Insights from the 2022 Federal Budget on the Future of the Workforce

The first Federal Budget handed down on Tuesday marked the Albanese Government’s first key policy priorities for the Australian Economy. There have been a number of economists and experts breaking down the budget implications, however, the effects on the Australian workforce is a key area that will impact our world. There are a few areas that will have a significant impact on the future workforce in Australia.

First things first, What is the Budget?

The Federal Budget is a commitment of federal funding based on insights, data, and factors that play an influential role on a micro and macro level. It is the road map for the policy levers such as investments, subsidies, and taxes that the Government can use to support Australia to respond to these influences.

Macroeconomic and global factors like rising fuel and energy prices, political instability in countries that play a vital role in our supply chains, and China's slow growth outlook all point to the rise in tension surrounding not just the growth for Australians, but globally.

Dr. Jim Chalmers' budget papers outline the foreign Governments' financial policies, their responses to these global trends, and the local challenges that in turn will shape the environment in which our economy is impacted. These factors fuel inflation globally due to rising costs and rising interest rates across Central Banks globally.

"The combination of these factors is expected to slow global economic growth in 2023 to 2? per cent" - Budget Paper 1        

From a local level, factors the Government have considered include household spending, where the strain is on people's minds and wallets. One of the areas that my eyes go to is the shortage of talent in the market, factors that set up candidates and managers to drive organisational growth for the year ahead. Reviewing the investment/divestment areas help shape a vision of the road ahead.

Investments impacting the workforce:

• Sizeable focus on Skilled migration and upskilling the workforce. With over 190,000 skilled/ partner visas to drive the inflow of global talent to our shores
• Through subsidies for TAFE, Vocational Education and apprenticeships across the clean energy sector, the budget is in line with the candidate expecting and valuing upskilling. In QLD this is echoed in the State's commitment to investment in jobs in the Clean Energy sector
• This growth in the availability and access to talent address current shortages but also can be a positive driver to the tax revenue for the Government to repair the economy
• Investment into increased childcare?subsidies?and paid parental leave to advance equity at home, work, and society. This category, as the Treasure said, is the "biggest on budget commitment" which in line with the current Government's family-based policy perspectives
• Digital and infrastructure projects across each state and regional Australia will stimulate the economy and drive productivity increases in the medium to long term, especially in a hybrid working landscape. Naturally, this was a key driver in this year’s budget as it echoes the market expectation for a post-pandemic workforce

• With the rising fuel/energy prices negatively impacting the economy and further adding strain to the supply chains, the budget has committed to $1.8 Billion towards sustainability initiatives, in the hopes to counterbalance this, with directed funds towards electric vehicles and charging stations
• This is supported by a firmer commitment to the?emissions reduction target?of 43% by 2030 and net?zero by 2050
• One of the most notable additions to the budget is the Women's Budget Statement. Addressing education, safety, and access to wellbeing. The commitments to these areas will ultimately increase the participation and engagement of a significant portion of the workforce. Employers will be supported in establishing and executing on the Respect@work agenda set forth by the Australian Human Rights Commission in 2020
• Housing was a key area for this budget, however, without addressing the rising inflation rates, increasing the supply is a safe bet. This has left room for not abating the anxiety of its impact on one of the biggest expenses of most households. This will be an area to watch out for, especially with its impacts on the pressures on your workforce.

My advice to managers over the next 30, 60 or 90 days:

• Review your organisation's parental leave and employee benefits. This budget's stance will be a clear influence for organisations to leverage this as a differentiator, to attract and retain talent
• Review your current workforce's appetite for skills-based development. With 480,000?fee-free TAFE places over the next four years, the drive to upskill, supplement their skills across sectors that create jobs growth will be driven by both, candidates, and Government
• Start planning for the inflow of global talent with a capability gap analysis of your teams/organization. One of the unobservable externalities from this will be the productivity gains from global insights and a broadening of knowledge base
• Embrace your hybrid working conditions and set measures in place to make sure they speak to the expectations in the market for talent, this includes structural and cultural measures

Ultimately, businesses need to account for the fact that the war for talent will continue until the levers in the budget take effect. This could be at the end of the year, or early next year. The challenges to the mental health and financial health of the current workforce will rise as increasing household costs will continue to play a part in the movement of talent. Longer term, however, we will see the settling of these factors, well at least as far as the budget allows us to forecast.

Resources for further reading:

Budget Papers , The CBA's Chief Economist's Report , Respect@Work Report