Company counts cost of labor shortage in Australia and New Zealand

Australia and New Zealand’s decision to close their borders to non-residents during the pandemic has helped suppress Covid-19, allowing economic growth and business profits to exceed expectations.

But 15 months later, critics warn that these “hermit nation” policies are now causing significant problems for companies, which face a growing skills shortage that increases costs and reduces production.

Many industries are pushing for relaxed border and visa rules, even as the highly infectious strain of the Delta coronavirus prompts authorities to tighten rules to protect the largely unvaccinated public in both countries.

Australia’s booming agricultural and mining sectors, which helped the economy come out of its first recession in almost 30 years, are among the hardest hit. As New Zealand restaurants and cafes face such staff shortages, they recently staged a nationwide protest to pressure the government to relax visa rules for workers. foreigners.

Unemployment rates in the two Pacific countries fell rapidly due to government stimulus measures and the early reopening of their economies.

Australia’s unemployment rate hit a ten-year low of 4.9% in June, although that may rise due to new outbreaks of Covid this month. The unemployment rate in New Zealand is 4.7 percent.

Lachlan Dobson, co-owner of Kimberley Produce, Western Australia’s largest banana producer, is among thousands of farmers struggling to hire staff because most of the army’s 40,000 backpackers and laborers foreign seasonal workers have returned home.

“We made the difficult decision of just spilling part of our crop rather than letting it cause biosecurity issues, such as fruit flies,” said Dobson, who estimated the loss of produce at 1.4 million. Australian dollars (US $ 1 million).

Australian farmers have reported A $ 58.4 million in lost crops due to labor shortages since December, according to a National crop loss register set up by Growcom, an agricultural lobby group.

Miners in Western Australia say they could face a shortage of 40,000 workers over the next two years, threatening a sector that contributed A $ 83 billion to the local economy in 2019-20.

Rio Tinto cited coronavirus-related “restrictions on the movement and availability of people” on Friday as a factor contributing to lower-than-expected iron ore production in the three months ending in late June.

This follows warnings from BHP, Mineral Resources and gold miner Santa Barbara that skills shortages in Western Australia are increasing costs and reducing production.

“What would have been a workforce squeeze due to high demand has turned into a squeeze due to Covid-19 restrictions,” said Paul Everingham, chief executive of CME, a lobby group from the resource industry.

Iron ore miners poach gold miner workers with the lure of higher wages, says Everingham, who is lobbying the government to create new visas for foreign workers and explore ways to get them into the country by air.

He warns that action is needed to avoid the experience of the last mining boom in 2010-12, when wages and costs skyrocketed to be followed soon after by a collapse.

Most analysts say Canberra is unlikely to ease border rules in the short term due to coronavirus lockdowns, which cover nearly half of the country’s population following the Sydney and Melbourne outbreaks .

Relaxing border restrictions for businesses is politically tricky with 34,000 Australians stranded abroad. And last week, tighter flight caps were imposed on arrivals, which halved the number of passengers allowed into the country to just over 3,000 per week.

Health experts say Australian and New Zealand authorities cannot yet reopen their borders due to low Covid vaccination rates, with just 10.8% and 11.7% of the respective populations fully vaccinated.

The Australian Treasury predicts that the international border will not reopen until at least mid-2022.

In the meantime, Canberra and Wellington are easing visa restrictions on foreign workers already working in their countries in an attempt to retain as many foreign workers as possible.

New Zealand has also introduced a Essential Workers Program, which has allowed 17,000 skilled workers to enter the country to support businesses.

But until vaccination rates reach levels approaching those where herd immunity becomes possible, companies will likely have to rely on hiring a steadily shrinking pool of local workers, analysts say.

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