Skills shortages present major threat

skills shortages present a major continuing and esca lating threat to the competitive ness and future viability of Australia’s manufacturing industry.

A recent Australian Jobs 2010 report from the federal depart ment of Education, Employment and Workplace Relations advises that as the Australian economy strengthens after the global recession, the demand for skilled workers is growing, and that a highly-skilled work force is needed to secure our economic growth.

Further, the recent National CEO Survey, Skills Shortages: A High Risk Business, undertaken by the Australian Industry Group (Ai Group) and Deloitte, found that skills shortages are an imme diate concern to business today and this concern is expected to exacerbate in the mid-term.

Nearly half of all businesses in the survey are giving the manage ment of skills shortages a high or top priority as major risks are foreseen in relation to production and service delivery.

Ai Group chief executive, Heather Ridout, believes that though skills shortages have been around for some time, they are set to intensify in the coming years and are arguably the number-one threat to our economic growth.

“While companies learnt painful lessons from past down turns and hoarded their skilled staff, the magnitude of the prob lem today requires new strategies and renewed effort at a whole new level,” Ridout said.

“Of particular concern is that shortages are intensifying in occu pations associated with manufac turing, construction and engineer ing, which are pivotal to the Australian economy. These occu pations are based on skills which have a long development lead time, are in high use across the economy, and whose absence puts industry at high risk.

“Industry considers that manag ing skills shortages is a high prior ity, but they also believe that investing in skilling is a shared responsibility between govern ment, business and individuals.” The survey revealed that many companies were forced to reduce staff during the downturn, so there is no ‘fat’ to cover skill shortages. Others are concerned about the impact of skilled employees entering retirement over the next few years.

Suggested government reforms include additional financial incen tives for small businesses, tax breaks for training expenditure, and making trade apprenticeships more attractive to both individu als and business.

The survey noted significant dif ficulties filling vacancies for metal fitters and machinists, engi neering professionals, metal cast ing, forging and finishing trades persons, and structural steel and welding trades workers. By far the most popular response where a vacancy could not be filled was to upskill existing staff, followed by outsourcing or sub-contacting the work, or redesigning jobs around available skills.

It was found that 39.7% of com panies surveyed expect not to be able to find people with the spe cialised skills needed for their workplace. For some companies the risk will increase between 2010 and 2015 due to the impact of the ageing workforce.

Strategies being adopted to address current and anticipated skills shortages include imple menting a longer term strategy to train the next generation and especially putting effort into apprentices, developing a plan to multi-skill by training existing workers, and considering increas ing wages and pay for perform ance to retain skilled workers.

Victorian Employers Chamber of Commerce and Industry (VECCI) senior manager employment edu cation and training, Andrew Rimington, points out that 30% of the workforce is now over 45 years old with developed skill-sets fought over by their employers, yet workers younger than 25 years old only account for 17% of the workforce.

“So who is going to fill the gap as the older workers seek retire ment, or scale back their work commitments, or exit the work force altogether? This means there will be a gap in labour sup ply as well as growing skill short ages across all industry sectors, which will have a particular impact for employers in the manu facturing sector,” Rimington said. “Many employers have not under taken an analysis of their business to determine the impact of the ageing workforce, and are unaware of future impacts of retirement, occupational capacity restrictions, and the need for training and skilling to meet suc cession planning requirements.

“VECCI participates in the Manufacturing and Engineering Skills Advisory Board (MESAB) and each year the Board com pletes an economic outlook for its industry sectors. The report for 2010 was compiled in partnership with ACCESS Economics and determined that fitters, toolmak ers, aircraft maintenance engi neers (avionics and mechanical), and metal fabricators and welders are occupations experiencing a critical skills shortage. Occupations in continuing demand include boat builders, mechatronics tradespersons, welders, and production and process workers.”

Rimington says that when look ing at the ongoing demand for par ticular skills, as well as the reducing number of employees, a number of factors should be considered.

“Survey data and anecdotal feedback indicates that many busi ness operations have restructured and introduced leaner manufactur ing processes as well as trimming business costs during the GFC. Also, there is still an apparent trend to move to off-shore produc tion to remain competitive in glob al markets,” he said.

“Another factor is the introduc tion of new technology and process es as a means to lift overall produc tivity, and there has been a consid erable increase in using Australian Apprenticeships to increase skill levels of existing workers while the overall level of traditional trade apprenticeships has remained stat ic or declined in some sectors.

“An issue here remains the gen eral level of inflexibility of train ing providers to meet employer requirements. A comment from MESAB that many employers would engage apprentices if providers were more responsive is a concern at a time of growing skill shortages. Restrictions being imposed in terms of particular days or weeks of block release do not necessarily suit employer requirements in meeting produc tion targets. The Commonwealth Government, in an attempt to increase the overall training effort, has introduced the Apprentice Kickstart Incentive by way of addi tional funding support for busi ness owners with less than 200 employees. The incentive applies for any apprentice under 19 years of age undertaking a Certificate iii or iv in a skills shortage trade occupation (on the National Skills Needs List) and employed before 12 November this year. Employers should take advantage of the additional funding to help them address the looming skills crisis.”

Australian Manufacturing Technology Institute (AMTIL) chief executive officer, Shane Infanti, says the issue of relevant skills for our manufacturing sec tor continues to be one of high importance. “As the ageing work force hits a level where we have more people leaving the industry than we have being attracted to it we will continue to have a short age of skills. This requires a signif icant focus to be put into promot ing our industry as a potential long-term career for our younger generation. Government and industry need to work together to ensure this happens,” Infanti told .

“The identification of skill gaps is a slightly different issue. This is where we have a gap between the skill required to perform a job to international standard and the actual skill currently employed. The solution to this problem is to make sure the relevant training in place meets the needs of the employer and industry in general, and to then ensure that the compa ny actually invests in this training.

“More often than not, businesses account for training within their profit and loss report and therefore see training as an expense. We need to change the mindset so that the upskilling of our workforce is seen as an investment, otherwise we will continue to battle the issue of skill gaps within the manufac turing sector and never be able to move forward.”

Australian Manufacturing Workers’ Union national projects officer, Ian Curry, observes that skills shortages are once again emerging as a serious capacity constraint in manufacturing and engineering specifically.

“We believe that the sectors most vulnerable are those dependent on key technical skills associated with engineering plan ning, design and drafting, and those requiring key engineering trades in fabrication and welding, diesel mechanics, and mechanical maintenance trades. These gener ic technical and trade disciplines are, and will continue to be, in high demand across a range of industry sectors and the economy is yet to demonstrate a capacity to gear training to meet replacement rates,” Curry said.

“Our training system needs to be refocused to the delivery of vocational skills for jobs in the context of employment. More competition in the training sector is not the answer, and the States need to revert to managing their training systems, not just their training budgets.

“We are concerned about the rash of quick fix fads emerging as solutions, none of which address the key issue; that being the need to give proper attention to the development of sustainable voca tional skills through an integrated combination of work and learning, as is found in the traditional apprenticeship/cadetship model.

“The training reforms of the eighties need to be completed, which will require genuinely put ting industry at the centre of the skills and workforce development system and having regard for the standards that industry sets.”