The other side of the coin: Why JobSeeker is not all it’s cracked up to be

The introduction of government subsidies such as JobSeeker and JobKeeper have no doubt helped many individuals and some businesses survive the current climate. From keeping businesses and households afloat to people employed, these subsidies have allowed business opportunities to flourish and has given individuals reassurance as they seek employment.

 

While we can comfortably say the subsidies have helped stimulate the economy, as a business owner myself, I have experienced another side to these incentives.

In short, if I could stop JobKeeper and JobSeeker today, I would – and here’s why:

At a time where unemployment is at an all-time high, to no one’s fault, yet jobs remain unfilled – why might this be?

While these incentives are designed to keep the Australian economy afloat and set businesses and the public up for success as they recover through the pandemic, we are instead seeing a stagnated response to job opportunities as our nation etches back to normality.

I’ve come to find, and it seems like many businesses are in the same boat, that JobSeeker has lowered the drive for people to proactively seek employment or change careers, using these benefits almost as a safety net. In fact, a recent report shows 47 per cent of employers recruiting are experiencing difficulties.

Even as we look to hire for our own team, we’ve noticed a significant decline in the number of applicants. In conversations with clients, in a wide array of businesses, they are finding it incredibly hard to fill positions. Anecdotally, a business we work with said they would normally receive up to 80 applicants for this particular role in the past which they advertise for at least twice a year, and most recently received eight applicants!

There seems to be very little movement and I wager that a big part of this is the altered mindset of individuals who have the reassurance of income coming in despite being unemployed. People now have more time to focus on other priorities and this may be lowering their drive to commit to something again.

The economics of these supplements is also driving up prices of trade and decreasing the profit margins for businesses. Right now, when a company’s bottom line is at its most critical, there are key business decisions that owners and executives need to assess to ensure you are financially ready for the future.

For example, if your current staff members get paid $35 per hour and you are forced to bring on new team members at a higher wage level, this is going to bring pressure to your business. This is because, most likely a lot of your pricing has been based on $35 per hour labour cost, not $40, and what if team members talk (they shouldn’t but it does happen).

For one, I urge businesses that are currently looking to hire to carefully consider who they are investing in. What may seem like a worthwhile option at the time, may instead see yourself paying $1 for what is only valued at 80 cents. As a business owner, your team is your biggest asset and should be your biggest investment. The decisions you make today will have an impact on tomorrow so it’s important not to make hasty short-term decisions that may turn harmful down the track.

I would not undo what has been done with JobKeeper and JobSeeker, however when these initiatives were released nobody had any idea what we were install for. Economic disruption (fancy way of saying recession) comes in many different forms over history (tech booms and busts, over leveraging, stock market crashes, high interest rates, oil price spikes) and this time it was a pandemic and at some point we have to take our medicine.

As we all do, I feel for people who work at and run business who have been hit the hardest but from what I have seen, there a real risk of unintended consequences the other way with a dormant labour force and the business impact this will have.

Now is the time to think about your business processes that may help address profitability concerns. If you’re asking yourself any of the following questions it may be time to seek financial advice:

  • What is the best investment for my business right now is?
  • How do I make critical business decisions such as employment at a time like this?
  • Is there a creative way I can engage with potential employment candidates?
  • Does my business need a financial strategy?
  • Are there areas I can cut costs on?
  • Can I build strategic partnerships with suppliers to help my bottom line?

CFO Dynamics can help guide you to create the business and financial success you want to achieve through expert advice, analysis and projection. Taking a look at where you’ve come from, where you are now and where you want to be, we can craft a roadmap to help achieve financial stability.

While it will be interesting to see if attitudes and behaviours change with the recent cuts to the JobSeeker supplement. Our team is ready to help your business through this time by arming you with the knowledge and an action strategy to plan for the future. Reach out to us today via our Contact Us page to learn how we can help!