Research Paper on Labor Shortage in the Australian Tourism Sector

Australia's tourism sector is suffering from a shortage of labor. For an industry that contributed more than 10% of the Australian GDP in 2014 (Ironside 2016), this labor shortage is a major concern for the viability of the tourism industry. According to Ironside (2016), the sector is growing rapidly, and its labor shortage is becoming more severe. The tourism sector in Australia is a wide industry consisting of hotels, restaurants, gaming, shopping malls, tour operations and ocean cruises. The sector is suffering from a lack of both skilled and unskilled labor. The chronic labor shortage will affect growth and productivity in the tourism sector if it is not properly dealt with.

Australia's tourism industry has been growing consistently, and now it has a greater contribution to Australia's GDP when compared to banking, mining, and agriculture (Ironside 2016). Without the availability of adequate supply of skilled and unskilled labor, this growth will be unsustainable. A tourism plan needs to be developed to address the labor shortage in the Australian tourism sector. This plan aims to find out what causes of this chronic labor shortage in Australian tourism sector and what can be done to tackle the shortage and it will discuss government policy, Australians' perception of the tourism sector and level of training available and focused on the provision of labor to tourism and hospitality sectors. The research plan will investigate what actions need to be undertaken by all stakeholders in the tourism sector such as the government and the private sector to ensure that the labor shortage is curbed.

Objectives

To determine the causes of skilled and unskilled labor shortages in the Australian tourism and hospitality industry

To determine steps that can be undertaken to reduce the labor shortages in Australian tourism sector.

This research was conducted by carrying out a survey of more than 1183 business institutions in the tourism sector based in Australia. The business owners and the employees filled confidential questionnaires, and the information from the survey was used to develop this tourism plan.

Background Context

Australian Tourism sector is a sector of the Australian economy that is consistently developing. According to the World Travel and Tourism Council (2015), Australian tourism industry is expected to grow consistently for the next decade at an annual rate of 2.9% which is greater than the expected rate of growth of the whole Australian economy. The labor shortage is a major hindrance to this growth. The labor shortages are caused by a combination of factors such as government policies, inadequate training facilities and peoples poor attitude towards jobs in the hospitality sector.

Lack of appropriate required skills on tourism and hospitality has led to a shortage of labor in the industry (Evans 2015, p.113). Many employees have complained that the available workforce is incompetent due to lack of the required skills and experience. Inadequate skills can be attributed to lack of access to training institutions, lack of quality training, and a high drop-out rate training institutions (Deloitte Access Economics 2015). Employers may view this shortage of appropriate skills as labor shortage (Healy, Mavromaras & Sloane 2012). In these cases, employers may choose to pick workers who lack necessary skills and experience who will provide substandard output and thus reduces productivity. Deloitte Access Economics (2015) reported that most employees complained that the available workforce lacked sufficient experience and capability to work as desired.

In Australia, jobs in the tourism and hospitality sectors are viewed as short-term employment opportunities as one waits for better opportunities instead of a launch pad for a stellar fulfilling career (Ironside 2016). Many Australians believe that careers in tourism and hospitality are short-term and they do not offer opportunities for growth. More than 50% of businesses in the tourism sector are seasonal, and their operations fluctuate with time (Mascheck 2016 p.4). With these fluctuations, it is difficult for a business to recruit and maintain skilled staff. Leaders in tourism are trying to shift that perception to avoid an acute shortage of labor which seems inevitable at the moment. As the contribution of tourism in Australias economy becomes more important this change in attitude needs to change very soon.

The aging Australian population is contributing to the labor shortage in the tourism sector. Between 2009 and 2014, the number of people aged over 65 increased by 20% despite an increase in the population of the whole country by a mere 8.6% over the same period (Service Skills Victoria 2007). Tourism is an industry that relies on young labor whose population in Australia is reducing. It is estimated that by 2030, people aged over 55 will make up approximately a third of Australias population (Deloitte Access Economics 2015). Increase in population is not only affecting the labor force in hospitality and tourism but also all other sectors of the economy such as mining and industry.

Lower pay and long working hours in the tourism sector is discouraging people from taking jobs in the sector (Brysk 2003 p.47). It is known that the tourism sector offers the lowest wages compared to other sectors of the economy with most unskilled and non-skilled laborers earning just the minimum wage. This may drive these unskilled laborers to mining and construction industries where the pay is significantly higher. People working at the lowest level in the tourism sector such as waiters and bar attendants earn very little money compared to low-level employees in other sectors of the economy. These low-level employees in tourism sector consist of more than 45% of the sectors entire workforce (Cowgill 2012). In peak seasons, the workers are expected to work for long hours despite the low wages. The long working hours and low wages have made it difficult for businesses to retain workers.

