If pain persists, please see JobKeeper

20 August, 2020 by Vanessa Cavasinni

COVID lingers like the headache that just will not go away and the battle is on to identify a vaccine before the pain relief of JobKeeper wears off, writes Luke Butler, managing director of Hastings People.

It has definitely been an interesting three and half months since I contributed posts forecasting the future of the hospitality labour market, so I thought it might be time to provide an update on what we are now seeing across the industry.

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The first post centred on the shifting job market and most of the predictions have come to fruition, with the forecasted trends currently on display. Most notable is that operators have worked hard to retain key staff in senior positions with the majority of the attrition occurring at more junior levels.

We have seen continued tightening of the labour market in leadership or specialist positions, with top talent reluctant to relinquish secure employment to commence a new probation period. Fear of a second lockdown is driving an attitude of prudence, making the recruitment process for key appointments more challenging than it was pre-COVID.

Significant is the fact that both JobSeeker and JobKeeper have actually reduced the volume of experienced candidates seeking work in key positions. Additionally, many casual or part-time workers on JobSeeker have an incentive to not work given the coronavirus supplement. Those on JobKeeper also risk losing the payment if they leave their current employer.

Some job categories are experiencing a distinct loosening of the employment market. Events, sales, marketing, back office and some specialist roles have experienced turmoil as operators remove roles they believe are non-essential, at least in the short term.

Multi-site and group-level positions have been removed or reshaped within many organisations as talent is redeployed to single-site assignments. We have witnessed a number of highly experienced group operators entering the employment market, facing the reality of waiting for a relevant opportunity or taking a role that sits below their level of experience.

Salaries are contracting as businesses seek to capitalise on competition for active jobs. This is driven by the willingness of talent to negotiate in order to secure a role. However, the market will correct itself as trade returns to normal, meaning ‘underpaid’ staff will invariably be the first to seek new opportunities.

This scenario is consistent across most states, with Victoria the obvious exception. Their extended lockdown has caused challenges at all levels and a very high volume of talent is seeking new opportunities across the state. In contrast, Western Australia is really firing as they are operating in a ‘post-COVID’ environment which has created a very tight labour market.

One positive is the number of businesses seeking talent from peripheral sectors, capitalising on the access to new talent as a means of injecting alternate thinking into their organisations.

We have witnessed an almost immediate cessation of ‘pivot’ activity across the industry. Most businesses that opened additional revenue streams during lockdown have closed them. This is surprising given the fact that we are only part way through this challenge.

The potential for re-introduction of restrictions is high, yet rather than using the trading period to improve and streamline initiatives, the concepts have been disbanded. Interestingly the restaurant sector has been more committed to this activity while hotels are enjoying the enthusiastic return to food and beverage sales – and gaming in particular – rendering additional activity unnecessary.

For non-gaming venues, a gaping hole remains in event business, which will be difficult to replace until there is a vaccine. The inability to dance and mingle renders many permitted event occasions, such as weddings, untenable for a lot of consumers. Cancellations and postponements are rife.

So what does the future hold?

The extension of JobKeeper was clearly welcomed and has helped alleviate much of the looming anxiety. It has funded the reopening process for many operators and without a doubt prevented, at least in the short term, the demise of a number of businesses.

Without stating the obvious, the clock is ticking on the vaccine. Not only is community health anticipating its arrival, but our economic challenges are immutably linked.

When a viable vaccine is available and restrictions gradually dissipate, a large amount of money will be pumped into the sector. We will experience an unparalleled period of patronage as consumers relieve the stress of the COVID experience and take advantage of the ability to connect with one another.

The longer it takes to produce a vaccine, the greater the chance that the drawn-out reduction in trade results in more operator casualties and less money in the economy with which to celebrate.

Continued pain is going to drive new trends, one of which is opportunity. The volume of movement in the market is exceptional with property acquisition, renovation and new developments continuing with haste.

There is a potential for group operators with strong cash reserves and borrowing power, to capitalise on distressed assets. Looking back to the Global Financial Crisis, new pub groups were formed on the back of distressed assets and this may well happen again, although pub prices appear to be remaining stable.

Outside of the CBDs, the hotel sector has been able to weather this storm better than most. A swift return to strong trade levels, faith in long-term value from financial institutions and strong government support has combined to deliver a better trading environment than most were expecting in the first quarter of the year.

For the most part, the sector has also been extremely responsive to safety protocols which drives consumer confidence. This is something we should be very proud of.

While a bumpy road lies ahead, there is solace in the fact that we are unlikely to endure any new firsts. We simply need to bear the pain and look forward to some relief.

It is coming.