A coffee shop that opens at six in the morning is located close to Central Station. At five-thirty, the owner arrives. The majority of his employees come from the outer suburbs, some of which are 30 or even 35 kilometers away. The first train is carrying them. They’ve been up for five hours by the time the breakfast rush is over. He’s noticed the fatigue. He’s also noticed the turnover.
This is not a problem of abstract policy. Everywhere in Sydney that needs warm bodies at inconvenient hours in pricey postcodes—kitchens, classrooms, aged care facilities—it is happening in real time.
According to data from property consultancy Cotality, the median home value in Sydney is currently A$1.3 million. That number is so well-known that it hardly registers anymore, which is a problem in and of itself. Over the course of five years, rents have increased by almost 42% throughout the city; the median weekly rent for a house is currently $883. Those numbers aren’t background noise for those who work in childcare, hospitality, or cleaning. People leave because of them.
According to research by the Committee of Sydney, this actually costs about $10 billion annually in lost productivity, which is directly related to inaccessible housing and the ensuing long commutes. For some time now, Professor Philip Oldfield of UNSW Built Environment has been arguing this point, and his reasoning is simple. Workers are less productive and more likely to eventually quit altogether the farther they live from their jobs. “If your rent goes up, you may be spending less on coffee, less on lunch, less on leisure,” he said recently. The ripple effects hit small businesses hardest.
According to a recent study conducted in Melbourne, half of the essential CBD workers—childcare providers, delivery drivers, and housekeepers—live more than 20 kilometers away from their place of employment. Sydney’s predicament is similar, if not worse. According to the SGS Rental Affordability Index, virtually all housing in Sydney’s East, Central, and Inner West areas is classified as either severely or extremely unaffordable for hospitality workers. That’s not a fringe statistic. That’s the workforce that keeps the city’s service economy running.
There’s a sense that the business community is only beginning to reckon with what this means at an operational level. According to research by recruitment firm Robert Walters, 54% of Australian workers are thinking about relocating across state lines in quest of more affordable housing. Employers in Sydney are already experiencing that, so it’s not a threat for the future. Young professionals seeking cheaper rents in Brisbane are not the only ones departing. They work as teachers, nurses, and craftspeople. employees whose jobs cannot be performed remotely.
The recent adjustments made by the federal government to capital gains tax treatment for investors and negative gearing regulations may eventually slow the rate of increase in housing prices. It’s genuinely unclear if that’s sufficient or arrives quickly enough. Saul Eslake, an economist, has argued that these developments should be celebrated because they lessen investor competition with first-time home buyers. However, he would also concede that workforce pressures are currently occurring and that structural housing reform is moving slowly.
As this develops, it becomes evident that Sydney’s housing issue has progressed beyond a cost-of-living crunch. It’s becoming a question of whether the city can continue to attract and keep the workers it needs to function. It’s a different kind of crisis. It doesn’t make a loud announcement. Staff rosters, absenteeism statistics, and the silent choice of a 28-year-old nurse to apply for a job in Adelaide instead are all examples of it. Employers are starting to notice. It’s probably past time.
