SHAPING AUSTRALIA’S SKILLS FOR FUTURE GROWTH National Forum on Labour Market Information Vancouver Denis Hart Employment Analysis and Evaluation Group, DEWR Canberra, Australia

Overview of presentation Australian labour market - trends and outlook Active Participation Model for employment services Industry drivers and ‘shapers’ of future jobs and skills Industry strategies for employment services Identifying and addressing skill shortages Knowledge industries – ICT skills and shortages Guiding job seekers and career explorers into jobs with good prospects – shaping careers and lifelong up-skilling Policy challenges facing Australia – and the role of LMI

Australian labour market The Australian labour market has performed strongly, with employment at a record high of 9.6 million in March 2004 Full-time employment accounted for 97 per cent of new jobs over year to March 2004 (growth of 141,000 or 1.5 per cent) The (trend) unemployment rate fell to 5.7 per cent in March 2004, the equal lowest level in two decades Forward labour market indicators suggest employment growth should continue in Australia through 2004 There are widespread skill shortages, especially for trades, but little evidence of general upward pressure on wages Teenage full-time unemployment is low (4.8 per cent of the teenage population), and there are industry concerns about finding suitable young workers for apprenticeships

Australia’s unemployment – ‘000

The Active Participation Model (APM) and Australia’s employment services A more flexible and strategic approach to employment services, implemented from 1 July 2003 Builds on strategies in Australians Working Together, such as Training Credits and Training Accounts More vacancies, and a broader range of vacancies, for job seekers on Australian JobSearch, with Job Placement organisations focusing on gathering and lodging vacancies Better matching – Vocational Profiles for job seekers on Australian JobSearch automatically matched, on a daily basis, against vacancies (using ‘smart’ technology) - around 800,000 active Vocational Profiles at present

Active Participation Model (APM) More help for those most in need: Intensive Support - customised or ‘tailored’ assistance for disadvantaged job seekers (intensity of assistance generally increases with duration of unemployment) Assistance includes training, work experience and referral to complementary programmes (eg literacy/numeracy), and access to specialist providers (eg Indigenous or mature age) Job Seeker Account (in addition to Training Account for mature and Indigenous job seekers) – a pool of funds to help disadvantaged job seekers secure work (eg training in work or ‘employability’ skills, licences, trade tools) Importantly, APM provides an approach to employment services that can respond to labour market opportunities

Job Placement Organisations Complementary Employment and Training Programmes Job Network Centrelink Active Participation Model Job Seeker Disability Employment Services/ Personal Support Programme 2 working days Job Seeker Account Service Guarantee National Jobs Database Jobs

Where are the future job opportunities? Industry ‘drivers’ of future employment growth are clustered around business services, health and community care, hospitality, retail and education Challenge for employment services – to help the unemployed, those returning to the workforce, and disadvantaged job seekers (eg mature age) to access jobs, and address skill needs and shortages, in these growth areas Involves LMI – understanding the changing nature of jobs, skills needed, barriers to entry and ways of helping the unemployed be more ‘job ready’ for these growth areas Way forward – working with industry and government agencies at the regional level to develop strategies for job seekers, including special groups

Employment growth by industry indexed (1987 to 2004)

Share of projected employment growth by industry to (per cent)

Key growth industries – annual new jobs to (‘000)

Industry strategies for employment services Why? Low unemployment, skill shortages for many skilled occupations and growing industry reports of difficulties in recruiting less skilled occupations Better job prospects for our clients – employment opportunities in growth industries, while helping to meet industry skill needs Low skill entry level barriers for most jobs, yet the Job Network share of vacancies filled appears low for some sectors Recognition of different skill needs of industries, and helping job seekers to be job ready for these industries Active Participation Model provided the flexibility needed to develop and implement targeted strategies

LMI and industry strategies Short analytical papers were prepared for selected industries (eg. retail, health, hospitality and manufacturing) covering: Number of businesses and employees by firm size Employment level and annual change (indicator of cyclicality) Skill level – educational profile for industry Main occupations and age profile for industry New apprentices in training by age group Information on skill and recruitment issues and ‘ideas’ for the way forward for industry strategies Follow-up LMI has included more detailed industry profiles and research into specific occupations (eg aged carers)

Selected industry initiatives Hospitality (accommodation, cafes and restaurants) Pre-employment courses, with a focus on indigenous job seekers Employment Innovation Fund - Tourism Training Australia Pre-vocational commercial cookery course in regional centre Health and community care Recruitment and training for work in aged care facilities Best practice recruitment and training strategy for South Australia Survey of aged care providers (in Western Australia), to identify recruitment and training issues Investigating linkages to assist with training and recruitment of qualified child care workers

Selected industry initiatives Retail Industry body identified skill shortage, and provides training and work experience for ‘trainees’ referred by Job Network member Road transport “Ready for the road” pre-vocational training, placement in jobs (training cost shared with industry through Job Seeker Account) Manufacturing and regional Meetings between Job Network, industry bodies and training providers to improve New apprenticeship take-up Developing strategies for large recruitment by a food processor in Eastern Victoria, including participation in pre-vocational course

