The Skilled Labour Crisis

Much is made in the Australian media about the best way to address our Nations’ growing skills shortage crisis. Although, it has become a hot topic politically, it is clear that skilled migration must form at least part of the nation’s response to this challenge. The following article explores the benefits of skilled migration relative to other strategies available. In future contributions I intend to provide more practical advice about how to implement a skilled migration strategy whilst avoiding some of the most common pitfalls.

Solutions for the Skilled Labour Crisis

Skills shortages can be mitigated using a variety of techniques. In the short term, wage increases can be implemented to attract workers from similar occupations or other industries. However, this measure only works for the targeted occupations and doesn’t address the underlying problem.

Training as a solution

One medium to long-term solution to skills shortages is increasing access to training for occupations that face shortages. This can lead to a larger pool of labour supply as some people who are not in the labour force elect to be trained and join the workforce. However, increases in training can also lead to occupation swapping, which may simply transfer a skills shortage from one occupation to another. For example, a shortage of auditors may prompt an increase in auditor education and training, which may attract accountants. The end result may be a reduction in the shortage of auditors, but a shortage of accountants.

Much has been made of the value of training as a means to alleviate demand for skilled labour. However, there is a significant lag (13 years to train a doctor, 4 years for an apprenticeship, 6 years for a masters qualified engineer) for candidates to gain their qualifications and enter industry. Even when they do eventually enter the workforce, they do so with limited practical or industry experience and require close support and further training.

In addition to this delay, there is a significant drop-out rate with all forms of training ;

  • Less than 50% of trainees complete their qualification
  • Only 60% of traditional apprentices complete their qualification
  • Between 20-25% of university students do NOT complete their degree

Source: Australian Vocational and Training Statistics

Qualifications in demand by 2015

The growing skills shortage has been forecast in detail by DEEWR. The skills they anticipate will be most in demand by 2015 include;

  • Occupations that require a bachelor degree or higher are expected to grow by 440,200.
  • Occupations that require a Skilled VET qualification are expected to grow 93,500.
  • Occupations that require a Certificate II & III is expected to grow 301,400.

Industry Growth by Sector to 2015

Skills Australia predicts that Australia will have 9.3 million additional job openings by 2025. 4.8 million by economic growth and 4.4 million as a result of workers leaving the workforce. DEEWR has forecast specific industry employment growth over the next four years and has identified the following requirements:

  • Health Care and Social Assistance is expected to increase by 211,500 positions.
  • Construction to increase by 120,800 positions.
  • Education and Training will increase by 119,000 positions.
  • Professionals, Scientist and Technical Services will increase by 111,200 positions.
  • Retail will increase by 106,600 positions.
  • Accommodation and Food Services will increase by 79,000 positions.
  • Transport, Postal and Warehousing will increase by 67,000 positions.
  • Public Administration and Safety will increase by 45,200 positions.
  • Financial and Insurance Services will increase by 33,300 positions.
  • Mining will increase by 28,400 positions.

Some of these additional jobs may be filled by reskilled or upskilled workers. However, it is clear that with our aging population, the nation is simply not going to be able to meet the growing demand for skilled labour detailed in the forecasts above. As such, over the past decade, Australia’s migration policies have increasingly emphasised the importance of attracting skilled migrants. By attracting skilled migrants, the pool of skilled labour is increased, and this also relaxes some of the upwards pressure on wages that has existed in pockets of the Australian labour market.

Why skilled migration?

Skilled migration provides considerable benefits and clearly must play a significant part in our response to labour market shortages:

  • It helps the nation respond quickly to fill shortages while training programs are implemented.
  • Helps achieve a better balance between experience and skill, energy and diversity.
  • Removes labour market bottlenecks created by localised booms.
  • Lifts productivity and increases labour flexibility.

Skilled migration helps provide the right workers at the right time and right place. If Australia is to continue to prosper up until 2015 and beyond, it simply must be a part of the nation’s strategy to address skills shortages.

For Further Reading:

This article was written by a special guest contributor, Darren A Nelson. Darren is the Managing Director at Global People Solutions  P/L.

[email protected]

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