Unemployment in regional Australia has dropped below the magic 4% but experts say the outcome is “double-edged”, as surging vacancies amid a shallow labour pool looms as the bigger issue.
Ballooning vacancies are already beginning to constrain development across whole regions and multiple industries beyond farm labour shortages.
The latest Regional Australia Institute’s job vacancy report shows that with an unemployment rate of 3.8%, regional Australia has already hit the national target of below 4% announced by the prime minister at the beginning of the month.
However, the report found that while the number of people employed in regional Australia in December 2021 was just 1% more than in December 2020, the number of job ads had “ballooned” by 36%.
Dr Kim Houghton, chief economist at the Regional Australia Institute and lead author of the report, said: “The overall driver of these low unemployment numbers and rapid increase in job advertising is because the total size of the employment pool has been so diminished by the closing of international borders.”
Houghton said there was a lot of variation across the regions, with some still at 7-8% unemployment and others under 2%.
According to Houghton, the lower figures are a positive outcome for regions which have experienced “stubbornly high” unemployment rates, such as many locations in New South Wales and Victoria which have seen higher population growth than job growth.
However, he says for many inland locations with rates under 2%, it can prove “chronically low” as employers are left without a pool of people they can readily draw on, meaning there is no room for employees to retire or leave the workforce.
James Atkinson, an associate at SGS Economics & Planning, said the shallow labour pool was a major disincentive to the growth in regional areas of new businesses, as well as the operation and expansion of existing businesses.
Unable to find employees, Atkinson says regional business owners are having to take on the necessary tasks themselves, often at the cost of their own business’s productivity.
“When you see that happening across the region it starts to impact the productivity of the entire region,” Atkinson said.
Nick Collett, a manager at Key Employment which operates employment agencies along the north coast of NSW, says unemployment figures have “definitely gone down” while the current vacancy rate is “exceptionally high.”
“We are fielding many calls from current and new employers desperately seeking workers, whether it be to fill a shortfall due to Covid, or trying to find someone permanent to fill a roster,” Collett said.
Jo Palmer, the founder and managing director of Pointer Remote Roles, an online platform that facilitates remote work opportunities for people living in regional, rural and remote regions, believes the trend for remote working would “for sure” be contributing to ever-increasing job vacancies.
Palmer has had over 1,000 registered job seekers with her company, which she says is “crazy” as she estimates it’s three times as many who registered in January 2021.
“To me that indicates, if those employment rates are right, these people are employed but not happy,” Palmer said.
She believes people unhappy in their work are moving around for flexibility, or at least indicating by registering with her company that “they’ve got their eyes open to new opportunities that are offering a remote location”.
Houghton affirmed consequences for those communities where unemployment does fall too low, “essentially it’s a break on growth” restricting not only the growth of business, but also the availability of services in regional places.
“When we look at the jobs vacancies in caring professions, personal and community services, now they’re the glue that hold our communities together,” Houghton said.
“There’s quite a lot at stake. It’s not just about export businesses having difficulty with pickers and packers. This is about the fundamental structure and services available in our regional communities,” he said.
The report found regional employers are demanding higher-skilled labour, with the highest demand for professionals accounting for one quarter of all vacancies in regional Australia, while technical and trade worker vacancies were the next largest group, accounting for 16% of all vacancies, followed by community and personal care roles at 13% of all vacancies.
The report recommended greater investment in the availability of quality post-school training and learning across regional Australia, as outlined in the National Regional, Rural and Remote Tertiary Education Strategy adopted by the Government in 2020.
Fiona Nash, who was appointed regional education commissioner in December 2021, says there’s a huge gap between people in the city and the country gaining a university degree.
“They’re less than half as likely as a city person by the time they’re 35 to have attained a university degree,” Nash said.
A related problem, she says is the brain drain as regional students are less likely to return to the regions and practice if they undertake a component of their studies in the city.
Yet conversely, she says “all of the studies point to where we see students studying regionally, and being able to undertake their education regionally, they are more likely to go on and practice their profession in the regions.”
Housing supply emerged as the second issue alongside educational opportunities which the report found was constraining labour supply in regional Australia.
Nash said while the increasing numbers of people moving to regional areas due to the pandemic has affirmed the value of living and working in regional communities, it has become harder to find a rental property or buy a home.
Houghton says the last two years has seen regional Australia benefit from greater investment as a result of the pandemic as well as excellent agricultural seasons, “this bounce back is really starting to show where the constraints are in the system”.
“Our regions are busting to grow, but there’s a constraint on bodies and there’s also a constraint on housing,” Houghton said.
