Attracting more students to the profession is key to solving the number one issue for business, says Nexia partner.
‘Make accounting sexy!’ to solve skill drought
Increasing interest rates and an economic slowdown could help solve the stretched labour market, said Nexia partner.
Record low unemployment and increased demand for skilled workers mean it is vital to make accounting “sexy” again, said one Nexia partner, “if it ever was!”
Paul Clements said the skill drought was a more common topic among his clients than inflation or interest rates.
“Across every business type it is the one thing that is a key frustration point and a key headwind to businesses being able to deliver on services, and deliver on products,” he said.
A lack of accounting and financial planning graduates was one of two key factors that needed to be addressed.
“I know there’s a lot of demand for good quality graduates and so a focus on where the future is going and where the shortfalls are going to be moving forward is important and that we pre-plan with our education resources,” said Mr Clements.
“To try and make financial planning and accounting sexy again would be nice, if it ever was!”
He said raising pay rates was one obvious method of attracting more candidates, but businesses should try alternative solutions.
“I was working on an employee share plan for a client today that is all about incentivising their team and retaining their top players, their top management team,” said Mr Clements.
“I think good businesses will adapt to the environment as they need to and if that is something that is appropriate for them they will look at it.
“I would say there’s probably more businesses open to it now than perhaps pre-COVID.”
He said outsourcing was becoming more widely discussed as a possible solution, and businesses were looking elsewhere to get jobs done.
Staff had become accustomed to hybrid working during the pandemic and flexibility was now a key consideration, both for employees and firms.
“As offices or leases are coming up for renewal, businesses are potentially reducing space but trying to create environments for their teams that are attractive for team members to want to get together,” said Mr Clements.
“Employers in a tight employment market find it difficult to mandate for people to come to work, so having people come in and mentoring younger team members in particular is more challenging than pre-COVID.
“So we’re in this situation where you need to bring in people, you may not be able to find experienced people, so you might go to graduates or less experienced people but then you have the challenge of mentoring them and onboarding them in an environment where your more experienced people would rather work from home.”
Mr Clements said that as the Reserve Bank attempted to reduce inflation by raising rates, that could help ease the labour shortage.
“It’s clear that the Fed and the Reserve here, as well as in Europe, their number one priority is to get inflation down. It seems pretty clear that they will do that at a cost to employment levels and economic growth,” he said.
“If the result of them pushing to get inflation under control at around that 2–3 per cent mark results in a slowdown in economic conditions, demand supplied both for labour and for goods and services, then you would expect the unemployment position to grow as that occurs.
“So that’s going to be one solution to the labour shortage.”
While interest rate increases were immediately hitting sectors such as construction, their true impact on households and businesses would not be seen until further down the track.
“There’s going to be a lag effect obviously as reserves of individual households and businesses dry up and as economic conditions slow down,” said Mr Clements.
Mr Clements expected the RBA to raise another 50 bps at its meeting tomorrow (6 September), as it tried to make up for lost time.
“I think the market is generally expecting it — certainly equity markets have built it into equity pricing,” he said.