Deloitte Access Economics Skill shortages in the resources sector

Institute for Minerals and Energy Resources

Report name:	Mining employment in SA – exploration and exports boom but what about jobs?
Date:	March 2011
Author:	John Spoehr & Simon Molloy
Publisher/Industry/Government affiliation:	Institute for Minerals and Energy Resources
Subcontractor involved:	-
Primary/Secondary research	Primary
Key sectors	Minerals and energy industry with a focus on South Australia

The authors address the issue in South Australia (SA) that has arisen following the GFC where employment levels in the state haven't recovered to their pre-crisis levels. They offer some suggestions for explaining the relatively low level of employment at a time when mining industry activity is set to increase.

In recent years/while employment has more than doubled in the other mining states of WA and QLD, the authors find that this has not been the case in SA despite rising miffing activity. The authors rule out a rise in productivity being a cause of the low employment levels. Instead, they find that productivity in SA has been falling as commodity prices have risen (and hence, mining output measured in monetary terms has risen), mine quality has been depleted and investment has been high.

As for skills shortages, the authors contend that current statistics do not represent the true extent of labour demand in the market. Mining employment could be understated with contractors used by the mining industry also being utilised by other industries such as construction and infrastructure which could lead to confusion when the ABS statistics are compiled.

Overall, the authors find that there is not enough information available to answer the question on why, ‘in the face of rising activity in the mining sector, do we observe static or declining employment?’. A number of questions are raised which need to be addressed in order to answer this paradox. These revolve around the level of labour productivity, the reliability of available statistics, the extent to which the increase in output value is due to rising commodity prices or physical output.

9. Institute for the Study of Labour

Report name:	Was there a Skills Shortage in Australia
Date:	December 2009
Author:	P.N. (raja) Junankar
Publisher/Industry/Government affiliation:	Institute for the Study of Labour
Subcontractor involved:	-
Primary/Secondary research	Primary
Key sectors	Minerals and energy industry with a focus on Australia, Western Australia and Queensland

Junankar explores whether a skills shortage has existed in Australia and, in particular, QLD and WA. He looks at the concept of a skills shortage and the various responses by interested parties.

Junankar juggles between alternate definitions of a skills shortage based on theory and what occurs in practice. He also looks at how the market responds to reduce the impact of a skills shortage, whether it is via raising wages, improving longer term working conditions, retraining unskilled workers or becoming more capital intensive.

Junankar uses the vacancy to unemployment ratio as an index of the shortages of labour in which he finds that labour shortages were very noticeable in QLD and WA since 2001.

In conclusion, Junankar reports that due to the difficulties in defining a skills shortage, government policies on targeting one will not be easy. He recommends that the government should not be focusing on migration as a short-term solution and instead should be relying on appropriate education and training opportunities for current citizens.

10. Mining Industry Skills Centre

Report name:	Resources Industry Heartbeat Project Report
Date:	2009
Author:	-
Publisher/Industry/Government affiliation:	Mining Industry Skills Centre
Subcontractor involved:	-
Primary/Secondary research	Primary
Key sectors	Australian Mining

The Mining Industry Skills Centre's Heartbeat Project is a national assessment that aims to 'facilitate workforce planning at an industry wide level, so that investments and Strategies can be targeted to ensure a sustainable and productive resources industry workforce for the future'. The report on the project provides an aggregate view of workforce profiles based on consultations and input from nine resources companies across 16 critical job roles.

An initial workforce profile was identified and consisted of an assessment of turnover and demographic measures for the 12 months to end-June 2008.

Turnover trends identified within the report were:

• 
  Consistent with the demand for experienced employees, senior electrical engineers had a significantly higher turnover than electrical engineers
  
• 
  Employee departures tended to be at the initiation of the employee, not the organisation.
  

Demographic patterns identified included:

• 
  Electrical engineers, environmental scientists, metallurgists and mine engineers had
  
• 
  comparatively lower length of service and younger age profiles than other roles while the demand for experienced professionals in these roles remains strong
  
• 
  As a result of increased retirements, several trade roles are likely to lose significant knowledge, skills and experience. Boilermakers were identified as being at the most risk
  
• 
  Open cut examiners and training coordinators have the greatest risk of high retirements which is of concern given the amount of experience and training they require.
  

The Centre's Strategic Leaders Group also identified five critical skill sets. Key challenges were identified for these skill sets and are listed below.

1. 
   Geoscientists:
   

1. 
   Low length of service and young age profile combined with industry concerns around experience levels underscores the importance of workforce development strategies to ensure an adequate pool of workers
   
2. 
   The declining number of graduates is a long-term concern.
   

2. 
   Mine surveyors:
   

1. 
   Small workforce size and low numbers of graduates provides a narrow pool from which future expansions can draw
   
2. 
   Current and ongoing demand growth will create future supply challenges.
   

3. 
   Mining engineers:
   

1. 
   Low retention of engineers within the industry with 80 per cent of all new job opening having arisen from engineers leaving the occupation and moving into managerial roles
   
2. 
   Limited numbers of experienced engineers.
   

3. 
   Fitter mechanics and electro-technical trades:
   

1. 
   Moderate risk of loss of productivity due to expected increases in retirements.
   
2. 
   Technological change will require ongoing updating of knowledge and job requirements
   
3. 
   Greater focus on training is complicated by moderate levels of inter-company mobility which may reduce the investment return,
   

The analysis also identified from participating organisations roles that had proved difficult to fill. These are listed (and ranked from most to least permanent vacancies) below in Table 1.10.1.

Table 1.10.1: Roles identified as being difficult to fill

Rank	Skills Set	Rank	Skills Set
1	Diesel mechanic/diesel fitter mechanic	11	Boilermaker
2	Mining engineer	12	Electrical engineer
3	Geologist	13	Fixed plant fitter
4	Open cut examiner	14	Electrical engineering manager/electrical engineer in charge
5	Dragline operator	15	Deputy/assistant underground mine manager
6	Auto-electrician	16	engineer/engineering geologist
7	Electrical fitter mechanic/electrician	17	Environmental scientist
8	Health & safety personnel	18	Metallurgist
9	Mine Surveyor	19	Instrument fitter
10	Training coordinator/manager

11.