Australia’s Worker Shortage Remains Double Historic Average

Written by:
28 March 2024
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“The ongoing high number of job vacancies in Australia underscores the immediate need to once-and-for-all lower exorbitant tax rates on Australians who want to work if we want to see numbers return to pre-pandemic levels,” said Saxon Davidson, Research Fellow at the Institute of Public Affairs.

New data released today by the Australian Bureau of Statistics shows there are still over 363,000 job vacancies across the nation, with one-in-five Australian businesses still unable to find the workers they need.

“Australia’s job vacancy levels are 60 per cent higher than prior to the pandemic in February 2020, and double the long running average,” said Mr Davidson.

“It demonstrates the need to finally address tax and red tape barriers currently preventing pensioners, veterans, and students on the Youth Allowance from getting into work.”

Previous research by the IPA found that adopting the New Zealand pension tax model would significantly reduce job vacancies.

“In Australia, should pensioners and veterans choose to work more than two days a week on minimum wage, they face an effective marginal tax rate as high as 69 per cent due to income tax and pension clawbacks,” said Mr Davidson.

“Pensioners who choose to work in New Zealand pay tax on their combined pension and income at a tax rate as low as 10.5 per cent, and their pension is not reduced for simply working. This is why one in four pensioners work in New Zealand, compared to only three percent of pensioners in Australia.”

“New Zealand’s pension tax model is the major reason why its job vacancy levels are only five per cent above what it was pre-pandemic,” said Mr Davidson.

IPA analysis found that if the New Zealand model was applied to Australian pensioners, veterans, and students, there could be up to 520,000 more Australians participating in the labour force, far more than the current number of vacancies.

“Leading surveys have found that 20 per cent of pensioners would return to the workforce if these red tape and tax barriers were removed,” said Mr Davidson.

“At a time when one in five Australian businesses are struggling to find the workers, the federal government is maintaining tax and red tape barriers, which are obvious disincentives for Australians to enter the workforce and help solve our worker shortage crisis.”

To download the IPA’s research click here.

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