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The emergence of the “three-speed economy” has a major impact on the workforce. But what is it, and why is it important?
For years Australia has observed a two-speed economy in which one sector grows much quicker than another. Over a decade ago, the big player in this was mining and resources, with people and businesses connected to this industry seeing enormous success post-global financial crisis.
In this day and age, as we exit yet another global disaster, business strategist Angela Vithoulkas said similar themes are emerging. However, instead of a two-speed economy, we’re actually in the midst of a three-speed economy.
The first of these groups affecting the economy is those who thrived through the pandemic. They’re the ones leaving the rest behind amid the chaos.
“There are businesses [that] have done really well through COVID-19. They’ve increased their profits enormously, and they’re well equipped to deal with anything that the economy is going to throw at them,” said Ms Vithoulkas.
“In fact, they’re probably going from strength to strength because they can afford to reinvest and grow.”
Next is those who struggled throughout COVID-19. “Then you’ve got a whole other business sector who got through COVID-19 that used all their resources, used everything they had at their disposal to survive on the assumption that things would get back to normal. But they didn’t,” she said.
“If you shined up your crystal ball just a little bit more than normal. You might have seen a little bit what [of] was coming, and they are now going to be hit hard because they can’t invest. They’re spread too thin financially. They’ve got a skills shortage. So, they’re not projecting up. They’re trending down because they don’t have resources and staff.”
“It’s not because they don’t know what they’re doing. It’s not that there isn’t a market; they just don’t have the means to get into it.”
Finally, the third group is the start-ups. They’re the new kids on the block who have merged post-pandemic. The strains that this period put on other businesses haven’t affected their processes.
Ms Vithoulkas commented: “What we’ve got is a lot of start-ups coming through who are full of people with either bright new ideas or looking for a sea change, or have lost their jobs, and aren’t part of that data anymore.”
“They’re entrepreneurs. And they’re coming through, and hopefully, they’ll be nimble enough. They don’t have the economic baggage that that middle company has, and are able to get investors, and they’re happy and full of light and hope and prosperity.”
These are the three key players shaping the economy in 2023, said Ms Vithoulkas, and businesses that want to succeed may need to realise that the workforce isn’t what it used to be.
“It’s a very different world now. And any business that hasn’t recognised there is no previous. That relationship with the economy’s done. You’ve got to do things different now,” she said.
Unfortunately, the current economic climate may prevent these middle businesses from getting through these tough times. While the government provided support for people through the pandemic, many are feeling alone now and have nobody to fall back on.
Ms Vithoulkas said: “The interest rates are what’s preventing that middle business from being able to get through this bump as well. There’s not enough money out there at a decent rate for businesses to borrow and invest.”
“There’s certainly a huge issue with our lenders in terms of appetite for risk. And we’re not talking about risk unsecured; we’re talking about businesses and business owners who have had decades of great credit rating. But no one believes in them now to move forward.”
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The term "workforce" or "labour force" refers to the group of people who are either employed or unemployed.
Jack Campbell
Jack is the editor at HR Leader.
