Navigating rising Labour costs and workforce pressures in Western Australia

Author: Christo Smit

Western Australia (WA) is experiencing a notable economic phase, characterised by record-low unemployment rates and increasing labour costs. As of September 2024, the state’s unemployment rate stood at 3.6%, the lowest among Australian states and well below the national average of 4.1% (Western Australia Government). This exceptionally tight labour market has created intense competition for skilled workers, driving wages higher and placing significant operational cost pressures on businesses across key sectors like mining, construction, and energy.

Economists are closely monitoring the broader impact of these developments. While the Reserve Bank of Australia (RBA) has maintained interest rates at 4.35% to counter persistent core inflation, weaker-than-expected economic performance in the September quarter highlights vulnerabilities (The Australian). Business conditions, as measured by the National Australia Bank (NAB), have weakened, with the business index dropping to +2, the lowest level since late 2020 (Reuters).

WA achieves equal longest period of low unemployment: Latest data from the Australian Bureau of Statistics (ABS) shows Western Australia’s unemployment rate fell to 3.6 per cent in September, the lowest of the states and well below the national rate of 4.1 per cent.

However, WA’s robust business investment and population growth mean any adjustments will likely be slow, leaving businesses in need of proactive strategies to navigate rising labour costs, enhance workforce productivity, and retain critical skills.

[To address these challenges, organisations must rethink their Human Capital strategies.] Quote

This article outlines targeted interventions—workforce planning, reskilling and upskilling, digital adoption, and employee value proposition redesign—that are particularly relevant to the WA context. These solutions not only mitigate rising labour pressures but also position businesses for long-term resilience and competitiveness in an evolving economic landscape.

Workforce Planning and Strategic Talent Pipelines

• Proactive Workforce Planning: Organisations must anticipate future skill gaps and labour needs to align with industry demands (e.g., mining, construction, energy). This includes identifying critical roles and developing a sustainable talent pipeline.
• Targeting Underutilised Talent: WA organisations can expand their talent pool by targeting underrepresented workforce segments, such as women, indigenous groups, retirees, and international workers.
• Collaboration with Educational Institutions: Partnering with TAFEs, universities, and trade schools to align training programs with industry-specific needs will help secure skilled talent locally.

Reskilling and Upskilling to Enhance Internal Capabilities

• Rapid Reskilling Programs: Given the difficulty of sourcing external talent, companies should invest in reskilling their current workforce for critical roles. Targeted programs in digital skills, automation, and project management can drive productivity.
• Skills-Based Frameworks: Transitioning from role-based structures to skills-based organisations allows businesses to optimise talent by focusing on capabilities rather than rigid job descriptions. This enables cross-functional mobility and greater workforce agility.
• On-the-Job Learning: Leveraging tools like learning in the flow of work and AI-driven learning platforms (e.g., Gensafe Knowledge) ensures employees access real-time, role-specific learning to improve performance without leaving their roles.

Employee Value Proposition (EVP) Redesign

• Enhancing the Employee Experience: A competitive EVP tailored to WA’s market pressures—such as flexible work arrangements, improved well-being programs, and unique benefits—can differentiate employers.
• Workforce Flexibility: Embracing hybrid work, the gig economy, and contingent workforces can help businesses scale their labour needs dynamically, while reducing fixed costs.
• Purpose-Led Workplaces: In sectors like mining and resources, purpose-driven narratives around sustainability, safety, and innovation can attract talent looking for meaning in their work.

Digital Adoption and Productivity Tools

• AI-Enabled Productivity Solutions: Investing in automation, AI tools, and digital adoption platforms (DAPs) allows organisations to increase output without increasing headcount. Tools like Gensafe Knowledge can streamline operations, enhance decision-making, and reduce repetitive tasks.
• Workforce Optimisation Tools: Implementing digital systems to manage rosters, monitor productivity, and allocate resources can help organisations maximise existing labour capacity.

Retention Through Leadership Development and Engagement

• Leadership Development: Effective leadership is critical in periods of labour scarcity. Organisations should focus on developing leaders who can motivate teams, retain key talent, and drive organisational change.
• Cultural Alignment and Engagement: High employee engagement can mitigate attrition rates. Tailoring cultural initiatives to meet workforce expectations and aligning employee goals with business objectives is key.
• Performance Recognition: A well-designed rewards and recognition system (both financial and non-financial) can help retain critical talent while improving morale.

Change Management and Organisational Resilience

• Driving Adaptability Through Change Enablement: As organisations introduce digital solutions or shift operating models, supporting employees through structured change management processes is critical to ensure adoption and minimise disruption.
• Building Resilient Workforces: Focusing on psychological safety, mental health programs, and support services can help employees manage increasing workloads, particularly in demanding industries like resources and construction.

Strategic Immigration and Talent Mobility Programs

• Targeted Skilled Migration: In collaboration with government bodies, organisations can advocate for policies that enable faster access to skilled migration pathways. Programs such as sponsored visas can help businesses address acute talent shortages.
• Internal Mobility and Global Talent Sharing: For larger organisations, leveraging international or interstate talent through rotations, secondments, or remote work models can ease pressure on WA’s constrained labour pool.

Western Australian organisations are operating in a tight labour market that demands innovative approaches to workforce management.

By focusing on skills development, workforce optimisation, employee experience, and technology adoption, businesses can mitigate rising labour costs and labour shortages.

Human Capital interventions such as reskilling, EVP enhancement, and AI-driven solutions not only address immediate needs but also position organisations for long-term resilience and growth.

Partnering with solutions providers like VSLS—who integrate Change Enablement, Learning Solutions, and Agency Communications—ensures businesses can implement these strategies effectively and prepare their workforces for the demands of a rapidly evolving economy.

To learn more about our approach to holistic Human Capital solutions, visit www.vsls.com