Unpacking the Jobs and Skills Summit: Business outcomes

Speaker 1:
Welcome to CPA Australia's With Interest podcast. Bringing you this week's need to know information for businesses and accounting professionals.

Jane Rennie:
Hello, and welcome to CPA Australia's With Interest podcast. I'm Dr. Jane Rennie, general manager, media and content at CPA Australia. It's Monday the 5th of September, against a backdrop of the lowest unemployment rate in 48 years and with more job vacancies than unemployed people in Australia, a national skills and job summit was held over two days last week. This is the first of two with interest episodes exploring outcomes from the summit. In this episode, we'll be discussing what the summit delivered in terms of solutions for businesses. In part two, which will be available shortly, we'll look specifically at outcomes for the accounting profession. Joining me for today's discussion is CPA Australia's senior manager, business policy, Gavan Ord. Welcome to With Interest Gavan.

Gavan Ord:
Greetings Jane and greetings to all our listeners.

Jane Rennie:
Gavan you'd have to be living in a cave not to know that there's a job shortage right now, but lay it out for me with some facts and figures, just how shy of the mark are we when it comes to plugging the labour shortfall in Australia?

Gavan Ord:
You said in your introduction that the unemployment rate is at a near 50 year low at 3.4%. So that in our lifetimes has never been so low, but it's not just that. So the underemployment rate, so that's people who want to work more, but can't necessarily find the extra work that's also at a very low rate at 6.1%. And the youth unemployment rate is at a historically low 7% as well. Drilling a bit deeper, then you look at things like the participation rate, which records the number of people 15 to 64, who are actually working, that's currently 66.4%. And that's basically where it's been for the last decade. If you go down a bit further, the participation rate usually split between male and female participation rate. The male participation rate is 70.5% at the moment. And the female participation rate is much lower at 62.2%. But then you look historically the female participation rate has grown steadily over the last 50 years, in July, 2012 was 58.8%. It has grown around about four percentage points in the last decade. My participation rate has interestingly declined a little bit from 71.5% in July 2012 to 70.5% now. Going on a bit further if I can, Jane. The number of payroll jobs in Australia is up 8.4% since the start of the pandemic in March, 2020. And if you look at small business, their demand for workers is incredibly high for the year to mid-May 2022. The number of payroll jobs that have been added by small business is 7.6%. Now this actually compares very favourably to large business where they've only added 2.6%. Interestingly small businesses has been a major creator with jobs in the last 12 months and beyond. Job vacancies as at May, 2022 is up nearly 14% from February to 480,000. This is the highest number of job vacancies on record, going back to May 1980. With just over 25% of businesses reporting vacancies in May, 2022, the industries where the biggest job vacancies are utilities at 39%, administrative services at 38.3%, public sector at 38%, then you go down to accommodation as the next one 34%. For professional services, 18% of firms are reporting vacancies. All those figures shows that the pressure on jobs is high. The demand for jobs is high. And we know from our engagement with members and small business, it's very hard to find people to do the jobs that are required, and that's limiting the ability of some small businesses to grow and to service their clients.

Jane Rennie:
Gavan, you've laid out the scale of the problem, and I can see, listening to you, lay out those facts and figures. It's easy to see why the government has held a job summit. I want to discuss the anatomy of the job summit though, because it's easy to write it as a talk fest if you only focus on the two days of the forum. But the gathering in Canberra, that was actually only a small part of the search for a solution, wasn't it?

Gavan Ord:
And that's a great point, Jane, that the summit was almost the end point of, I think, around about a hundred round tables leading up to the summit. And CPA Australia participated in several of those round tables. There was also array of submissions that were made in the lead up to the summit as well. There was a whole lot of activity pre summit. Then there was the summit and there's going to be a whole lot of activity after the summit, white paper, further consultations. But I would say what the summit did was create momentum in policy and in public discussion. And it's very important for the government not to lose this ... Well, I'll put it the other way. It's very important for the government to exploit this momentum of conciliation, of cooperation and to push through some short term quick wins. And also some of those longer term solutions that we really need to address this decades long, develop this decades long skill shortage that the Australian economy is suffering.

