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The Great Resignation or the Great Migration?
Allan_Savvy_Article_Author

17 December, 2021

Aiden Heke,

CEO,

 Decision Inc. Australia

  • Are we seeing the global Great Resignation or the Great Migration?
  • Has COVID created a two-year gap of skills and capability? Are our universities delivering sufficient capacity into Australia to offset the skills gaps?
  • And do we have an intake for 2021/ 2022 of the most resilient and innovative kids since the post war depression?

In case you have been living under a rock, which frankly might have been a good choice for the last two years, you’ve probably heard about the term “the Great Resignation”. A lot has been written about it and what is driving this trend and labour force changes, but it’s worth taking a longer lens to this to examine the long term impact of this, and that of our children, by examining the impacts of COVID 1.0 and 2.0.

In late 2019 we had our first public announcements from China of another pandemic outbreak possibility, followed by the first Australian state and federal government announcements around Australia Day, 2020. By mid to late March, depending on your state, many of us entered our first 10 week lock down. We thought we had this thing licked by late 2020, but come the 25 June 2021, NSW entered another lockdown for 17 weeks. Meanwhile, Victorians lost count of their days in isolation.

It was scary, novel, and bewildering for most of us – but it’s had an economic impact not just on GDP, but on our ability to hire skills.

Closed Borders, Locked Out Skills

 Our borders were shut repeatedly, both internally, and externally. Our land girt by sea was effectively a castle with a massive moat, keeping out as much of the virus as possible – but a side effect has been the concurrent locking out of skilled migrants and their desirable skills from coming to Australia.

In 2019 we had 249,600 skilled migrants apply and enter Australia as a proportion of 515,800 migrants across all industries and roles. Extrapolating the data, we have a gap of more than one million workers into the Australia economy created by the two-year COVID induced travel bans.

Ideally, Australian Universities are helping students bridge these skills gaps – but have they?

The Great (University Student) Resignation”

 Elon Musk was quoted saying university is basically for fun, not for learning, and that a degree isn’t evidence of exceptional ability.” He said university degrees were not a prerequisite for future success, potentially further widening the participation rate issue.

In Australia, it appears fewer students are sticking it out to see if their future success hinges on that degree or not.

We reviewed the data on graduation rates across nine-, six- and four-year degrees and higher education qualifications. The stark reality is that more students at Australian universities are dropping out than ever before.

If we’re hoping for graduates to fill the breach, we’ll be extremely disappointed.

A pickier employee pool?

 An article recently in Forbes hypothesised the Great Resignation in the US was the result of a labour shortage due to demand lag and an opportunity for employees to become choosier about their job options. If we apply that hypothesis to Australia and we examine vacancies versus employment seeking and understand our underlying unemployment rate, we see a similar trend.

The variation in unemployment versus job vacancy rate has swung widely twice during the lock downs and married with skills scarcity, has driven a major gap in available skilled workers. It appears the Great Resignation is also the Great Migration. People are seeking better terms – read work life balance, and improved salaries through horizontal and upwards movement of their careers at a staggering rate because this is the moment to move.

And finally, consider the economists view of future economic prosperity for Australia. Our productivity comparatives are modest at best. As one senior economic commentator said: ”We are getting fat and lazy in our ideal lifestyle”.

Australia Productivity | 2021 Data | 2022 Forecast | 1978-2020 Historical | Chart (tradingeconomics.com)

If you review one simple comparison of GDP to the big kid in the economic playground, China, we can see by 2015, they have shot past Australia and continue to accelerate.

The Great Resignation is about to Get a Little Greater

 So, what can we draw from these disparate data points? Our verdict: we have some serious headwinds coming.

We have a gap of skilled people of more than 520,000 that will span a two-year cycle.

Furthermore, our productivity numbers must improve to drive continued economic prosperity. Growth is not going to be achieved on the backs of more people; rather, we need our current cohort of people to be smarter and more ambitious.

Learning systems both in the education system and within the workforce will be critically important for accelerated economic output from employees. But our current state of play means that we’ll turn blue if we’re holding our breath waiting for our current skills to bridge the skills gap left by two years of border closures.

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