Deloitte Access Economics Skill shortages in the resources sector
Primary Sources Birrell and Healy
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Birrell and Healy review previous modelling conducted by Access Economics on employment demand by industry. They apply this modelling to claims by the Commonwealth Government that a high migration policy is required to support the skills requirements of the resources industry. The authors state that following the 2008 federal election, the new government increased the number of places to the skilled migration program by 33,500. It was claimed that this was to pre-empt future skills shortages, particularly in the resources industry. The new government feared that such shortages would lead to wages break-outs or bottlenecks in the construction phases of major projects by the resources sector. Following on, the government started to develop a longer-term migration planning framework which would see net overseas migration continue at an annual increase of around 180,000 to 190,000. Birrell and Healy note that the Department of Immigration and Citizenship points to work completed by Peter McDonald and Jeromey Temple of the Australian National University which reports that high migration is necessary to solve shortages in the resource industry. The authors point; however, to recent employment growth rates and state that in trade occupations these have been approximately half of that in professional roles. In delving into this further, Birrell and Healy refer to modelling completed by Access Economics for Skills Australia in 20091. In the case of the main 'Open Doors' scenario, employment in the resources industry was forecasted to grow from 157,000 in May 2009 to just over 240,000 in 2025. In contrast, the predicted demand for the health care and social assistance industry was larger, from 1.17 million to 1.73 million by 2025. As a result, the authors conclude that, based On these lower employment levels, 'employment growth in the mining- industry is of minor significance'. The authors do acknowledge .the impact of the mining industry on employment in the construction phase of major projects..Yet they also note that construction workers are also in major demand in cities across Australia. Recent data illustrates that much of the growth of employment in construction occurred in centres which are 'not major players in the resources boom'. Competition for skilled employees across industries will be fierce. Alongside the expected growth in the mining industry, the expanding services sector will promote further growth in professional and managerial employment which, in turn, will create strong demand for those with degree qualifications. As a result, under the 'Open Doors' scenario, Access Economics predicted that the proportion of employees in. professional occupations with degree qualifications will increase from 68 per cent in 2007 to 81 per cent by 2025. Compared with estimates of the projected supply of domestic residents with such qualifications, this is likely to result in a major shortage of workers with degree qualifications. In contrast, the expected growth in demand for workers with lower level qualifications will be smaller. In conclusion, the authors declare that the government's high-migration policy has little to do with the resources industry's skill needs. Instead, they argue that strong immigration is driving construction in metropolitan regions and, in turn the 'services industry whose growth is linked to these regions' populations. AS a result, demand for skilled labour in the construction and Service industries will likely remain high as migration to metropolitan regions continues. As for the resources industry, the authors argue for a smaller, more targeted migration program that is focused on skill shortages in industries which are export-market focused.
Briggs provides a high level overview of the current labour market situation in the resources sector with a particular focus on the Pilbara region in WA. Rather than conduct his own specific analysis, Briggs surveys recent analysis on the skills shortage, including projections of future demand in the region, and highlights claims by key industry stakeholders on the current situation and future limitations. Briggs highlights that the minerals and energy industry makes a significant contribution to regional Australia yet points out that skilled labour shortages will have a major impact on future growth. He reports that analysis by the Chamber of Commerce and Industry of Western Australia is referenced which predicts that in 2020, the State will likely need an extra 400,000 skilled workers. While some of this demand will be met, there will be an expected shortfall of 150,000 workers. The Western Australian Chamber of Minerals and Energy (CME) conducted a survey in 2008 of minerals and energy companies on their expected workforce demand through to 2020. It was found that projected peak demand would be in 2012 with labour demand for the year of approximately 38,000 workers. The CME reports that the regions with the highest growth in labour demand will be the Mid-West, Goldfields/Esperance and the Pilbara. Gaps across occupations and skills are likely to occur during the construction phases of projects in the Pilbara region. Briggs predicts that such demand for workers will likely be met by FIFO rotations. Briggs goes on to note the somewhat negative impact of FIFO employment on regional communities whereby the wealth created by FIFO workers is often spent in regions outside of those where the mining operations are conducted. To alleviate this, Briggs makes the point that 'it is necessary to look at options that create and support regional workforces that live close to where there is demand for their labour'. Finally, Briggs closes by discussing some of the proposed approaches by different industry groups and stakeholders. These include:
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