Jane Rennie:
Because just on that, Gavan, the point about momentum, this is not the first government summit that has been held. And I know a lot depends on what happens next. Can you give us some examples of just briefly of previous summits and the different next steps that can follow on from them?

Gavan Ord:
Well, that's a really great point that I know that CPA Australia CEO gave the summit to provisional A, and he emphasised the word provisional because what comes out of it that counts the most. And when I reflect back to previous summits, it really is a mixed bag, so hopefully some of our listeners would remember the Kevin Rudd 2020 summit, which was held in 2008. Now many people have forgotten, but there was a thousand people called into Canberra and they distilled, it was broken down to 10 subject areas and they had 10 recommendations. The only recommendation I can recall that was ever implemented from that was to set up ABC for kids. So for those of us with kids, you'd be very familiar with ABC for kids, it's a TV channel for kids. I can't remember any other recommendations that came out of it. People will correct me if I'm wrong, but there's an example of a summit that failed because the outcomes, there was very little outcomes that come out of it, but then you go back further into the Hawke–Keating economic summit of the, I think 1984, 1983. And the accord came out of that, which is sort of seen as the best practise in summits, because there was a discernible major impact from the summit. There were also Hawke and Keating also rank tax, which led to some tax reforms, but not complete tax reform. So really you judge the summit by the outcomes. While the summit was a great momentum builder, the end result, the end judgement of that summit will be what outcomes come out of it.

Jane Rennie:
I can really fall back to a saying like the proof is in the pudding. But just getting back to the actual two day summit, how were business interests represented at the summit? And do you think the right interests were represented?

Gavan Ord:
Yeah. Look, this was a big topic of conversation. I would say that business interests, particularly smaller business interests were definitely underrepresented in comparison to union representation. I think there was over 30 unions represented at the summit as well as the ACTU. I do think smaller businesses were underrepresented at the summit. That's unfortunate given smaller businesses employ around about 40% to 45% of the workforce, whereas unions represent around 16% to 17% of the workforce I believe, so that's unfortunate. But as I said before, the smaller businesses and their representatives will be actively engaged in ... We're actively engaged in the round tables leading up to the summit and will obviously be very much involved in the consultations that come out of the summit.

Jane Rennie:
Well, in the end there were about 150 organisations represented at the summit, who would've been in charge of deciding that guest list?

Gavan Ord:
It's a very much a political exercise. It's not public servants, it would've been a decision made from cabinet and prime minister, which is why there were so many unions there. If this was to be a coalition round table, I'm pretty certain the number of unions there would've been fast more. From a political point of view, it's a balancing act. Who do you get there, who you don't. And this is why summit's not necessarily popular within government, because it does create the organisation of these things and who's there, who's not does create a lot of headaches for those who actually try to organise these things.

Jane Rennie:
To me, the summit appeared like a good example of a consensus based style of policy making. I'm interested, and this is another bit of a segue, but could that consensus style decision making translate to other big policy topics of the day for example taxation.

Gavan Ord:
I would hope so. Hopefully this is a model for some of those other big policy issues we need to confront like taxation reform, as you said. We hope the government gets a positive feeling from this and they feel that this is something that they could do again on other big policy topics. And for us is particularly tax reform that's to us, that's the standout that we really need, a open frank discussion and not be restricted in how we can discuss this issue.

Jane Rennie:
Ahead of the summit we ran an informal poll where we ask people what they thought might have the biggest impact on addressing the skills shortage. We only gave four options but the results from over 1000 voters were, 39% said upskilling existing staff, 36% said increased migration, 17% voted for automation or artificial intelligence and 8% for offshoring jobs. So that was what the public suggested. Gavan, at the actual summit, was there a strong focus on anyone solution over others, or did the discussion move around the grounds in terms of presenting a variety of options?

