Labour Deficit Epidemic Facing Regional Australia’s Larger Employers

Australian Meat Industry Council (AMIC) member research highlights People, Permanency and Profitability challenges ahead for Australia’s largest remaining manufacturing industry.

A discussion paper released today by the Australian Meat Industry Council (AMIC) shows that about two thirds (63%) of Australia’s red meat processors are prevented from running at capacity due to what AMIC is calling the ‘Labour Deficit Epidemic’ in regional Australia.

With the federal election just weeks away, AMIC, on behalf of its 2,000 members (including processors, butchers and smallgoods manufacturers) is calling on both the major parties to address the key challenge for the red meat manufacturing industry – its inability to access enough skilled and unskilled workers in regional and rural Australia. According to AMIC research there are 3,780 job vacancies in the industry.

AMIC CEO Patrick Hutchinson says the cost to operate a business in the meat manufacturing industry is high but the margins are not.

Labour-related costs account for 55% of the total cost to operate (excluding livestock purchases), which is significantly higher than for our main competitors Brazil and USA, according to the Cost to Operate report by the Australian Meat Processors Corporation (AMPC).

The red meat manufacturing industry priority ask of government is simple: It wants a clear commitment from all sides that it can set production targets with confidence, knowing it can access a permanent and stable workforce.

“As one of the largest regional employers, and the country’s largest trade exposed manufacturing industry, we are calling on the Government to reduce the burden so red meat processors and the red meat supply chain can get on with supplying Australia and global markets with the world’s best red meat,” Mr Hutchinson said.

“The red meat supply chain is facing a drought of the most severe magnitude — a drought in local workers who are willing to be trained up in our industry, and a visa system that is not fit for purpose. This is denying us ongoing access to overseas workers who have been trained to do the jobs that local workers are either unable to fulfil because of the labour requirements or because they are unwilling to stay in the industry. Further to this, Mr Shorten’s pledge to increase the pay of overseas workers by $11,000 per annum will add tens of millions to the industry’s wage bill, significantly impacting our industry’s ability to achieve a permanent and stable workforce.”

According to AMIC’s discussion paper, the labour market challenges reverberate across the entire supply chain. Independent butchers, most of whom are SMEs, are finding it increasingly difficult to fill job vacancies or do not have funding support to take on apprentices (although this has just been announced as an election promise). Additionally, they also face government red tape cost burden due to federal and state administrative duplication.

“Our members’ priority is a stable permanent work force,” Mr Hutchinson said.

The four key employment areas identified by AMIC’s employee reference committee (and expanded in detail below) that are in dire need of government support are:

  1. Training
  2. Skilling the long-term unemployed
  3. Access to overseas workers with fit-for-purpose visas as part of a total employee mix
  4. Permanent migration into regional areas.

Addressing the four key areas: AMIC research and calls to action

  1. Training:
  • Despite an average youth unemployment rate of 17% across 20 regional areas in Australia, there has been a sharp decline in the number of school leavers being trained in meat processing, smallgoods manufacturing and butchery.
  • In the last financial year, 73 processing plants advertised for almost 6,500 new workers, which were filled by approximately 4,600 local Australian workers. However, this has failed to fill or even maintain job vacancies, particularly as Australian local workers stay an average of less than six months in the job.
  • The Coalition government has not included independent butchers, processors or smallgoods manufacturers in its list of 80,000 apprenticeships that will be funded nor has it catered for traineeships, which is a significant area of training in the meat industry.
  • Labor has promised to double the Coalition investment to $1b, but it also has not catered for traineeships.

Call to Action from the new Government

  • Coalition to include processors, smallgoods manufacturers and independent butchers on the apprenticeship list and to add traineeships for eligibility.
  • Both parties need to confirm if funding incentives will be available to boost traineeships as well, given that they are used significantly as a progression towards a skilled workforce.
  • Most importantly, there needs also to be a holistic approach by all levels of government, training institutions (schools and universities)/ organisations (TAFE/RTOs) and regional and rural community groups to assist the meat manufacturing industry to attract, recruit and train and retain local Australian workers of all ages and genders. 
  1. Long-term unemployed in regional and rural Australia
  • AMIC is currently working with the Department of Jobs and Small Business to promote the current Launch Into Work program amongst its 2,000 members in the hope that individuals, who have had a period of long-term unemployment, will take up red meat manufacturing and retail industry jobs.
  • AMIC members are finding that a large number of long-term unemployed people are unable to join the workforce due to their use of illicit drugs and alcohol.
  • At least 20% of jobs applicants fail to turn up to mandatory drug testing and a significant number fail the tests.  

Call to Action from the new Government

  • AMIC members want to join forces with government, secondary and tertiary educators, RTOs, healthcare authorities and community-focused organisations to develop solutions that help to upskill and provide lifestyle choice education for the long-term unemployed.
  • Also greater funding needs to be provided to treat illicit drug and alcohol addiction in the bush and not just metropolitan areas.
  1. Access to overseas workers
  • Currently out of necessity, overseas employees account on average for 3% of red meat processors full-time skilled employees and 17% of casual workers.
  • In November 2018, the Federal Minister for Immigration announced that from 1 July this year workers with 417 and 462 visas could stay in regional areas and operate at one plant for up to three years with annual renewal application. This has been viewed positively by the red meat industry.
  • Skilling Australians Funding (SAF) Levy, which partly paid for by employers who sponsor a foreign worker as they are required to pay a Nomination Training Contribution Charge (known as a levy) under certain visa types. This is an upfront charge of $7,200 per foreign person employed and it’s incurred each time a visa is renewed within the timeframe allowance. This is too costly for business.
  • Last week, the Opposition Leader’s pledged that employers would be required to pay an additional $11,000 per annum to overseas workers on 457/482 temporary work visas if they were voted into government. Mr Shorten’s announcement will only negatively impact workforce capacity further, particularly as a pay increase to employees under the skilled migration scheme will add tens of millions of dollars to the red meat industry’s wage bill.

Call to Action from the new Government

  • Clarification is needed on Labor’s position on 417 and 462 visa.
  • Reduction in cost of SAF levy. If a regional red meat manufacturing employer has 150 foreign employees than the annual levy is over $1 million, which makes employing overseas workers almost probative especially when some unemployed regional Australian workers won’t work.
  • The SAF levy paid by regional businesses at the very least should go back to the regions to support local training.
  • A Shorten government does not increase the Temporary Skilled Migration Threshold (TSMIT) payment to overseas workers by $11,000 to $65,000 with annual indexing, from the current level of $53,900.
  • The party that is voted in to govern the country should show leadership in the bush and provide regional training centres. A divided Australia is a socially and economically weak Australia.
  1. Permanent migration into regional areas.
  • Last month, the Morrison Government announced it would cut the permanent migration program from 190,000 to 160,000 places and encourage migrants to work in the regions. This is disastrous for the red meat manufacturing industry as it reduces the pool of low-skilled and unskilled labour positions, which make up the bulk of the industry’s workers.
  • Migrant caps and redirection of skilled labour doesn’t fix the problem.  AMIC research has shown that constrained visa quotas simply do not meet basic labour requirements, especially in rural and regional areas.  

Call to Action from the new Government

  • They key to Australia’s regional growth is to attract foreign workers and have them stay permanently in the bush so they can join and rebuild diminished communities and add to economic growth of these regions, reducing the widening divide between over-populated cities and under-populated regional Australia.