I know many business owners are considering what will happen over the next few weeks with the lockdowns. However, today I’m looking ahead to 2022 and I want to give you insight into what we’ll experience over the coming 12 months.
In this briefing for Australian business owners:
- Forces impacting the Australian labour market
- What’s happening on the ground now
- What’s likely to happen in 2022
- What Australian business owners need to do now to shore up your employees before NSW and Vic open up
These insights follow on from my briefing on 13/8/21 about the labour shortage – you can revisit that briefing here: https://tenfoldcoaching.com.au/business-insights-the-labour-problem-explained-and-the-action-you-need-to-take-now/
Forces impacting the Australian labour market
This is an interesting time to be an employer and many of you have expressed to me some of the challenges you are experiencing.
By way of explanation, here are some of the forces impacting the Australian labour market:
- The lockdowns in Vic and NSW have messed with everyone’s mindset. Some people are aware of it, while others are oblivious as to how they have been shaped by the restrictions and the lack of normal social experiences:
- The Reserve Bank has made the decision to keep interest rates low until 2024. With 0.1% interest rates (or between 2% and 3% interest rates that most people pay on their mortgages), the RBA has said their main focus now is to see employees’ wages grow significantly. Other considerations like the rate of growth of house prices and whether low interest rates create excessive economic activity aren’t the RBA’s main consideration anymore. See: https://www.abc.net.au/news/2021-09-20/reserve-bank-government-no-control-property-prices-verrender/100475080
What is happening on the ground now
As explained in my briefing of 13 August, even with the lockdowns, unemployment is extremely low. This is putting pressure on employers to offer better working conditions, increase salaries and generally give team members what they feel they deserve just to hold onto them
Even with the entire construction industry shutdown in Victoria, there were still 47 new job ads for electricians listed on Seek last week:
What is likely to happen in 2022
Look at the UK and what is happening there: with minimal immigration and the opening up of their economy, the UK is facing severe fuel shortages. The reason has nothing to do with a lack of fuel supplies, it is due to the fact that there aren’t enough truck drivers to transport the fuel to the petrol stations! See: https://www.bbc.com/news/explainers-58709456
With NSW opening up in Oct and hopefully Vic opening up in Nov, I’m predicting that we’re going to see a huge bounce back in economic activity:
- All the people who have been putting off spending in retail stores will go out and make purchases, especially leading into Christmas,
- People who have been stuck up at home will put their home improvement ideas into action and want to renovate, add onto to or install something new at their homes,
- We’re all going to want to treat ourselves by going out to restaurants or events more than we have in the past.
Without immigration, there won’t be enough people to staff the retail stores, work in the restaurants or commence building works.
What Australian businesses need to do now to shore up your employees before NSW and Vic open up
As I wrote on 13/8/21, you can jump ahead of other businesses and your competitors by doing the following now, before we begin to open up:
Consider what’s important to your team members
The businesses we coach have teams of all sizes, from small crews to larger workforces. Whether you’re managing a sizable team or only a few people, but each employee is an individual so it’s important to consider each person individually. The advice from Tenfold coaches is to assess your business from their viewpoint and what matters to them:
- What career and training opportunities do you offer?
- What work environment do you provide?
- What kind of employer are you to them?
Review the wages of each employee
Look at external sources like Seek or Hays Salary Guide to compare the current salaries being offered for similar roles. These are the salaries your employees could earn elsewhere if they were to go looking for a new role. We’re also hearing more instances of employees being actively head-hunted, with appealing salaries and conditions being bandied about.
Use your financial model
Use your financial model with your Tenfold business coach to determine what, if any, pay rise or incentives you might offer them. Once you know your numbers, you can be confident to start a discussion about their salary review. If you aren’t completely across your numbers, you risk under or overselling a pay rise. That could lead to your team member feeling short changed, or your business promising more than it can afford to deliver. A robust financial model will enable you and your business coach to run various “what if” scenarios to refine the amount you can confidently offer your team members.
Use the time now to plan ahead. Map out what roles and skills you’ll need for the remainder of this year and well into 2022. Be aware that recruitment will take a lot longer in this coming environment so adjust the timeframe you need to allow to find and induct the right person.
If you’ve recruited for a particular role previously, think about how long that recruitment process took and now expect that it will take 2 or 3 times as long.
In this tight labour market, our business coaches are seeing high demand for good team members, especially in manufacturing business and the trades. If you’re not strong in the areas listed above, then you could be at risk of another employer making your employee a better offer with a more appealing company culture, training and development, and career advancement. Being proactive across these areas will provide a compelling reason for your employees to stay with you and will help secure you as their employer of choice.
Engage your Tenfold business coach in the process; this might be the most important initiative you take in your business in 2021.
Ashley Thomson B.Eng. (Hons), Grad. Dip. Mgmt, MEI
Tenfold Business Coaching