Gavan Ord:
I think if you read the documents that came out of the summit that does cover a wide variety of issues. But if you look at the media coverage of the summit, it seemed to be very much focused on industrial relations. And while that's part of it, that's not the overriding issue. I think people need to read the actual outcomes if there's 36 recommendations that came out of it, because I do think they cover the broad issues, but if you just focus on the media and the political commentary, you might get a sense that IR was the only thing discussed, and that was not the case and nor should it have been.

Jane Rennie:
And I was actually somewhat surprised by that, the focus on industrial relations and the way it in effect headlined day one of the summit. I admit that's not where I thought the solution to the jobs and skills shortage lay. But perhaps it was unsurprising given the high union representation of the summit. Would that be your take on the issue?

Gavan Ord:
Yeah, I definitely agree with that. I think once you get high union representation and you get the large employer groups there, the conversations usually devolve to discussion on the problems with the IR system. Given the participation, not surprised with that result. But as you said, and I totally agree. I don't think it's the most important issue for jobs and skill shortages.

Jane Rennie:
Well, let's talk through some specific issues and solutions. Perhaps starting with addressing diversity and inclusion in the workforce as a means of boosting participation, because that came through to me as a strong theme and especially women's workforce participation. Do you think that's an area the government might focus its post summit attention on now?

Gavan Ord:
I would say absolutely yes. I mentioned before at the start around the difference between male participation rate and female participation rate. There is definitely large opportunities to increase the number of women in the workforce. And I know that the government's talking about including looking at the gender equality issues in some of their policy discussions. I think we'll see quite a lot of that coming out of that space, particularly as the government moves towards having a women economic statement in ... I think maybe in the October budget, but definitely in next year's May budget. There'd be a greater focus on gender equality and we'll see that coming through in budgets and in government policy over the next few years.

Jane Rennie:
And what about older Australians as a potential source of labour, was that discussed and is that a solution to the jobs and skills shortage?

Gavan Ord:
Well, first of all I say there's no one single solution, it's a popery of solutions. I don't know if that's a right word there, Jane. But for the older Australian-

Jane Rennie:
It is now.

Gavan Ord:
For the older Australians, well basically they're able to earn an extra $4,000 for this year without affecting their pension. For the remainder of this year there's probably 39, 40 weeks remaining this year, $4,000, that's a hundred dollars a week. What's the sort of a minimum wage, $23 an hour. That's maybe four hours a week of extra work for a pensioner. That's something, but it's not what it could be. I also know that it's only for this financial year. If you're an employer, you do want a little bit more certainly that the person you ring on will actually work beyond June 30 next year as well. I think that one about greater participation of older Australians needs to be looked at a little bit deeper and the policies need to be considered a little bit more than what was done at the summit.

Jane Rennie:
People with disabilities are another group that's underrepresented in workforce participation. Australian of the Year Dylan Alcott said that Australia has dropped the ball when it comes to workforce participation. Would you agree with that assessment?

Gavan Ord:
Yeah, it's an interesting observation. I think obviously Dylan made some very good points. I think what we could do on this particular issue. I know we mentioned about male participation or female participation rates. Maybe the ABS could start to develop some statistics around participation by Australians with a disability. And I think that'll give us more definitive detail on what the level of participation rate is. And putting that aside, we need to look for solutions. We need to create workforces, which are employ people of all abilities that meet the needs of employers. Government can do more to encourage that, I think that would be good for the economy and good for society.

Jane Rennie:
And I guess this is all about retaining and nurturing home grown talent. Interestingly Australia is a net importer of labour, but we can't just rely on attracting talent and we can't just rely on sunshine and beaches to get people to Australia. Was there any discussion of how in a globally competitive environment we do more to retain and nurture talent?

