Luke Butler, managing director of Hastings People, continues his three-part series with a forecast for what the labour market will look like for the industry on the other side of the pandemic.

By Luke Butler

The latest figures released by the Federal Treasury on the 13 April predict that the Australian unemployment rate will double in the June quarter, from 5.1% to 10%, essentially confirming that we will enter a recession.

This, on the back of the incredibly challenging Australian summer trade period, dominated by bush fires, is the last thing our industry needs.

For the hospitality sector, this is a foreign challenge as a majority of us have never experienced a time when it is difficult to obtain work. In fact, we have been enjoying an incredibly abundant employment market in our sector for many decades.

This is referred to as a ‘tight labour market’, meaning that the volume of available jobs exceeds the number of suitable candidates. The characteristics of this tight labour market have been evident for years.

Bucking broader market trends, average salaries across a range of hospitality job types have increased as employers compete to attract and retain talent. Average tenure has decreased for many employees as they continue to move from one new opportunity to another, rapidly improving salary and status.

We have therefore seen individuals promoted too quickly as businesses are forced to fill roles with applicants who may not possess the requisite experience.

Based on current data, it is likely that the opposite trends will emerge as we enter a ‘slack labour market’ following our period of hibernation. It is very difficult to predict how long this will last; it could be three months or it could be 24.

What does a slack labour market mean for employers and employees?

If you are one of the many recently stood down or redundant individuals, this will undoubtedly be a cause for concern and there is no real remedy to the situation, particularly as it is not just hospitality feeling the impact.

If other non-hospitality markets remained tight, unemployed workers would be driven towards other relevant sectors like retail. The reality is that an abundance of employees across most sectors are in the same boat.

The competition for employment in a slack market will be fierce as the number of suitable applicants will significantly outweigh the number of roles available. Furthermore, the converse characteristics of a tight market will be evident, as salaries are driven down due to the flexibility of candidate remuneration expectations.

I have already begun to see these two trends emerge in both my clients’ and candidates’ behaviour, and it will last as long as the market remains slack.

If you are seeking employment, it would be a good idea to create a budget to fully understand what you need to survive this period. Know your salary threshold and be prepared to negotiate in order to secure a job.

Initially, the best piece of advice in a slack market is to keep the job you have. Even if your hours are curtailed and you perhaps need to take a step down in responsibility, remaining employed should be the primary objective. From there one can look to subsidise their income through government support or additional casual work if it is available.

Herein lies the counterpart to reduced tenure in a tight labour market. One upside that employers may experience on the back of this is a tendency for employee tenure to increase.

In a slack market, fewer roles are available to tempt talent from their current positions. Employees racked with anxiety about their futures will place a greater importance on stability. This in turn will help improve skillsets as employees master their craft.

Our insights suggest that venue management positions have been retained by employers as they have sought to hang on to key talent, with the support of JobKeeper. The same can be said across senior, venue-based culinary roles.

Pockets of the recruitment market will be incredibly hyperactive as we exit hibernation, though I would suggest a dominant percentage of the activity will be in casual or junior permanent positions. These should be the first to return to a high level of activity.

The desire to reduce fixed costs may also result in an increased casual workforce until trade fully normalises, amplifying this activity short term.

Finding employment in a slack market can be a real challenge, and those seeking a job may experience a period of pain until businesses are allowed to trade to full capacity again. Current predictions suggest that this is going to be next year. The government support via initiatives such as JobKeeper are scheduled to be operating only until October.

Clearly it is impossible to predict exactly what is going to happen. None of us have experienced this before and the situation can change at any time based on government or regulatory intervention.

In the short term, preparing emotionally and financially, while making the best use of government support, is a good plan. As the market becomes active, remaining flexible on salary and employment type is an approach that many may need to consider until the market returns to normal.

This is the second of three columns from Luke Butler. His first, on preparing to re-open your venue, can be viewed here. Keep an eye out for the last instalment of the series in coming weeks.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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