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This is an audio transcript of the FT News Briefing podcast episode: America’s hiring headache

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, May 25th. And this is your FT News Briefing.

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Hungary’s prime minister has declared a state of emergency. Australia’s new prime minister is facing big challenges like China and climate change. And the tight US labour market is making hiring a number one headache. I’m Marc Filippino. And here’s the news you need to start your day.

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[Audio clip of Viktor Orbán]

Marc Filippino
Viktor Orbán has declared a state of emergency in Hungary that gives his government rights to rule by decree. Orban said the emergency decree is a response to what he calls the economic crisis caused by the war in Ukraine and Western sanctions. Yesterday, Parliament approved an amendment to the constitution and Orban will announce specific measures today. Hungary has so far opposed the Western sanctions on Moscow and Orban has refused to sign off on EU plans to ban Russian oil imports.

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Australians this weekend elected their first Labour prime minister in nearly a decade. Voters were frustrated with the previous government. They were also drawn to Anthony Albanese’s campaign promise to do more to address climate change. Here’s the FT’s Nic Fildes.

Nic Fildes
So part of Albanese’s election campaign was to go further on climate, but not too far. So he didn’t want to propose anything too radical that would scare people and possibly lose him the election. Labour is going to be really under pressure to deliver on the economic management side of things in a tougher environment than it has been for the Australian consumer. Now the energy transition is another layer on top of that. You know, it’s a case that there’s a huge investment projects and nobody wants to close down coal-fired electricity stations and result in blackouts and much, much higher prices at this time. So it is going to be a very tricky balance to find. But Australia has voted for stronger climate action, so they’re gonna have to come up with an answer.

Marc Filippino
Soon after being sworn in, Albanese flew to Tokyo to meet with allies. He flew right into a political cloud. US president Joe Biden had just pledged to use military force to defend Taiwan if China were to ever invade. China is Australia’s biggest trading partner. Fildes says despite the close trade ties, Australia’s new leader will likely continue the previous government’s tough line toward China.

Nic Fildes
Australia has been very bellicose, has been the tip of the spear in the Indo-Pacific in terms of the allies, the US in countering Chinese aggression under Scott Morrison. And that is likely to continue, at least in theory, possibly not as aggressively though in terms of the rhetoric. So while Albanese has yet to put on the table whether he would support what Joe Biden said there about military intervention, Australia generally does act in concert with its allies in the region, which is obviously the US, France, Japan, India, other countries as well. And there is no signal yet, although (inaudible) Albanese would be looking to change that at all.

Marc Filippino
Nic Fildes is the FT’s Australia and Pacific correspondent.

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Our US economics editor Colby Smith was just in the booming southern metropolis, Atlanta. It’s the capital of Georgia. She stopped by a restaurant called the Atlanta Breakfast Club, and it’s one of the city’s most popular brunch spots. It’s known for classic Southern comfort food, like fried chicken and waffles and Gulf shrimp and grits.

Colby Smith
I mean, this place is absolutely packed, you know, from the moment they open. And on the weekends when things really get busy, wait times are up to 4 hours for a table. In September 2020, they opened a counter-service offshoot of the restaurant. And then in April last year, they reopened this beloved Atlanta institution that had previously been under different ownership and had closed. And now, in the summer, they’re opening another location of the Atlanta Breakfast Club.

Marc Filippino
And this success means the restaurant needs more workers. The problem is, the US labour market is so tight right now, there are nearly two job openings for every unemployed person. And in Georgia, there are even fewer workers per job opening. So the owners of the Atlanta Breakfast Club had to get really creative to find employees.

Colby Smith
Every Wednesday and Thursday afternoon, they host this kind of open door hiring fair. And they advertise it as a place where prospective applicants can come by the restaurant, potentially be hired on the spot. And it’s something that they advertise on Instagram. So in a way, it offers them this kind of steady stream of potential hires. And then on top of that, they also work with a local non-profit and host this 15-week culinary training programme. And they say that they hire quite a bit from the graduating classes. One of the other tactics they use to get people in the door is offering very competitive pay and at times, you know, flexible working arrangements. That’s a very important way for how restaurants have had to kind of respond to some of these labour shortages.

Marc Filippino
So, Colby, how are other restaurants dealing with the staffing shortage?

Colby Smith
I spoke to a couple other establishments and in a lot of places demand has come roaring back. You know, people want to go out. They want to eat in restaurants again. And the biggest constraint across the board is staffing. And one restaurant I spoke to, you know, they really wanted to reopen one of their locations seven days a week, but simply couldn’t because they just didn’t have sufficient people to cover those shifts. And sometimes they’ve had to resort to adjusting menu items, either taking out labour-intensive products or perhaps offering specials where the ingredients are a little bit less expensive to procure. So in a lot of ways, this is indicative of a problem that restaurants across the board are really facing.

Marc Filippino
And this conversation that we’re having about the Atlanta Breakfast Club, it’s really indicative of the broader US labour market right now. And another thing that’s happening because of this tight labour market is that the Atlanta Breakfast Club and other companies, they’re all offering more competitive wages, higher wages. Isn’t that a good thing? You know, wages in the US have been stagnant for so long. You have to assume it would be.

Colby Smith
Absolutely. I mean, higher wages is a great thing. After, you know, as you mentioned, such a long period where people were working, you know, extremely long hours and not potentially making a living wage to a certain extent. Low unemployment across the board is a great thing. But what’s problematic is actually the pace of those wage gains. So we’re in an environment of extremely high inflation. And what you’re seeing in states across the country is the fact that some of those price increases are actually outstripping the wage gains that servers or, you know, truck drivers or, you know, other workers in other industries are receiving.

Marc Filippino
Right. So, like, if I work at, I don’t know, a grocery store, I may have to burn through a tank of gas or two tanks of gas a week. And because of rising gas prices on top of other price rises, even if the store pays me an extra few bucks an hour, I may just be breaking even, or I may even be operating at a loss. I might be losing money.

Colby Smith
Absolutely. And that’s a lot of the reason why I think you’re seeing some of these labour shortages in some industries where although you’ve seen these pretty substantive wage gains, the compensation is just not sufficient to kind of keep up with everyday costs. That’s, you know, creating this strange calculus for people where maybe it is not worthwhile to work, if that also means you have to think about childcare and some of the other expenses that you just mentioned.

Marc Filippino
Colby Smith is the FT’s US economics editor.

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Before we go, Amazon is holding its annual general meeting today. And company leaders face no fewer than 15 shareholder proposals. Amazon investors are pressuring the company on things like executive pay, tax transparency and unions. If the past is any guide, none of the proposals are likely to pass. Amazon founder and former chief executive Jeff Bezos controls nearly 13 per cent of the overall vote. Shareholders can only hope that pressure and public scrutiny will force the company to change its ways.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.

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