Finance Finance News Middle-income jobs lagging behind in COVID recovery

Middle-income jobs lagging behind in COVID recovery

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Middle-income workers are at the greatest risk of further job and income losses as the pandemic reduces demand for lower-skilled labour.

New analysis released by ANZ on Monday shows that jobs in the middle and second-lowest income quintiles have been the slowest to pick up during the economic recovery.

In November, employment in these quintiles was down 2.5 and 4.4 per cent respectively on pre-pandemic levels, while employment in the lowest quintile was down 2.3 per cent.

The top end of town, meanwhile, was in much better shape.

Between February and November, the number of people with jobs in the highest and second-highest income quintiles increased by 3.2 and 1.8 per cent respectively. And this trend is likely to continue.

ANZ economist Catherine Birch said workers in the middle and second-lowest income quintiles, such as chefs and office or retail managers, “may suffer more hardship in the short term from loss of employment and income”.

“[Workers in these quintiles] tend to be older (so less likely to be able to move back in with parents, for example) and more likely to have dependent children than workers in the lowest quintile,” Ms Birch said.

She wrote in a research note that the slow recovery from the pandemic shock in the middle and second-lowest income quintiles was compounding a longer-term slump in lower-skilled labour, as companies increasingly look to automate routine tasks.

Consequently, the middle and second-lowest quintiles account for a diminishing share of the labour market, while the top two account for rising shares and the share of the lowest quintile remains steady.

In other words, there are opportunities at both extremes of the income scale but not many in the middle.

“This is not a bad thing in itself,” Ms Birch said.

“Indeed, we want a growing concentration of higher-income jobs in the Australian labour market. But it does leave some workers vulnerable to changes in skills demand, particularly due to technological change.”

Ms Birch said employment has been flat or falling for years for some of the larger occupations in the middle and second-lowest quintiles, such as bookkeepers and earthmoving plant operators.

She told The New Daily that employment growth in middle-income roles was also sluggish after the GFC, which prompted companies to replace lower-skilled, middle-income workers with automation.

However, Ms Birch said it was too early to say whether companies were engaging in similar cost-cutting measures during this recession.

“It’s quite interesting that we’ve seen such a strong rebound in the lowest quintile. Some of that will very much be linked to hospitality starting to reopen,” she said.

“But something that we can’t tell from this data [but could be happening] is that some people who were previously in jobs in that middle or second-lowest quintile [could now] be taking jobs in that lowest-paid quintile.”

Ms Birch said separate ABS data pointing to a sluggish recovery in the employment of young people, despite a large bounce in low-paid jobs, supported this theory.

Which is why the government’s JobMaker hiring credit, which pays eligible businesses a subsidy of $200 a week for every worker they hire between the ages of 16 and 29, is so important, she said.

Asked what could be done to help older, middle-income workers who have lost their jobs, Ms Birch said the federal government’s JobTrainer scheme, which will provide up to 320,000 free or low-cost training places in health care, IT and trades, would help.

But she said older workers faced other barriers to employment beyond the cost of training.

“There are other costs as well, particularly if people have to look after children, or if people are older, often they might perceive – whether rightly or wrongly – that employers may not be willing to offer them a job anyway, because of their age,” Ms Birch said.

“There’s also a mismatch in some of the skills and occupations – the ones that are in demand and going to see growing demand aren’t really a good match for some of these workers.

“Starting in a completely different sector or a completely different role can really be quite daunting. And you need quite a bit of support to really make that jump.”