Skill shortages in Australia Where are the skill shortages? Shortages are widespread in the trades: eg automotive, chefs and cooks, engineering, electrical and (some) construction trades For professionals, skill shortages are mainly evident for nurses and health specialists (eg pharmacist, physiotherapist), child care workers, accountants and civil engineers Why do skill shortages matter? Skill shortages can impede industry growth and innovation (and cause upward pressure on wages) and affect the reliability and quality of services (eg health services) Information on skill shortages can: Help to understand the nature and causes of skill shortages, develop industry-led and employment service strategies, guide education planning and target skilled migration

Skill shortage research in Australia Skill shortages exist ‘when employers are unable to fill or have considerable difficulty filling vacancies for an occupation’. Skill shortage research in Australia is built around this definition Core of research is (telephone-based) Survey of Employers Who Have Recently Advertised (SERA) – focus on recent recruitment experience (follow-up of job advertisements) Employer survey provides (for each state) data on % of vacancies filled and the number of total/suitable applicants per vacancy Data on training commencements and completions, migration, vacancies, employment and industry demand are analysed State prepares reports, guided by an agreed ‘template’, and provides a skill shortage rating for each occupation Teleconferences are used to consolidate findings and national and state skill shortage lists are then prepared

Nature and causes of skill shortages Conceptual approach distinguishes between ‘skill shortages’, recruitment difficulties and ‘skill gaps’ (existing workers) Shortages are often for specialised skills within an occupation, and these are identified in the skill shortage lists ‘Wastage’ (workers not using qualifications) and non completion of education and training contribute to shortages Training levels for some occupations are not adequate to replace workers leaving the occupation Ageing of the workforce is an emerging concern about future shortages, and the impact will vary across occupations For Australia, in per cent of the population were aged 65 years and over: this rose to 13 per cent in 2004, and is expected to rise to 20 per cent by 2023.

‘Wastage’- Chefs/Cooks labour force status - years since qualification

Ageing of the workforce % aged 45 years and over

National Industry Skills Initiative (NISI) Initiative grew out of a desire to target New Apprenticeships more effectively to address skill shortages faced by industry Industry-led skill shortage working groups, managed by the Department of Education, Science and Training Working groups tasked with identifying skill shortages, and developing action plans to address shortages Our reports on employment for each industry (eg automotive trades, retail, engineering) were complemented by training data from National Centre for Vocational education Research Information gaps were addressed through targeted research (eg why workers leave occupations, specialised skills in shortage) Strategies include improved career information NISI has now been replaced by the National Skills Shortages Strategy, and a new website:

ICT skill shortage research Mix of employer survey and survey of Information and Communication Technology (ICT) recruitment companies, since most ICT advertising is through specialist recruiting firms Skill shortage ratings, for each state, for around 80 specialised ICT skills – in Australia, in a six month period, approximately 3,000 different ICT skills are advertised! Reports draw from surveys and industry reports on demand and supply trends. Detailed results are on workplace.gov.au (with a power point presentation of findings and employment trends) Supported by an ICT vacancy index (weekly updates), based on advertisements on ICT online recruitment sites ICT nomenclature – project for identifying ICT occupations, to provide better information on the ICT labour market

Skills for growth To enhance future skills and economic and employment growth, countries like Australia need to use LMI effectively to guide workers into good jobs: job seekers, youth in education, those returning to the workforce and those seeking a change in career What occupations will experience growth? Which occupations will provide good job prospects and future careers? A small number of Professional occupations are among those with the largest future (numerical) growth – ICT Professionals, Accountants and Registered Nurses The largest generators of new jobs are less skilled and VET oriented occupations: eg Sales Assistants, Office Assistants, Waiters and Aged and Disabled Carers Long-term job growth is evident for Professionals and ‘service- oriented’ skills, but little growth for Trades

Indexed employment – selected occupational groups

Strongest growth occupations (% pa to )

Largest growth occupations (‘000 to )

JOB PROSPECTS In assessing job prospects DEWR examines: Projected employment growth for the next six years (including our projections – adapted from the ‘Monash’ model) Recent/historical employment trends (up to ten years) Whether the occupation is employed in growth industries Unemployment rate for the occupation Vacancy trends and graduate employment outcomes Whether there are skill shortages Job turnover - the number of workers leaving the occupation (job opportunities for new workers) and total vacancies Expected occupational developments – structural change and the impact of technology, including new products

Unemployment rate by highest educational qualification (%)

Meeting future skill needs - in the Ageing Age of Knowledge New industries, built around new technologies and growing demand for services, will continue to emerge and grow Skill demand will continue to shift from occupations to highly specialised skills – ICT skills are a forerunner New and evolving technologies (eg ICT, self-service retail, biotechnology, distance learning, nanotechnology) will impact on how we live and work and industry skill needs Lifestyle changes from higher incomes will impact on working arrangements. Work and life will be more intertwined. The global influence on our lifestyle will rise, and countries will compete more strongly for skills. Ageing of the workforce, in Australia, will impact progressively on the availability of skills, and on future skill shortages.

LMI : challenges and policy links Forward-looking information on skills can inform the employment and education markets and achieve a better match between future skill demand/supply and lower unemployment Vital to shape the discipline mix of higher education and the future directions for vocational education and training Employment services: LMI is playing a role in employment strategies. Better data on ‘skills for jobs’ and regional skill needs are needed to achieve effective strategies Welfare reform: need to assist the transition to jobs in growth industries for those in receipt of income support Flexible and responsive workplace relations policies are important to address skill shortages and ageing of the workforce Fine tuning of skilled migration requires good information on emerging skill needs, and advice on ‘persistent’ skill shortages.