Gavan Ord:
Yeah, thanks Jane. I know that in the part two of the podcast we'll be discussing the school migration thing in particular. But in terms of retaining and nurturing talent, there was quite a few announcements. There was funding for 180,000 free TAFE places for this financial year. And there's also discussions around apprenticeships, digital apprenticeships, all those sort of things.

Jane Rennie:
Gavan, just on the TAFE places and the apprenticeships, we often see this in budget announcements and often it can be an initiative that is somewhat gendered and you've talked about in the workforce participation stats, the gendered nature of that workforce participation. What would you like to see in terms of those announcements?

Gavan Ord:
Yeah, I think you make a good point. Apprenticeships, particularly trade apprenticeships are very male dominated and I would like to see a move away from this hard high visa approach to skill shortages. Skill shortages are across the economy. I mentioned before administrative services have the second most number of vacancies. Now that's not necessarily a TAFE qualification and definitely not an apprenticeship. I would like to see a more discussion on university places and a broader discussion on training people up through things like micro credentials. I think we need to have a broader discussion on training and it needs to move beyond just apprenticeships and TAFE.

Jane Rennie:
And that's certainly a point that CPA Australia, CEO, Andrew Hunter has made that people and particularly young people are looking more at those micro credentials as a way to upskill themselves, so we need to look more broadly at the different ways people become skilled for particular jobs in particular occupations. Gavan, in many respects I guess we've talked about the real work begins now and the October budget feels like the next logical step for some of the summit announcements to move closer to becoming a reality. Is that your sense? And if so, what do you want to see in the budget?

Gavan Ord:
It's definitely my sense that there'll be something in the October budget. But having looked at the announcements that I think most of the announcements, the short term wins have announced, and obviously they'll be captured in the budget, but they've already got them out. There may be some more things in the budget, but yeah, I don't think we're going to see a huge number of jobs and skills announcements coming up in the budget. But we'll note for example that the skills training boost, so the 120% deduction, I will note that that's limited at the moment according to proposal to education providers only. So you have to spend the money at a qualified education provider to get the 120% deduction. We'd like to see that expanded to any sort of training. If you're bringing on an older worker, often you have to train older workers in new technology. Now you're not going to send that person off to a TAFE university to do a course in Excel. You're going to go to already made provider that will give you that course. Therefore we would like to see more, particularly that one as example of we need to look at the jobs and the problems from the jobs and skills summit in other policy initiatives like that skills and technology boost. And we think that opening up the avenues we can get training would actually encourage more people to take on older workers, more people to take on Australians with disability because they can claim an extra deduction for the training those people may need.

Jane Rennie:
And so it sounds like the announcements made so far and what's in the budget, if there are further announcements in the budget, they're the quick wins, but I understand the government will release an employment white paper. I guess is that where we move beyond quick wins to a comprehensive plan for Australia's labour market future?

Gavan Ord:
Yeah, so definitely the intention is with the next ... I'm not sure, a few months that we'll see a large scale white paper. But also note that there's quite a few consultations were initiated from the summit and they will be happening over the next few months as well. So there may be separate bodies of work that emerge out of the summit as well, not just within the white paper. As you said at the start, this is like a step in a long process to undo our jobs and skill shortage. And it's a shortage that has evolved over many, many years, not just has appeared post COVID. It's a shortage that has built up over many, many years through because of failures in government policy or failures to invest in developing the skills of Australians. It's not going to happen overnight, but it will happen and it will take time.

Jane Rennie:
Well, that's all we've got time for today. Thanks very much to our guest expert, Gavan Ord. And just a reminder, in part two of our job summit discussion available shortly, we'll explore outcomes for the accounting profession. Links to CPA Australia CEO, Andrew Hunter's pre and post summit media releases are included in the show notes. With Interest is a weekly podcast, if you like what you've heard today, why not subscribe so that you'll receive notifications when new episodes are available. From all of us here at CPA Australia, thanks for listening.

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