Mind the gap between skills and jobs

Training programs must match future demand, write Lucy Battersby and Mathew Murphy.


A failure to match education, immigration and training programs to future labour requirements is setting Australia up for a second skills shortage and constrained economic growth.

The global financial crisis barely dented Australia's employment market, although it temporarily relieved wage pressures.

Advertisement: Story continues below The workforce kept increasing throughout 2008 and fell by just 2000 in early 2009 before the federal government's stimulus packages started flowing through the economy and international growth picked up again.

Unemployment peaked at 5.8 per cent for three months in the middle of last year and has now returned to 5.1 per cent, the same level as late 2005.

However, new infrastructure projects could face significant delays unless there is an increase in skilled workers available, according to industry insiders.

Jim Hayman, the global managing partner of mining and metals for the executive search firm Heidrick & Struggles, said the pressure to secure senior project managers has already resulted in a year-on-year increase in remuneration packages of about 25 per cent.

''Companies are willing to pay thousands more to get the right person. If it means that the project isn't delayed then it is viewed as money well spent because it could save millions of dollars down the track,'' he said.

Australia's junior iron ore players have to ''think smart'' to compete with far larger rivals BHP Billiton and Rio Tinto for skilled workers.

David Flanagan, the chief executive of Atlas Iron, said the subject was ''unsurprisingly'' on the agenda when the North West Iron Ore Alliance met this week.

''This is something we look at all the time, to be honest. Our next couple of stages of growth are going to need a couple of hundred people … Some time in the next five years the Alliance projects are going to need thousands of people,'' he said. ''We fly people in from Brisbane, we fly people in from Bali, we fly people in from Kangaroo Island.''

Wages in the Atlas workforce have increased by 5 to 10 per cent in the past year, he said.

The head of the Australian Constructors Association, Jim Barrett, said skill shortages threatened the commercial and residential building sectors. The association's biannual Construction Outlook, to be released next week, is expected to highlight increasing labour market shortages.

''There are definitely going to be skills shortages and in fact those skill shortages are probably there at the moment,'' he said.

''Often people focus on lower-level skills but in fact the high-level technical skills [and] specialist project management skills … are absolutely essential to the development of a lot of these projects that are on the drawing board.''

Government-led skills programs and some private sector initiatives were alleviating supply problems, Barrett said, but there was a gulf between current training programs and ensuring workers have the right skills to plug future gaps in the economy.

For the report, the Department of Education, Employment and Workplace Relations and its statutory authority, Skills Australia, were asked in what sectors they foresaw skills shortages over the next five years.

The department's spokesman said it regularly surveyed public job advertisements to determine which skills were in short supply but did not provide forecasts.

Skills Australia's chief executive, Robin Shreeve, said shortages would be more acute in 2015 than in 2025 because of shortfalls in skills and labour supply, particularly in health care, education, mining and engineering.

Skills Australia relies on data from government sources, private consultancies and some original research but a spokesman said it did not have the resources to do its own forecasting.

Lisa Barry, Deloitte's national partner of human capital, said Skills Australia's inadequacies are partly due to ''inadequate terms of reference''.

''They put people in charge of these groups and they aren't qualified to drive them,'' she said.

''I think there are a lot of people working hard in there but it is pointless if the strategy is not robust enough. Who owns the gap? At the moment it is hard to answer that question.''

Barry said employers needed to think creatively about using staff. If the workforce was not allowed to be more flexible, Australia probably would need to double its intake of migrants to meet demand.

In March Julia Gillard, the then deputy prime minister, launched Skills Australia's report, Australian Workforce Futures: A National Workforce Development Strategy.

Setting out the path to 2025, it recommended increasing the workforce participation rate from 65 per cent to 69 per cent and lifting enrolments in higher and vocational education by 3 per cent a year.

Skills Australia was announced by the then prime minister, Kevin Rudd, in 2007 to help businesses, trainers and workers prepare for skills shortages. Barry said a greater part of the load must be shouldered by the very companies complaining about not having enough skilled workers.

''A lot of companies in the resources industry like Rio Tinto are 50-50 between contingent and non-contingent workforce,'' she said. ''For every dollar that these companies spend on recruitment and on headhunting in the same pond and driving [salaries] up, they spend four cents on training.''

The ACTU president, Ged Kearney, concurred. A chronic underinvestment in vocational education and training by employers and governments over the past decade has brought Australia to this point.

Kearney said some industries have been exaggerating the under-supply to strengthen the call to bring in more skilled migrants.

"The problem in sectors such as mining has been that employers have become far too reliant on temporary migration and the practice of poaching employees from other sectors of the economy,'' she said.

The government's proposed national broadband network is expected to add to the problem by taking 15,000 to 20,000 full-time employees when construction reaches its peak. Many workers will be employed by contractors and will need to be trained in basic cabling skills.

But the Constructors Association did not expect the broadband network to interfere with other construction projects because it was a much slower regional project requiring different skills.

NBN Co is expected to connect up to 4000 houses daily around Australia during peak construction. The job could take at least eight years.

Source:http://www.smh.com.au/business/mind-the-gap-between-skills-and-jobs-20101013-16k32.html