Federal Budget Unpacked: Workers and work

“I’m confident this Budget will create jobs and that this Budget will secure Australia’s economic recovery” – Treasurer Budget Speech.

Treasurer Josh Frydenberg has unveiled the Federal Budget, with jobs and skills front and center. This is a signal that the government sees them as key levers for turbocharging the economy and driving the post-pandemic rebuild.

The existing measures announced towards the end of last year have put Australia in a strong position. There are already 74,000 more jobs than there were pre-pandemic, and whilst the Treasury once forecasted unemployment to exceed 15%, it is currently at 5.6%. This is largely in part to the JobKeeper program, which kept 3.8 million Australians in their job.

Now, with increased certainty around our economic position and the job market outlook, it’s about fixing the cracks that have appeared and addressing the gaps that have been exposed.

The headline from this Budget is that there will be 250,000 jobs over the next two years using income tax cuts, business tax breaks and a huge commitment to social services, ranging from aged care to mental health. Let’s take a look at how the government will be tackling the issues and where they are allocating spending.

The Government’s getting real about the skills shortage - but is it enough?

In Australia, the number of job vacancies is much higher than they were pre-COVID. Yet, there are still hundreds of jobless Australians, indicating a skills gap. So it’s pleasing to see the government’s investment in upskilling the long-term unemployed, building foundational skills for those struggling to find work, and focusing on key industries that are impacted by low skilled migration and mobility.

JobMaker has been scrapped, but there has been a massive boost to the JobTrainer program, with the government doubling its commitment to the scheme by supporting more than 450,000 new training places.

Apprenticeships have also been given a step up, with $2.7 billion in wage subsidies to extend the ‘Boosting Apprenticeship Commencements’ program for a further 70,000 people.

Let’s now look at skilled migration. The Budget assumes that net overseas migration will reach 95,900 in fiscal 2023 and return to its past level of about 235,000 four years from now. The government’s focus in the short term will be on highly skilled migrants, though the challenge will be attracting them in the pandemic economy, causing a lag and sustained pressure on the demand for skills.

While there is a focus on supporting job seekers and reskilling to drive down unemployment, there is an absence of suitable support for upskilling employed workers. This will increase participation, but likely only at the lower skilled end of the spectrum. This is a signal that the government is looking to business to fund worker upskilling and reskilling.

Pushing a digital economy

“Digital infrastructure and digital skills will be critical for the competitiveness of our economy, creating massive opportunities for growth and jobs,” Mr Frydenberg told the Parliament in his Budget address. This has led to a $1.2 billion commitment to the digital economy with a key focus on skills, including 10,000 training places for digital skills.

I’m pleased to see the focus on digital skills, which is critical for economic security. But it is also necessary, with other Budget announcements around telehealth, digital services, cyber security, and investing in advanced industries.

While I’d like to have seen more of a focus on digital skills, it’s a step in the right direction and I hope to see the government build on this in future budgets.

Wellbeing and mental health

Workers are feeling the pinch and wellbeing is taking a hit. Our research at PwC found that 61% of workers say that their workload has increased. This is on top of market uncertainty, job losses and mass displacement causing stress and heightening mental health challenges. As such, I welcome the $2.3 billion investment in mental health and wellbeing, which will indirectly flow into benefits around worker engagement and productivity.

One of the challenges is that there is already an existing shortage of mental health practitioners. So, while increased funding may drive up service demand, there may not be the workers to meet that demand over the short to medium term.

 Responding to the Aged Care Royal Commission

The aged care package was one of the biggest items in the Budget, with a five-year cost of $17.7 billion. I expected to see this off the back of the Aged Care Royal Commission. The investment will drive a massive demand for workers, which is already experiencing huge shortages that are only exacerbated by the hit from skilled migration.

Although the Budget includes 33,800 training places for new aged care workers, this may not be sufficient. It may also mean that we don’t see the increase in skilled workers soon enough.

Women in the Workforce

There was a real focus on women in the Budget, with broader measures around women’s safety and economic security. There was also a strong jobs angle that aims to increase female participation, which is a big plus after I’d flagged a potential pink recession off the back of the last Budget. This includes placements for 5,000 women in STEM and non-traditional trades as well as 2,700 places in Indigenous girls’ academies.

A big winner in the Budget was childcare, with an extra $1.7 billion in funding alongside a range of other measures that seek to encourage female participation. The government has also committed to implementing the recommendations from the Respect@Work sexual harassment survey, which aligns with a notable focus from corporate Australia over the last six months in light of recent headlines.

Women are also supported through investments in sectors that have been hardest hit by the pandemic and have disproportionately impacted females, such as $2.1 billion in targeted funding for aviation, tourism, the arts, and international education.

Similarly, some of the investments in key industries will work to support women as well. While the last budget was all manufacturing and construction, this time it’s a big win for workers in aged care and childcare, both of which are sectors that employ an approximately 90% female workforce.  

Finally, the $9 billion social security safety net, including $50-a-fortnight JobSeeker increase, will also serve to support unemployed females, with more women than men on JobSeeker. 

Next, we need structural reform

There will be 250,000 jobs over the next two years, which is likely to see unemployment get under 5%. The measures in the Budget are all about leveraging the momentum of previous measures that have put us in a relatively strong economic position, to supporting key industries, the unemployed, and key workers.

Notwithstanding, there wasn’t the structural reform that I’d have liked, which would lead to more secure and reliable employment alongside increased wages. This was somewhat surprising given record low wage growth over the last two quarters. The Government is hoping that they can indirectly achieve this by growing the economy and driving down unemployment, to which only time will tell.