Budget: Labour market ‘resilient’ despite mining’s struggle to recruit workers

Global growth is projected to remain subdued over the next few years and is poised to record the longest stretch of below-average growth since the early 1990s.

On Tuesday (14 May 2024) federal Treasurer Jim Chalmers handed down Australia’s budget for the 2024-25 financial year with a $9.3 billion surplus and government line that the labour market has been “resilient”.

Tackling inflation remains the primary focus something which Chalmers says has been moderating, amid a period where annual real wages have been growing for the first time in years.

Nominal wages over 2023–24 grew at their fastest rate in nearly 15 years, reflecting what the government is recent labour market strength.

However, nominal wage growth is expected to soften to 3.25% in both 2024–25 and 2025–26.

“The moderation in inflation and pick-up in wage growth have contributed to a improvement in real wages. Real wages have risen for three consecutive quarters and returned to annual growth at the end of 2023, earlier than previously forecast. Real wages are expected to continue to pick up and grow by 0.5% through the year to the June quarter 2024,” the 2024 budget notes.

Yet unemployment remains at record lows amid a skills labour shortage for many sectors, including mining. In May 2023, the unemployment rate was near 50-year lows, wages growth had picked up, and national income was being supported by elevated commodity prices.

However, the global slowdown, persistent inflation and higher interest rates had been expected to slow real GDP growth to 1.5% in 2023–24 with the expectation it would rise to 2.5% in 2024–25.

The unemployment rate was projected to remain low “by historical standards” and was forecasted to be a ‘modest’ 4.25% in 2023–24 and 4.5% in 2024–25.

In Tuesday’s budget, the government notes the unemployment rate remains at 3.8%. The participation rate is reportedly near its record high at 66.6% and employment is “growing faster than any major advanced economy”.

“However, there are clear signs that labour market conditions are softening. So far, a decline in average hours worked has delayed the expected moderation in employment growth and an associated modest increase in the unemployment rate,” the 2024 budget says.

“As labour market conditions continue to ease over 2024–25, the unemployment rate is expected to rise but remain below pre-pandemic levels.

Employment in Australia’s resources sector grew over the 20 years to November 2023 with the number of workers increasing by 10,200 (or 3.5%) over the past year.

However, mining companies continue to struggle to recruit specialist workers to fill certain roles amid a collapse in skilled migration in what some industry leaders label the worst skills crisis in a generation.

Roles ranging from mine planning to process engineering, as well as digital (data science and automation) remain in high demand but are increasingly difficult for mining companies to fill.

Data shows that mining engineering enrolments have been dropping year-on-year for the past 10 years in Australia, as well as the US, with the resources sector also not viewed as an attractive industry for young people in Canada.

However, Victoria University employment projections forecast that in the five years to May 2028 employment in Australia’s mining sector is poised to grow by 35,400 people – or 11.9%.

In December last year, the federal government released the Migration Strategy, which provides a roadmap to reform the Australia’s migration system. The strategy takes a longer term evidence-based approach to planning migration that closely collaborates with the states and territories and is driven by the advice of Jobs and Skills Australia (JSA).

Underpinning the Migration Strategy is transparency being a guiding principle of JSA’s role with JSA submitting its findings to the federal government including publishing its analysis and recommendations.

JSA’s stakeholder consultation process began in Q1 2024.

Write to Adam Orlando at Mining.com.au

Images: Unsplash, SensOre & Group 6 Metals
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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.