investigation
Worker shortage: How WA’s border closures have created labour shortfall nightmare for businesses

When young job applicants with no qualifications or experience apply for a position at one of The Local Shack restaurants, many of them like to set their own terms. Their first demand, before they even get the job, is for a 25 per cent pay rise. “They will tell you straight up they want $30 an hour,” says The Local Shack’s operations manager Bart Mahat. “They know the whole industry is desperate for staff because of the labour shortage — they are holding us to ransom.” Mr Mahat does not agree to the demands, which has made it difficult to fill a dozen vacancies that would have traditionally been filled by backpackers. But some venues are desperate enough to pay it. “I have five or six friends who run restaurants and these demands are happening to all of them,” he said. “I think in six months time you will see some restaurants go broke.” The reason for his staff issue stems from decisions well out of his control — made in the upper echelons of State and Federal government, and by consumers across the globe. John Nicolaou, of economic advisory firm ACIL Allen, calls it a “perfect storm”. He said global demand for WA commodities, such as gas, iron ore and agricultural goods, had skyrocketed under foreign stimulus measures, while domestic demand was being driven up by building grants and other expenditure-led policies. But at the same time all this extra cash was ramping up business, the hard border had put a clamp on the supply of workers. One of the first major consequences of this played out this week, with Rio Tinto revealing labour shortages had caused delays which had prompted a downgrade on its full-year target by as much as 40 million tonnes of raw material worth up to $970 million. The resources giant was unable to rely on imported labour as it had in the last boom. These days, few Australians attempt the move west, and international workers have been locked out indefinitely — and there are not enough locals to fill the jobs. New figures show a record number of jobs in WA, with 1.47 million people in work and unemployment at an eight-year low of 4.1 per cent. There are currently more advertised vacancies than there are people looking for work, with 52,000 jobs going begging and 51,000 people registered as unemployed. “This issue has been a sleeping giant for a while and now it is waking,” Mr Nicolaou said. Mr Mahat fears the situation will get worse for small businesses like his if workers remain locked out. While he supports quarantine and border controls, and is grateful for the State Government’s handling of the COVID-19 pandemic, he claims businesses desperately need the safe and widespread reintroduction of interstate and foreign workers. He falls into the 71 per cent of businesses, according to research by the Chamber of Commerce and Industry, that cite labour shortages as a barrier to growth. This is up from 25 per cent a year ago. CCI’s upcoming business confidence survey shows labour shortages are deemed a bigger risk than COVID, with only 52 per cent citing the pandemic as a threat. There are seven vacancies at every workplace surveyed. Shortages are hitting more than 8 in 10 WA resource businesses (86 per cent) and manufacturers (85 per cent), followed by information media and telecommunications (80 per cent) and construction (76 per cent). CCIWA chief economist Aaron Morey said the only sustainable solution was overseas workers. “WA’s economic engine is pushing the speed limit while stuck in a lower gear, put under strain by skills and worker shortages and supply chain disruptions,” he said. Joe Zito, chief executive of United Motor Traders Perth, said small businesses were struggling in the battle for workers, especially after BHP Billiton recently announced it would bring 30,000 subcontracted workers in-house. To meet competition, he has boosted staff pay by 25 per cent in the past 12 weeks alone. It followed a seven-fold decrease in applications for some roles. In Mr Zito’s view, the current labour shortage is “100 per cent worse” than the last one. He currently has enough work to add another 40 people to his 240-strong workforce in vehicle repair, but cannot find suitable candidates. Likewise, Julie Mahony, owner of Pierrot’s Hair Studios in Mt Lawley, said she would hire 10 extra people, if she could find them. She said it was a fallacy that employers suffered staff shortages because they did not train or pay enough. Ms Mahony had hired 20 apprentices in the past four years, but only two had completed the training, with the reasons for quitting as flippant as not wanting to work on Saturdays. Her staff were paid above the award, with senior cutters on a healthy $92,000 a year. She backed calls for the safe re-introduction of foreign and interstate workers, particularly the “well-trained Irish hairdressers” who had long plugged gaps in the WA sector. Silver Sponge Car Wash franchise owner Frank Ferreri said he had to turn away half of all customers from his city fringe business because of staff shortages, costing him more than $200,000 in annual turnover. Before the borders closed, international students had filled the carwash jobs, but local students simply refused the work. To ensure the business can service regular customers, the 64-year-old has gone back on the tools. “My knees, my hips, everything is hurting,” he said. “Every night I go home and take painkillers.” Meanwhile, the State Government’s focus is on border control and vaccination. A spokeswoman for Premier Mark McGowan said WA would continue following health advice, warning of the deadly consequences of “importing the virus on purpose”. “Border controls are our best defence, but if the virus sneaks in ahead of high vaccination rates, public health measures will be required, relevant to our vaccination rate and the size of the outbreak,” she said. “Western Australians have done such a disciplined job to crush and kill the virus, and keep it out of our State. But the risk is ever-present, which is why we must ensure as many Western Australians are vaccinated as possible. Vaccination is the solution. Importing the virus on purpose before we reach a high enough vaccination level means people would be hospitalised and could die.” The State Government has requested an additional 5000 onshore places from the Commonwealth under the State Nominated Migration Program, and added 135 occupations to WA’s Skilled Migration List.

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Worker shortage: How WA’s border closures have created labour shortfall nightmare for businesses

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investigation
Worker shortage: How WA’s border closures have created labour shortfall nightmare for businesses