Strict immigration policy in Australia has prevented the influx of unskilled and semi-skilled laborers into Australia. Australia has restricted immigration especially to unskilled workers, and this restriction is enforced strictly unlike in most developed countries such as the United States and Scandinavia, where most of the semi-skilled and unskilled labor is provided by immigrants from developing nations (Clyne & Jupp 2011). Since Australian government discourages such immigration, the tourism sector in the country tends to suffer from the shortage of such labor. Due to these challenges, many employers are offering short-term jobs to people having the 457 visas to fill key roles, such as those of cooks and chefs, which cannot be sufficiently handled by unskilled labor. The 457 visa program allows skilled laborers to work in Australia for up to four years.

The rapid growth in the economy of Australia has led to an increase in the proportion of employed people. This, in turn, has led to higher consumption levels, business investments and demand for commodities which in turn has led to the increase in demand for both skilled and unskilled labor. This has led to pressure on the labor market and sectors that have disadvantages such as low wages, and seasonality of jobs such as tourism are being avoided by the workforce. In Australia, sectors of the economy are growing at a faster rate when compared to the labor market. With these varying growth rates, it is inevitable that some businesses will experience a shortage of labor.

Statement of Need

The tourism sector in Australia is experiencing an annual average growth rate which is greater than the whole economy. According to Deloitte Access Economics (2015), the sector accounts for more than 10 percent of the Australian Gross Domestic Product (GDP). With this growth expected to last for at least a decade, it is vital that proper emphasis is put on the sector to tackle the challenges facing the industry. At the moment, the labor shortage is one of the biggest problems facing the tourism industry in Australia. For the expected growth to be sustainable and productivity increased, the problem of labor shortage has to be fixed. The labor shortage will lead to decrease in investments. A research plan is required to highlight roles that key shareholders in the tourism sector such as the government, the private businesses, and other stakeholders need to play in order to ensure that development in tourism is not hindered.

Australia is becoming a popular tourists destination due to its wide range of tourist attractions that vary from white beaches to scenic landscape and a diverse aboriginal cultural heritage. Australia is relatively safe from terrorists attacks when compared to Europe and has amazing landmarks such as the Sidney Bridge which is famous all over the world. According to the Deloitte Access Economics (2015, p.13), the growth in international tourists in Australia is mainly driven by the developing Asian economies such as China and India. With the economies of these countries booming, tourists from these countries are flocking to Australia with the tourist preferring tours in New South Wales and Victoria. There is an anticipated growth of tourists from China of more than 8.5% annually in the next decade. The growth of the US economy is also contributing to the increase in foreign tourists visiting Australia.

Businesses in Australia have been complaining that there are facing hardship in recruiting appropriately qualified labor. According to Australias Chamber of Commerce and Industry (2007), lack of skilled labor is one of the greatest hindrances to investing in Australia. It is clear that the labor shortage does not only affect the tourism and hospitality sector but also the whole Australian economy. With the labor shortage, businesses in tourism sector cannot increase their production to cater for the increased demand as will lead to decrease in quality of goods and services offered to tourists as well as an increase in prices. It is important that to ensure that the labor shortage does not hinder the growth of the Australian economy. Skill shortage in tourism may also lead to pressures on wages. Due to the shortage, wages offered in the sector usually rise and in this, in turn, may lead to increase in the cost of production. High production costs may adversely affect small business and thus prevent them from expanding.

The Australian government has not done enough to solve the shortage of labor in the tourism sector (Kotter 2008). Its strict immigration policy is hindering the ability of businesses to hire skilled and unskilled labor from foreign markets. McCarthy (2015) explains how businesses have been taking advantage of the 457 visa program to bring skilled laborers such as chefs and cooks to assist them in business operations due to a surge in tourism. However, the temporary nature of employment availed by the 457 visa program discourages the skilled workers as there is no prospect for growth in the sector.

The inability of the Australian governments to adequately invest in education in vocation training needs to be addressed in order to curb labor shortage in tourism and hospitality. The problem is so severe that companies are competing for graduates directly from colleges. Simpson (2008) explains how more than 80% of students at the AFTA Travel and Tourism College SA were absorbed by tourism companies just after graduation. The government has not availed enough opportunities, and Australian have chosen to train and work in sectors such as mining and banking were training are easily available.

The business community in tourism is also not doing enough to reduce the labor shortag...