What Australia can learn from the UK labor market

The recent Jobs & Skills Summit highlighted the urgent need for Australia to act quickly to solve our persistent labor shortages. On the positive side, the Albanian government agreed to take immediate action against a variety of labor initiatives as a result of the summit.

One such initiative was raising the ceiling for permanent migration and working to reduce the current visa backlog. This is an excellent long-term approach, and we applaud the government for its stance on what is often a political hot potato.

But with the second-largest labor shortage in the developed world, Australia cannot afford to apply only long-term solutions such as migration to the problems we face today.

Fortunately, we won’t have to reinvent the wheel if lessons can be learned from comparable markets further in their post-pandemic recovery, such as the UK.

A tale of two cities

The Australian and UK markets have similar labor markets in a number of ways.

Both markets are very diverse and dependent on both domestic workers and migrant workers. They are also both fueled by SMEs, totaling 99.8 percent of all businesses in Australia and 99.9 percent in the UK.

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Hiring in either country can be a long and arduous process, with employees demanding more and more flexibility and employers struggling to fill vacancies.

Unemployment is also historically low for both countries, at 3.4 percent and 3.8 percent for Australia and the UK respectively. This represents a 48-year low for Australia, much lower than pre-pandemic levels for both countries, and means that power is strongly in favor of workers and candidates.

In addition, both countries also continue to suffer from underemployment, with currently at least 6.0 percent of the Australian workforce and 6.7 percent of the UK workforce. This indicates some dissatisfaction with the job, whether it be working too few hours or occupying a role that is below an employee’s experience and qualifications.

The lessons are in the differences

But there are also some notable differences between the two job markets. The UK market is further into the post-pandemic recovery than Australia, as it reopened its borders to migrant workers earlier than Australia.

This issue is now being addressed, but given the sheer magnitude of the current visa backlog, it will take time to return to pre-pandemic levels of migration. Crucially, the UK is also much more sophisticated than Australia when it comes to identifying creative workforce benefits an employee really needs to build out organizations’ employee value propositions.

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An excellent example relevant to our work at Wagestream is the proliferation of employer-provided financial wellness tools used by UK human resources and hiring managers to attract and retain staff.

It’s no secret that we’re dealing with a global cost of living crisis, so employers who are able to handle the resulting financial stress of their employees will have an edge over those who don’t.

But in Australia, the use of employer-provided financial welfare tools is still in its relative infancy. This is compared to the UK, where dozens of large and mature financial welfare organizations help hundreds of thousands of employees better manage their finances.

Tools like these could give the UK an edge as Australia has also opened its borders and is catching up to attract its share of migrant workers in our “global war for talent”.

Employee financial well-being must come first

There’s not much we can do now about the fact that the UK came out of lockdown much earlier than Australia, other than plowing through our plans to boost immigration.

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But Australian employers can act immediately to follow the UK steps by focusing on the financial well-being of their staff in this incredibly tight labor market.

For example, a Wagestream analysis of more than 10,000 job listings on Indeed.com found that offering “earned wage access” as an employee benefit resulted in positions being filled 27 percent faster than those who didn’t. Thirty-three percent of respondents in a survey of 1,250 new hires also said knowing Wagestream was available motivated them to take the job.

That’s a pretty powerful employee attraction tool!

It’s time we recognized that, in today’s economic landscape, employee financial well-being not only helps attract talent, but also increases employee satisfaction and retention.

This is a fact that our job market would ignore at its peril.

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