Ross Stitt points out there is still a global market for talent, and Australia thinks it can win big post-Covid

Here’s a puzzle. Why has a $US13 billion US hedge fund recently opened an office in Warriewood, a sleepy, beachside suburb more than 20 kilometers north of Sydney’s CBD?

The fund, Point72, has ten offices worldwide in all the usual places – Manhattan, Central London, the heart of Silicon Valley, and so on. Warriewood is clearly an outlier in this illustrious company. It’s not a financial centre and it doesn’t boast a cluster of hedge funds or tech start-ups.

So, what’s the attraction?

According to a report in The Australian Financial Review, Point72 has opened a Warriewood office because two of its “star recruits live out that way”. The report quote’s Point72’s head of international operations, Marc Desmidt, as saying “We are talent gatherers, not asset gatherers”.

This appears to be another example, albeit extreme, of the lengths to which some employers will go to attract and retain good staff.

The war for talent is not a new phenomenon, but it is heating up as much of the developed world emerges from the worst of the Covid-19 pandemic and businesses position themselves to participate in the unfolding economic recovery.

In Australia, some of the consequences of the pandemic are having, or will have, a dramatic impact on the war for talent. These include the collapse of immigration, the ‘Great Resignation’, and the rise of ‘working from home’.

Before the arrival of Covid-19, over 100,000 people a year migrated to Australia under the country’s skilled migration program. That flood of talent came to a sudden halt when the international border was closed. In addition, more than 500,000 temporary migrants have left the country since the pandemic began, many of them skilled migrants.

The gap between where Australia finds itself today and where it would have been without these two events translates into a substantial skills shortage for the Australian economy.

In August a record 4.3 million workers in the US left their jobs, bringing the total since April to 20 million. This is called the Great Resignation (aka the ‘Big Quit’). It has been attributed to a range of factors, including workers reassessing their lives and jobs in the wake of the pandemic experience.

This trend looks likely to spread beyond the US. According to international research undertaken by Microsoft as part of its 2021 Work Trend Index, “41 percent of the global workforce is likely to consider leaving their current employer within the next year, with 46 percent planning to make a major pivot or career transition”. These numbers are much higher than before the pandemic.

Recent research in Australia from Employment Hero, reveals that “48% of Australian workers are planning on seeking a new role in the next six months”. Significantly, “42% are considering or would consider seeking a job overseas”.  

To date, uncertainty surrounding the pandemic has suppressed worker mobility in Australia and there has been little evidence of the Great Resignation. However, the data above suggest the position could change dramatically in the next few months as the country starts ‘living with Covid’ and as borders reopen, both internationally and between the different states and territories.  

The rise in working from home is another consequence of the pandemic with implications for employment. Microsoft’s 2021 Work Trend Index states that “extreme flexibility and hybrid work will define the post-pandemic workplace”, and “it will have profound impacts on the talent landscape”.

So far, the primary impact of WFH in Australia has been to turn the CBDs of Sydney and Melbourne into ghost towns and to inflate real estate prices in regional Australia. However, going forward some element of WFH will be a requirement of many highly skilled and in demand knowledge workers. The willingness, and ability, of employers to meet this requirement will be crucial to their business.

For some Australian employers, the challenges of the skilled migrant shortfall, the Great Resignation, and WFH could not have come at a worse time. As the country’s economy recovers from the ravages of Covid-19, the demand for skilled workers in some areas is going through the roof. 

Infrastructure is a prime example. To stimulate the economy, the federal government and many state governments are pursuing infrastructure projects worth hundreds of billions of dollars over the next five years.

A recent report from Infrastructure Australia, reveals a looming capacity crisis. It states that “in mid-2023 the employment in the infrastructure sector will need to grow from 183,000 people today to more than 288,000”, a shortfall of 105,000.

There will potentially be a shortfall in 34 of the 50 public infrastructure occupations listed in the report. The biggest shortfall – 70,000 – is among engineers, scientists, and architects.

The problem is further exacerbated by Australia’s intention to significantly expand its supply of renewable energy. Many of the resulting projects will involve large scale construction.   

Of course, Australia is not alone either in building infrastructure to stimulate the post-Covid economy or in developing more renewable energy projects. Engineers, scientists, and architects will be increasingly sought after around the world.

The war for talent is not just between businesses but also between nations.

Another area of high demand for skilled workers in Australia is the technology sector. The Tech Council of Australia has just released a report on its goal to see a million people employed in the sector by 2025. The report summarises what’s required – 

146,000 Australians will need to transition into the tech sector via reskilling and upskilling from other roles. That includes an additional 60,000 Australians that would not otherwise transition. Attracting, recruiting and reskilling these Australians into the tech sector must be the top priority for the tech industry, workers, governments and the training sector.

Again, many countries around the world have similar objectives for their tech sectors. Australia has the benefit of some major and emerging players in the tech space like Atlassian, Afterpay, and Canva. The competition is already intense, and it will only get worse.

Numerous commentators argue that Covid-19 is reversing the decades-long trend toward globalisation. Perhaps in some areas, but it would be foolish to think that talented Australians won’t be lured overseas by great work and even greater remuneration.  

In the increasingly competitive post-Covid employment market, the ability of countries to attract talent, and to avoid a ‘brain drain’, will depend on a range of factors. Key among them will be pay rates, work quality, the physical environment, the climate, the tax regime, and the health and education systems.   

The Point72 office in Warriewood obviously ticks the right boxes for two highly qualified and sought after financial traders. Australia can only hope that other less customised opportunities will make skilled Australians stay home and convince hundreds of thousands of talented foreigners to seek employment down under.

Ross Stitt is a freelance writer and tax lawyer with a PhD in political science. He is a New Zealander based in Sydney. His articles are part of our 'Understanding Australia' series.