Deloitte Access Economics Skill shortages in the resources sector

Technology and Industry Advisory Council

Report name:	Managing Western Australia’s Economic Expansion: The Need for People and Skills
Date:	March 2010
Author:	-
Publisher/Industry/Government affiliation:	Technology and Industry Advisory Council
Subcontractor involved:	ACIL Tasman
Primary/Secondary research	Primary
Key sectors	Minerals and energy industry with a focus on Western Australia

This report by the Technology and Industry Advisory Council documents findings from investigations into the causes and future projections of skilled labour shortages in WA.

Key issues that have been highlighted during the current skills shortage include:

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  The ageing labour force, which will play a role in the tight demand-supply balance in the future.
  
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  Off-shoring of jobs - The scarcity of skilled labour has led to rising real wages so further constraints on commodity prices may place pressure on employers to source labour from elsewhere and this may result in an acceleration of 'off-shoring' jobs to overseas workers.
  
• 
  Higher wages have promoted school leavers to forgo higher education and commence employment immediately. As a result, WA has a poor ranking in the proportion of employees working in higher skilled occupations.
  
• 
  A need to further adapt and develop the current training system - particularly associated with the ageing labour force.
  

The Council looked at long-run projections of economic growth in the State and the expected impact on labour demand. It found that the demand for labour will grow faster than the State's ability to supply workers from natural population increases and current migration plans.

The Council estimated WA's total job openings will be at least 460,000 over the next 9-10 years. Compared to new entrants into the workforce, the demand-supply balance under such conditions is likely to remain tight. Table 1.15.1 below illustrates the required demand by 2016 and assumes a 2 per cent annual growth rate in new jobs.

Total_new_entrants_required_by_2016'>Table 1.15.1 Total new entrants required by 2016

Occupation (Major Groups)	Net Replacement	New Jobs	Total Job Openings
Managers and Administrators	14,509	19,074	33,583
Professionals	28,286	40,987	69,272
Assoc. Professionals	25,272	28,307	54,059
Tradespersons & Related Workers	31,241	30,974,62,216
Advanced Clerical & Service Workers	5,699	7,184	12,883
Intermediate Clerical, Sales & Service Workers	43,040	37,209	80,250
Intermediate Production & Transport Workers	16,032	20,150	36,182
Elementary Clerical, Sales & Service Workers	50,398	20,824	71,222
Labourers & Related Workers	24,707	19,303	44,010
Total	239,665	224,011	463,676

The Council also found evidence of skills shortages arising from a general labour shortage. This is despite the State's labour supply generally responding well to increased demand for labour.

The report detailed that WA has an insufficient skilled workforce across a wide range of key occupations, particularly amongst skilled tradespersons and technical personnel. The Council referred to the job vacancies by major skills groups for selected years, as shown in Figure 1.15.1 below.

Figure 1.15.1: Vacancies by skill, WA


Note: Skilled occupation groups chosen on the basis of highest average vacancy rate, for 1981-2008.
Source: DEEWR

The Council thus recognised a long-term dependence on immigration and a need to develop the domestic workforce. As a result it is supportive of increasing immigration with a particular focus on increasing the intake of overseas students.