‘Getting staff is a nightmare’: Where Sydney’s worker drought is biting hardest

Sheaves says the scarcity of labour is affecting businesses of every size and in every sector in her district.

“It’s the No. 1 problem we have,” she says. “It can be big corporates that are down hundreds of staff or a micropreneur who is desperately looking for an admin person. They are just about all struggling big-time to get staff. It is a real crisis in this region.”

Businesses in many NSW regions are also crying out for staff.

The worker shortage will be in the spotlight when the Albanese government’s jobs and skills summit is held later this week. One goal of the meeting is to build a “bigger, better-trained and more productive workforce”.

After surging more than 7 per cent during the early stages of the pandemic in 2020, the jobless rate across Greater Sydney has been well below 4 per cent since April this year.

The very low rate of unemployment across much of the city is something to celebrate. The share of women with a job in NSW climbed to a record high this year. There’s also been a sustained decline in long-term unemployment.

But as unemployment falls, so does the supply of labour and businesses are feeling the pinch.

One key reason for the worker shortage is the collapse in migration numbers caused by prolonged pandemic border closures.

Callam Pickering, an economist at job search firm Indeed, estimates the working-age population in NSW would be 159,000 larger than it is today if not for the border closures.

“The population shortfall is concentrated among people under 35,” he says. “The reason for that is simply because immigration tends to be heavily concentrated in that age group. This has made recruitment particularly difficult for those industries that rely primarily on younger talent, such as accommodation and food services and retail trade.”

There are now more job openings in NSW than unemployed people to fill those vacant positions for the first time in the 40 years since the Bureau of Statistics began tallying job vacancies.

A survey published in June by peak body Business NSW shows 93 per cent of businesses in the state were experiencing skill shortages compared with 55 per cent in 2019.

“Positions of every skill level were reported as being difficult or impossible to fill – from labourers to specialist doctors,” the report said.

Shortages were especially acute for chefs and cooks, cleaners, housekeepers, waitstaff, boilermakers, fitters and turners, electricians and carpenters.

Business NSW chief executive Daniel Hunter says the NSW business community is grappling with the biggest workforce challenge in more than 50 years: “Almost half of businesses reported it is equally difficult to fill entry-level positions as experienced roles.”

The difficulties recruiting and retaining staff, along with rising inflation and higher interest rates, are taking a toll on business sentiment. One measure shows business confidence in NSW had last month fallen back to the lows hit during pandemic lockdowns.

The worker shortage is affecting many aspects of city life.

The passenger queues snaking out of Sydney airport terminals earlier this month were one high-profile example. The airport’s chief executive, Geoff Culbert, warned last week the recovery in airline passenger numbers “continues to track ahead of the workforce recovery”.

He says the industry is working hard to rebuild staffing levels “but with the ongoing labour shortages it’s going to take time”.

A host of less conspicuous disruptions caused by labour scarcity have become commonplace including shops reducing opening hours, restaurants shrinking their menus and deliveries being delayed. This has been exacerbated by high rates of absenteeism caused by COVID-19 and the winter flu season.

Job vacancies are especially high in the accommodation and food sector, which includes many tourism firms.

Yesh Mudaliar, managing director of Holiday Inn Parramatta, says rooms sometimes cannot be cleaned to accommodate demand because of a lack of housekeeping staff. On occasions, members of hotel management have helped clean rooms and serve food and beverages.

“I sometimes wonder, where have all the people gone? We are a country of 25 million people. The hospitality industry is one of many facing labour shortages, which highlights the need for more flexibility in our immigration system,” he says.

James Scott, the owner of Crucial Plumbing Services, says a recent renovation project was held up for a month while he waited for the delivery of a toilet seat. He attributes the delay to staffing difficulties at the supplier.

“I could have walked there and got it,” says Scott. “Luckily, the client had another toilet they could use, but it was really annoying.”

Scott wants to expand his small plumbing firm but says it has been hard to find the appropriate people: “Trying to get materials is a joke and trying to get staff is a nightmare.”

A recent Organisation for Economic Co-operation and Development report found Australia was second only to Canada in having the most severe labour shortages in the developed world.

Hunter says there are cases where businesses have offered sign-on bonuses of up to $5000 in a bid to fill entry-level positions.

“It’s an extremely competitive environment between employers for staff now,” he says. “It feels like many businesses are in the desperation zone.”

Some Sydney firms have decided greater use of automation is the only option.

“To stay on top of things there is no doubt some NSW businesses are exploring how they can increase the amount of automation in their operations to overcome staff and skill shortages,” says Hunter.

NSW Treasurer Matt Kean says the state is entering a “worker drought” that will result in a shortfall of 304,000 employees by 2025-26. He has called on the federal government of Anthony Albanese to quicken the pace of migration.

“I’ve been briefed that there are 65,000 workers ready and waiting to come into NSW,” Kean told the Herald.

“Small businesses are desperate for workers, especially in the hospitality industry that relies on foreign students and working holidaymakers.

“It’s time to get the borders open and the passports stamped so that industries like hospitality, the care sector and construction can start filling crucial gaps that are holding their businesses back.”

A return to more normal levels of migration will help alleviate labour shortages, but deeper structural issues must also be addressed.

Research by Business NSW published in June found 36 per cent of firms identified housing affordability as a key long-term challenge to their staffing needs.

Many respondents identified the need for more affordable housing and limits on the number of properties used as temporary holiday rentals as a way to help address workforce shortages, especially in regional areas. The ageing of the workforce looms as another long-term challenge to the labour supply.

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Chronic skills shortages plagued many sectors of the economy long before the disruptions of COVID-19.

A Federal Treasury issues paper released ahead of the jobs and skills summit says “in recent years, Australia’s skills and training system has not adapted to meet the economy’s needs”.

The government says one goal of the summit is “addressing skills shortages and getting our skills mix right”.

But it’s likely Sydney businesses will be grappling with labour shortages for some time yet.

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