Australian employment is just 2,900 jobs short its all-time high, according to data released earlier this month. That’s a phenomenal performance for an economy many perceive as weak.
Any reference to the growth rates of the rest of the developed world would render the glass half empty approach to characterising Australian growth as weak completely redundant. Rather, as the Reserve Bank says, Australian growth is simply below trend.
It’s still strong, it just could be doing better.
One of the pieces of the puzzle has been business investment, which the government has tried to address with its Budget measures aimed at getting small business spending. One of the other pieces of the puzzle is to improve consumer confident and consumption. We’ll get a gauge on this with the release of the latest, post-Budget, Westpac Melbourne Institute Consumer sentiment survey this morning.
However, confidence comes from many areas and an important one is consumers’ employment situations. We need to see a reduction in fear of unemployment from the survey respondents. So we’ll be looking closely at the unemployment index buried in the Westpac survey.
Perhaps the answer to why employees feel less certain about their employment status and why the NAB Business survey continues to show that hiring intentions remain subdued is that businesses just can’t get the right employees to fit the roles they have to fill.
Research released this morning of 500 SME by Indeed.com, the world’s largest job site, found that “over half (53%) struggle to find the right people for open roles”. The primary challenge according to the survey is “finding someone who fits the company culture and attracting candidates with the best skills. Finding the right person is much more important to small businesses than finding someone quickly — only 4% are worried about not hiring someone quickly.”
Given that small business is the engine of employment in Australia, its ability to find the right employees and assure them they are valued may be the missing ingredient in getting Australia from below trend back to trend growth.
The government has focused the budget on business spending. That’s good. The next step should be to ensure that people looking for work have the right skills and expectations so that small business can not only increase spending but also employment.
If only it was that easy.