In Australia, demand for skilled professionals has simply outstripped domestic supply. Unemployment is at a 48-year low of 3.4%, workforce participation is near all-time highs, and vacancies are at all-time highs.
The federal government will walk a policy tightrope between business and union agendas during the much-publicised Jobs & Skills Summit in Canberra on September 1 and 2, in an attempt to keep the economy from stalling.
A core battleground will be balancing an acceleration of skilled migration visas and investment in domestic skills development for the future.
Even if the government is able to negotiate an increase in skilled migrant visas, they will have to overcome a visa backlog of nearly one million applications in order to provide any meaningful short-term relief.
Similarly, while significant investment in domestic workforce development is critical, it is a long-term proposition.
Skills shortfall to stall construction activity
The skilled worker shortage is acute in engine room industries such as construction, mining, and manufacturing, which are above or equal to the national average but significantly lower than the national average for underemployment.
In the construction industry, the consequences are exaggerated, as a once-in-a-generation investment pipeline collides with once-in-a-generation cost inflation.
The Australian Constructors Association estimates the mega project pipeline to require more than 100,000 workers within 12 months.
With the sector’s productivity at -0.7% growth, further escalation of labour, energy, and material costs will cause productivity to fall further.
Early settlements provide relief and flexibility
Head contractors with strong balance sheets have joined forces with Earlytrade to provide much-needed relief and flexibility for their projects and subcontractors by launching always-on early settlements.
Despite the simplicity of an early settlement between a head contractor and subcontractor, implementing an automated system at scale results in supply chain liquidity, improved trust, and cost escalation arbitrage opportunities.
1. Managing cost escalation on projects
Mainbrace Constructions Chief Financial Officer, Jaco Steyn said Earlytrade was a game-changer for managing cash flow and supply chains for the specialist retail builder, which launched Earlytrade about six months prior.
“It’s a win-win for us too, because if we have excess cash for a week or two we can then make that available to be used fairly within our subcontractor portfolio. Everyone can have access to it,” he said.
“If subcontractors want or need to move that [payment] forward a couple of days, obviously there’s a cost to that, a discount, which they decide on. But they have the opportunity to do that.”
2. Build trust and retain top trades across projects
Steyn said Mainbrace had turned to Earlytrade to help streamline payments and provide assurance to subcontractors who can access on-demand early payment on progress claims.
“It provides better and more timely information to our subbies, they can get a lot more visibility on payments that are due and what’s in the pipeline, which helps them smooth their expenses,” he said.
3. Labour hire suppliers bridge cash cycles to keep top talent on jobs
As contractors and subcontractors lean more on labour hire firms to plug skills and resource gaps, those labour suppliers have increasingly turned to Earlytrade to support their payroll-heavy operations, with demand increasing by 43% in FY22.
4. Cash flow helps subbies keep top talent on jobs
Subcontractors on Earlytrade say having access to on-demand liquidity through early settlements with their top customers means they have cash flow to attract and retain top trades and talent on projects. Similarly, they have a better cash position to replace talent that has been headhunted by competitors offering inflated wages.
Earlytrade is an award-winning fintech that partners with businesses to provide on-demand access to liquidity for their suppliers through early settlements. Founded in 2018 by Guy Saxelby and Piers Symons, Earlytrade has partnered with some of Australia’s leading companies, including Boral, Coles Group, and Cleanaway.