The Australian Retailers Association (ARA) has warned the further decline in retail vacancies may actually indicate further cost cuts across the sector - including redundancies.
According to data released by the Australian Bureau of Statistics (ABS), retail trade vacancies dropped to 32,200 in the May quarter, down from 36,400 in February and well below the record 49,900 in the November quarter.
Currently, 21.7% of retail businesses are reporting vacancies, down 6% from February.
In an interview with Ragtrader, ARA CEO Paul Zahra said the decline in retail vacancies is likely a consequence of retailers limiting hiring due to financial constraints.
“We are still concerned about the high number of vacancies, but we fear a significant driver in the decline is due to retailers experiencing a cost-of-doing-business crisis,” Zahra said.
“With increasing costs of rent, wages, insurance, utilities, materials and supply chain costs, some retailers are battling to avoid making redundancies – let alone hiring additional staff.
“The 32,200 retail vacancies remaining would likely be retailers who are still seeing somewhat stable performance – and they’re still struggling to fill those roles.”
Zahra said that the retail sector is beginning to feel the cost-of-living lag effect.
“While Australians face a cost-of-living crisis, retailers are battling a cost-of-doing-business crisis,” he said. “Next month, wages will increase for all minimum wage earners. All the while, the cost of rent, insurances, utilities, supply chain costs, and materials all continue to increase.
“There is little doubt that this will result in price increases, job hour reductions, redundancies, and in some cases – store closures.
“Retailers are absorbing many of these increased costs – so we’re yet to see a significant level of redundancies, but that is an unsustainable business model.
“We know that many retailers, particularly small businesses, are struggling. However, they’re doing everything they can to avoid pursuing redundancies.
“As spending continues to slow and operating costs continue to increase, retailers will be forced to reassess their operating costs and margins – and this is when we anticipate redundancies may occur.
“For us to proactively combat retail job vacancies, it requires further investment in our labour force.
“Despite this reduction, labour shortages remain a predominant issue retailers are facing.”
Background
ABS head of labour statistics Bjorn Jarvis said the total number of job vacancies across all sectors fell by around 2% to 432,200 between February and May - the fourth consecutive quarterly decrease.
Despite this ongoing decline, vacancies remained elevated.
“While job vacancies have fallen by around 10% over the past year, they were still high – around 89% higher in May 2023 than in February 2020, just before the start of the COVID-19 pandemic,” Jarvis said.
“This May saw businesses continuing to report difficulties in recruiting and retaining staff.”
While the number of job vacancies fell in May, ABS noted the percentage of businesses reporting at least one vacancy increased, rising slightly from 24% in February to 25% in May. This continues to be more than double what it was in February 2020 (11%).
“The percentage of businesses reporting at least one vacancy has been above 11% since August 2020, and higher than 20% since May 2021,” Jarvis said. “This highlights the impact of a tight labour market on a broad range of businesses.”
The May fall in job vacancies was driven by the private sector, which dropped by 2% from 394,000 to 385,000. Job vacancies in the public sector remained steady at 47,000 vacancies, underpinned by demand for education and health workers.
New South Wales saw the largest percentage drop in job vacancies (-12%) while South Australia saw the largest growth (+9%) for the quarter.
“All states and territories, except for South Australia, have a lower number of vacancies when compared with a year ago, but all remain well above their pre-pandemic levels,” Jarvis said.
Accommodation and food services showed the most pronounced drop in job vacancies (-27%) this quarter. However, vacancies in customer-facing industries continued to be the most elevated compared with pre-COVID levels.
While vacancies fell in 12 of the 18 industries in May, some industries continued to experience growth. The largest increase in vacancies was seen in Education and training, which went up by 18%.