Banning unvaccinated workers could impact our economy

Tim Hext, Pendal

22 September 2021

As Melbourne construction workers protest mandatory vaccinations, investors may want to consider how a ban on unvaccinated workers could impact the economy, says Pendal's Tim Hext.

THIS WEEK has been relatively quiet for bond markets, despite an attempt at excitement around China.

I learnt long ago that little happens by accident in China.

The government has the ability and the smarts to control what is going on. Letting Evergrande wobble is more about sending a message than a misguided step that will send the economy into freefall.

Of course the usual chorus line of doomsdayers have lined up to predict just that.

I am not one of them.

Maybe eventually they do stumble, but you'll go broke betting on it long before then.

The impact of banning unvaccinated workers

Our attention is more focused on what is happening domestically - in particular the how and when of re-opening in NSW and Victoria. 

The area of concern for us is how unvaccinated workers are treated.

The concern is less ethical - I will leave readers to their own views - but what it means for the workforce.

If one in ten workers end up unvaccinated, whether for health or personal reasons, their potential exclusion will have a significant impact on the supply side of the economy.

Most employers are currently awaiting government guidance, but until rapid testing is widely available it seems many will be banned from working.

The demand side of the economy is likely to return quicker than the supply side.

We are increasingly confident that 2022 will see higher - not lower - inflation and the RBA will be tested on its benign view.

Wages should also pick up faster.

Future inflation as measured by markets remains stuck around 2%, which to us provides an opportunity.

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