Worker shortages still the reality for many businesses

·3-min read

Finding staff hasn't gotten any easier for small businesses despite signs of a slightly less competitive labour market.

Attracting and keeping workers remained a top concern across all sectors, said the chairman of the peak industry group for small businesses.

The Council of Small Businesses Association Australia chairman Matthew Addison told AAP hairdressers were in drastically short supply as were retail and hospitality workers.

"I'm still seeing restricted hours in a lot of those industries, where they have to shut or just not offer the service because they don't have staff," he said.

Despite the rebound in migration since borders reopened, Mr Addison said the extra supply of workers was yet to be materially felt by employers.

The council's chairman also said there were stories starting to emerge of overseas students choosing not to come to Australia due to the housing crisis.

"The increase of migration to bring workers to Australia will be a journey over the next 12 months," he added.

For employers, the priority has been keeping staff by offering higher pay, and for workers, there's been plenty of extra work for those who want it.

These trends were reflected in the latest Australian Bureau of Statistics data on jobs and wages this week.

The wage price index lifted 3.7 per cent in the 12 months to March, and although the increase was nowhere near enough to make up for high living costs, pay packets are now growing at their fastest pace in a decade.

The latest jobs data revealed ongoing resilience in the labour market but showed some softening, with the jobless rate ticking up from 3.5 per cent to 3.7 per cent in the month of April.

Hours worked picked up strongly over the month, lifting 2.6 per cent, which St George economist Jameson Coombs said was indicative of the still-strong demand for labour.

Mr Coombs said there were likely a couple of factors driving up hours worked as well as the sustained decline in the underemployment rate, including that people were looking to grow their income to cover high mortgage costs and the generally high cost of living.

But he said businesses could also be trying to encourage workers to take on a few more hours instead of bringing on new staff.

"They're looking at potential storm clouds ahead and thinking 'look, I don't want to lock myself in', so they're choosing to add hours on the existing staff, where possible, rather than adding to headcount."

The ABS also noted the pick up in hours worked was partly driven by fewer people than usual easing back their workload over Easter.

New analysis by Deutsche Bank Australia's chief economist Phil O'Donoghue suggests new entrants to the job market, such as school leavers and those returning to work after parental leave, are still finding it relatively easy to secure work.

By zooming in on the small cohort of job seekers that have only just started looking for work - that is, last month they were not in the labour market at all - Mr O'Donoghue said it offered insight into firm hiring patterns as economic conditions worsened.

"If you're working for a company that's worried about headcount, before you start firing people, you're going to stop hiring ... and the people you aren't hiring anymore, are likely to be those without much experience," he told AAP.

He said there was a very small number of inexperienced job seekers struggling to find work.

"It's telling you that things are really strong."

Mr O'Donoghue said once the proportion of inexperienced job seekers started to lift, it would likely signal firms had tightened up their hiring and a more pronounced uptick in unemployment was around the corner.