Coming Out Of COVID Hibernation
As Australia’s patchwork of COVID-19 related restrictions on movement and business activity are rolled back as population vaccination targets are achieved, near term disruption is forecast as states which have experienced low levels of COVID-19 community transmission to date. In the absence of a new COVID-19 variant arriving on Australian shores, this disruption forecast to follow the opening up of the ‘hermit’ states should be short-lived given the accelerating rates of vaccination across Australian jurisdictions.
The Economic Scars
Many organisations, especially SME’s, which have experienced interrupted trading through 2020 and 2021 will be hoping for a ‘snap-back’ to business conditions pre the pandemic. Australian businesses and households have added $200bil to their collective balance sheets, deferring expenditure across the economy whilst waiting for the pandemic to pass. Beyond an initial sugar-hit of expenditure as the restrictions are relaxed, is Australia moving towards a period of strong economic growth?
The Risks To Australia’s Economic Growth
There are multiple external risks to growth well known to observers of the Australian economy. Chinese consumption of Australian goods and services has comprised a quarter of Australia’s global exports but is being impacted by ongoing challenges within the Sino-Australian relationship. The ‘stab in the back’ claimed by the French leadership following Australia’s withdrawal from its submarine contract with DCNS, has dampened hopes for the quick delivery of a free trade agreement with the European Union. The Glasgow COP26 Climate Summit could lead to increased trade barriers for Australian exporters if its climate change reduction commitments are deemed insufficient. However, ‘a rising tide lifts all boats’ and despite the external challenges for Australia, an awakened global economy will present opportunities for growth.
Its internal risks to growth could limit Australia’s ability to lift and sustain output to meet demand. Workforce participation in Australia has been falling through the pandemic, down to 65.2%. Reports have pointed to Australia’s 13mil workers stagnating, having deferred career changes and growth in personal networks through the pandemic. HR is increasingly focused on indicators from its workforce which highlight workers desire for improved purpose, flexibility and mental health at work. Individuals are increasingly able to tailor their employment arrangements picking up diverse contracting opportunities, gig work or bespoke consulting where borders are no longer relevant. Questions exist as to whether Australian workplace arrangements, both industrial and those that drive employee experience, will serve to settle or destabilise sustained economic growth.
Workforce Post COVID
Whilst business will pivot quickly to new opportunities, is Australia’s workforce in lockstep with its employers? Or is it shuffling to the beat of a different drum post the uncertainty wrought by the pandemic? Governments will likely be called upon again to respond by engaging expanded programs to re-engage, re-skill and re-organise the workforces businesses will need to lift and sustain economic growth as Australia emerges from the pandemic. Lead times to workforce investments are often long, but can Australia afford to wait?