Businesses battle with staff shortages as the Omicron variant spreads

The economy got off to a slow start this year due to the fast-spreading omicron wave. Businesses no longer face the looming threat of lockdowns but are struggling with an acute shortage of labour and supply chain issues. 

Record vacancies

We were taken a bit by surprise at the latest figures from the ABS released on Wednesday last week. Almost every piece of the economy is feeling the tight pressure of labour. 

There were 396,000 vacant positions waiting to be filled in November, an increase of 18.5% from August 2021. That’s 74% higher than it was before the start of the pandemic. 

Labour shortage is the biggest issue in key industries across the country from Accommodation and Food services to Manufacturing. 

Job openings in both private and public sectors went up 19.4% and 9.7% respectively for the November quarter. 

It is even more challenging with the spread of the Omicron strain. Employers are fishing in a smaller pool to fill for staff who are sick, exposed and overworked. They are under enormous pressure to run a business and worrying all the time that the wheel is about to fall off the operation. 

There is an ever-present feeling of dread and frustration among businesses. Stores have been forced to close temporarily and reduce operating hours. 

We are also seeing a drop in consumer confidence. People are imposing restrictions on themselves to dodge the virus, in turn, buying less. The latest ANZ spending data shows consumer confidence at the levels typically seen during lockdowns. 

Construction industry at tipping point

Shortages from staff to materials have plagued the industry through most of 2021. It has worsened at the peak of the omicron infections. 

More than 100,000 Australians wanting to build their dream homes are experiencing delayed building times, higher than expected costs and the risk their builder might go broke in 2022. 

Most recently, the parent company of the Hotondo Homes franchise in Hobart went into liquidation. Hotondo Homes had failed to deliver dozens of building projects. As a result, 80 contractors and 40 customers are left in limbo with incomplete builds. 

To make matters worse, there was no home warranty insurance to cover customers in Tasmania in the event their builder dies, disappears or becomes insolvent, after it was removed in 2008. The state government only reintroduced this protection in late December 2021 but it was already too late. 

From what we can see, the federal government HomeBuilder scheme and other state-based new build grants gave the industry a boost