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Why business must adapt to Australia's incredible shrinking middle class

Business

Australia’s population was hollowing out with a shrinking middle class that had already led to a skills shortage of 100,000 people, a Brisbane business function was told today.

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Demographer Simon Kuestenmacher told a BDO lunch said the top end of town had grown massively over recent years and jobs in the high wage sector had increased by 5 per cent since the start of the pandemic.

That had been exaggerated by losses in the middle class jobs, such as trades, nurses and police and the hollowing out of society was leading to a more polarised community.

Kuestenmacher said there had been winners and losers from COVID which was adding to the hollowing out of Australian society.

Adding to that was the loss of 250,000 immigrants a year.

He said the losses were flowing through to expectations of population growth to 2030 with the loss of about 1 milllion people.

These issues would challenge business because they would have to make sure they were marketing to the right sector.

He used the example of Weet-Bix, which a typical middle class consumable, but the market had splintered to Aldi brands at one end and high end products.

“It’s much more important to think about the Weet-Bix spectrum. You can make an absolute killing (at the top end) but it’s not a secret and you won’t be alone. You must get that positioning right,” he said.

However, he said one age demographic that was growing was the 42 year-old and that was good because they were the big spenders of the community.

He said business would also have to be careful about generational differences because they were all different and used the example of Millennials who were “obsessed” with purpose while Gen X was moving into the influential stage and had a much greater interest in gender equality and work-lifestyle balance.

Kuestenmacher said infrastructure development was the key to keeping society together. The Olympics will also be an event that binds society.

However, Infrastructure Australia Queensland chief executive Priscilla Radice said about the skills shortage in Australia was about 100,000 people by 2023-24.

She said that was in specialist jobs and roles such as project managers and construction workers.

Kuestenmacher said that differences in the states was also emerging.

“It makes a difference in consumer behaviour if your state has been locked down for 200 days or allowed to roam free,” he said.

“We will see consumer behaviour shift.”

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