seniors Australia estimates this could rise to 400,000, if pensioners could earn employment income without losing their benefits.

Only 14 per cent of Australians aged 65 or over work compared with 25 per cent in New Zealand, where pensioners are not penalised for employment income.

Yusuf Hussain, 71, from Sydney’s inner west is on the age pension. He rents a room in a boarding house and finds it hard to afford fresh food.

Hussain would love to return to working part-time in a call centre doing administration work, but the pension rules make it too hard.

“Most employers don’t want you just one day a week, they want you at least two or three days a week for part-time work,” Hussain said. ”Also, when you work, you have to deal with Centrelink, and I’ve not found that a good experience.“

A retired high school maths teacher who asked to remain anonymous said he used to take casual shifts to help plug shortages at his local school in regional NSW, but had to stop because the financial penalties were too high.

Yusuf Hussain does volunteer work and reads hundreds of books a year, but would like to take on more paid work.CREDIT:OSCAR COLMAN

Several employers in aged care and disability support – two of the sectors with the biggest workforce shortages – are keen to employ more older workers.

Georgia Downes, chief executive of home care service provider Home Instead said liberalising the pension rules would make a massive difference to her business.

“We have a significant number of our existing caregivers who are on the pension … and they can’t do any more hours because they can only earn [up to the threshold],” Downes said.

“They have vim and vigour, they have a passion for their clients and for caring in the community, and they’re being held back.”

Mark Townend, chief executive of Spinal Life Australia, said he could fill 100 positions tomorrow if the pension rules were changed.

However, he said increasing work visas would not solve workforce shortages in disability support because many clients lived in regional areas, while immigrants preferred to move to big cities.

Buchanan said people with disabilities represented another huge, underused workforce. About 200,000 workers with mild disabilities – such as people who use hearing aids or walking sticks – could be used, while there were also hundreds of thousands of people with more severe disabilities who had at least partial work capability.

ABS figures show only 47.8 per cent of working-aged people with disability are employed, compared with 80.3 per cent without disability. The gap of 33.5 percentage points is far higher than in most European countries.

Ross Joyce, chief executive of the Australian Federation of Disability Organisations, said most small to medium-sized businesses did not realise that employing people with disabilities came at no cost to the employer because the government paid for the appropriate equipment, such as screen readers for people with low-vision or desk adjustments.

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