Hospitality industry needs to train workers, not cry ‘shortage’

Over the past few months, the hospitality industry has been one of the most vocal groups demanding migrant workers to ameliorate purported skills shortages.

It has successfully secured favour from Liberal MP Julian Leeser, chair of the parliamentary committee looking into skilled migration, with Leeser singling out the hospitality industry as being in dire need of migrant workers.

The hospitality industry’s skills shortage claim is easily debunked by data, which shows unambiguously that the industry is actually awash with surplus labour. Consider the below evidence.

First, the ABS’ quarterly employment data showed that the Accommodation & Food Services industry (i.e. hospitality & tourism) lost 86,200 workers in the year to February 2021:

Hospitality industry jobs

Hospitality jobs are way below pre-COVID levels.

Second, the number of job postings across Hospitality & Tourism was 40% below pre-COVID levels at the end of February 2021, despite the 33% increase in job postings across the broader Australian economy:

Australian job postings

Hospitality & tourism jobs are down 40% from pre-COVID levels.

Third, annual wage growth across the Accommodation & Food Services industry tanked to only 0.3% in the year to December 2020, which was easily the lowest recorded wage growth across the economy:

Hospitality industry wage growth

Wage growth across the Accommodation & Food Services industry has crashed and was the lowest in Australia in 2020.

Finally, the median earnings across the Accommodation & Food Services industry was easily the lowest in Australia in August 2020 (as well as August 2015) at only $650 per week, according to the ABS:

Hospitality industry median earnings

The Accommodation & Food Services industry provides the lowest pay in Australia.

Therefore, if the hospitality industry’s ‘skills shortage’ claim was true, then the industry would not have experienced mass unemployment, the lowest wage growth in Australia, as well as paying the lowest wages in Australia.

Yesterday, we witnessed the hospitality industry’s shameless lobbying in full flight with a 7 News Report (video below) claiming “cafes and restaurants are being hit hard by worker shortages”.

The segment features the following testimony from Justin North, manager at Sydney’s Harbour View Hotel:

“It’s been very, very hard to find staff. And it’s even harder to find skilled staff…

“We’ve had probably about 150 applicants all up. And out of that there was probably about three to four applicants that were suitable for the position”.

This commentary from Justin North highlights precisely why the hospitality industry is not experiencing worker shortages.

150 applicants for a pub job proves there is an abundance of people looking for work. It is only because Justin North is unwilling to provide training that there was only “three to four applicants that were suitable for the position” – still not representative of a worker shortage.

Instead of taking the lazy approach and lobbying the federal government for cheap, exploitable migrant workers under the guise of fake skills shortages, why won’t the hospitality industry provide training to the many unemployed Australians wanting work?

By the same token, if some players in the hospitality industry are struggling to attract workers, there is a simple solution: offer higher wages. This is how the ‘labour market’ is supposed to work.

Curiously, 7 News Reporter Mylee Hogan understands the concept of a ‘labour market’:

“A high number of job vacancies is good news for workers. It means wages could go up as employers boost salaries and incentives in an attempt to attract people to come and work for their business”.

However, the hospitality industry, which pays the lowest wages in Australia, fails to understand this most basic of concept.

The sad reality is that the hospitality industry operates on a model of systemic wage theft and exploitation from migrant workers (see here and here).

Thus, if the treasonous Morrison Government gives it easier access to foreign workers, it will exacerbate the exploitation, push wages even lower, and rob local workers of employment opportunities and a living wage.

Unconventional Economist

Comments

  1. Free Education for all. Why pay for the damn thing? Boomers didnt?

    The Left believes in Health Care and Social Safety Nets. The Right believes in Business and Enterpreneurialism.

    Without Education, you have neither.

    • Because formal training isn’t worth **** without experience, and the experience will use little of the education you paid for (in many but not all cases). Ask your next uber driver what degree he has. Employers need to train people, and there need to be easier pathways to become an employer. Free education is already available on the internet if you look for it (e.g. university of the people).

  2. Training Aussies (to accept below award wages) is tough, maybe Scott Cam can do an ad campaign.

  3. “We’ve had probably about 150 applicants all up. And out of that there was probably about three to four applicants that were willing to accept less than minimum wage, with no declaration of income to the tax authorities, a complete lack of super payments, and were also of sufficiently precarious residency that they’d never dare rock the boat or question our conditions”.

    Fixed it for you.

    They want their precarious supply of cheap labour back so that ratio improves (for them) from 1 in 38 to 1 in 4.

      • Awww, shucks. Anyhow, to be fair, the US does have its own huge underclass of poorly paid laborers (with the Mexican border-hoppers at the extreme). But the US has diversity of cities, industries, and population sizes in its favor. Here’s a graph of unemployment from Jan 2000 to Feb 2021 in Colorado, where I am.

        https://www.denverpost.com/wp-content/uploads/2021/04/unemployment_1.png

        You may note that before COVID, unemployment was 2.5%. That’s similar to WWII rates! It’ll be back down there again in a year or so. Land around Denver/Boulder/Fort Collins is becoming expensive, but if you’re willing to commute a bit, there’s infinite prairie to the East and prices drop real fast. They are paving the prairie East of Denver with new housing of all forms; brand new roads, streets, water, power, the works.

        Plus, the US immigration rate (per capita) pre-COVID was around a quarter of Australia’s. Sure, a lot of them just pour into California, which does resemble Australia a bit (but with more industries), but escaping California ain’t that hard. Plenty of jobs in Texas, Colorado, Michigan, the East Coast… even Florida if you like to powder your nose occasionally. The natural result is that wages and associated costs are rising in some of these areas, but that’s fine! If I ever really want to cut costs, I can drive a couple of hours North to Wyoming where living costs are almost below zero and there’s all the coal you can eat.

        This is what Australia should have aimed for. CHEAP land, and some industry diversity. Reasonable immigration rates. Low unemployment, with the resulting price pressure pushing wages up and encouraging efficiency. The population is small, so it will never be as diverse as the US, but still, Australia’s current economic complexity rivals Pakistan’s.

        Instead, you’ve got a crazy high cost of living (largely driven by bonkers land prices), with a commensurate requirement for business to pay low wages because they can’t afford not to. To some degree, I can’t fault Australian businesses for demanding cheap compliant labor; their other operating costs are so massive that they may have no choice.

        • You’re an arrogant prick, but you are right about land costs being at the core of our problem.

          • The Claw is soooo close on this one. Australians are the core of your problem. Land costs are a symptom of Australians’ laziness, greed, and self entitlement.

            You cannot fix this without fixing the terrible ideas in Australians’ heads. Murdoch knows this.

            Also, I’m lovely!

        • drsmithyMEMBER

          You may note that before COVID, unemployment was 2.5%.

          And that graph certainly shows how critical The Donald was in getting there.