Australia’s employers may breathe a collective sigh of relief at the sight of international quarantine restrictions lifting in several States, but some businesses could be overlooking the hidden ripple effects caused by the absence of immigration over the past two years.
There are significant short-term and long-term issues that boards and executives should consider, including:
Talent: In the immediate future, the hope may be that a new influx of skilled migrants can be imported to plug areas of chronic skills shortages. But this may not be as quick or simple as some may expect.
Growth: In the longer-term, our nation’s projected population growth has been revised downward, by 2031 we will be 1.1 smaller than we thought we would be - which is equivalent to the population of Adelaide. This could have a disastrous impact on many organisations’ sales and revenue, unless strategic action is taken now.
Open borders are no panacea for skills shortages
Many people might assume that opening the borders means international travel will quickly return to normal but, in fact, it could take 18 months or more to get back to where we were.
For a start, international borders are not yet opening in every State and Territory – and domestic travel between several States remains disrupted. In the meantime, international capacity in the aviation sector will take time to fully ramp up. For two years, airlines have mothballed planes and redeployed staff, and it takes time to bounce back from that.
Even once normal service is resumed, many people entering Australia will not necessarily offer the skills we need most. Initially, many new arrivals will be international students who do provide labour opportunities for some businesses, but not for most.
Furthermore, we can’t underestimate a quintessential Aussie quality: wanderlust. After a two-year emotional rollercoaster of lockdowns and travel bans, there is huge pent-up demand among Australians – many of them skilled – to take a gap year or travel the world. So, Australia’s workforces may be at risk of losing younger talent, in particular.
The gap in population growth could undermine business growth
By 2031, revised projections suggest Australia will have 1.1 million fewer people than forecast before the pandemic hit. That represents about 4% fewer potential customers for business products and services. For Sydney and Melbourne (the most popular destinations for migrants) that figure is likely to be closer to 6%.
Six per cent may not sound like much, but it’s gigantic for the many businesses that have been relying on population growth to underpin their sales in the past few years. About 40% of Australia’s recent GDP growth has been achieved because our population has kept growing. Not because we’re working smarter or harder or faster – but because Australia just got bigger.
And now it’s clear that our nation will be smaller than we previously expected.
Whether you’re in the business of mobile phones or residential property or fashion or groceries, a 6% drop in population forecasts matters very much. Put simply: The fewer people there are, the less demand there is. The less demand there is, the fewer potential sales that exist.
For businesses operating in Sydney and Melbourne especially, losing about 6% of headline growth could be a real game changer.
Proactive leaders are on the front foot
Astutely, some boards and executives are pre-emptively tackling these challenges. There are obvious short-term issues, such as the surge in demand for international travel (which requires careful planning of teams’ annual leave to ensure business continuity) and the mental health toll of the pandemic upon the workforce.
There is also the immediate and long-term challenge of ongoing skills shortages, which requires a comprehensive strategy for talent retention and acquisition. While importing overseas talent remains a priority, proactive organisations are also rolling out forward-thinking reskilling and upskilling strategies among their existing workforces.
As for the long-term impacts of population growth, boards are questioning their assumptions about underlying growth in the coming years. In particular, they are asking management how reliant their revenue projections are upon future population growth. Together, boards and executives are modelling how a smaller population might impact their organisation and how this might be countered through increased effectiveness and efficiencies.
Jeremy Thorpe explains the actions boards and executives should take to tackle these challenges in this short video.
jeremy thorpe video