1. CEAV Forum Skill Shortages – Myth or Reality? 23 April 2009 Michael Taylor – Policy and Projects Manager Australian Industry Group

2. Overview …  an introduction to skills shortages  the state of the economy  business skilling intentions  green skills  skills shortages and schools

3. Definitions ? Skills shortage is: “a situation in which there are unfilled vacancies in positions where salaries are the same as those currently being paid to others of the same type and quality” OR “a market disequilibrium between supply and demand in which the quantity of workers demanded exceeds the supply available and willing to work at a particular wage and working conditions at a particular place an point in time”

4. Key Definitions – Skills Shortages  employers are unable to fill, or have considerable difficulty filling, vacancies for an occupation (or specialised skill needs in the occupation) at current levels of remuneration and conditions of employment, and reasonable location  typically for specialised and experienced workers  can coexist with relatively high overall unemployment in the occupation  an occupation may be assessed as in shortage even though not all specialisations are in shortage  occupations may be in shortage in some regions and not in others

5. Key Definitions: Recruitment Difficulties  employers have some difficulty filling vacancies for an occupation  may be adequate supply of skilled workers but employers are still unable to attract and recruit sufficient suitable employees  difficulties due to characteristics of the industry, occupation or employer - relatively low remuneration - poor working conditions - image of the industry - unsatisfactory working hours - location hard to commute to - ineffective recruitment - firm-specific and highly-specialised skill needs

6. Key Definition: Skill Gaps  occur where existing employees lack the required qualifications, experience and/or specialised skills to meet the firm’s skill needs for an occupation  may apply to new employees, where employers are unable to find suitable applicants for an occupation and recruit workers who need further training and/or experience to meet the firm’s skill needs for the occupation

7. Classification of Skills Shortages Level 1 Shortage Few people with essential technical skills not using them and long training time to develop skills. Level 2 Shortage Few people with essential technical skills not using them but short training time to develop skills. Skills Mismatch Sufficient people with essential technical skills not already using them but not willing to apply for vacancies under current conditions. Quality Gap Sufficient people with essential technical skills not already using them are willing to apply for vacancies but lack some qualities employers consider important.

8. Causes of Skill Shortages  general under-investment in skills development  rapid structural change combined with low levels of overall unemployment  cyclical surge in employment in part of the economy  particular weaknesses in the training system

9. Increased Supply of Skill  increasing the hours worked per worker  increasing proportion of qualified workers to actually work in the occupation  increasing the intensity of work and efficiency of use of scarce skill * Increasing the number of people recently trained in the skill is only one way to increase supply.

10. Skills Shortages ‘Lists’  National Skills Needs List (NSNL) Identifies trades deemed to be in national skill shortage based on DEEWR research  Migration Occupations in Demand List (MODL) DEEWR advice to the Department of Immigration and Citizenship re categories for skilled migration

11. Trade Training Centre Guidelines 3.2 Eligible training qualifications Schools must only submit applications to deliver the Program’s eligible training qualifications in order to receive Program funding. Eligible training qualifications for Trade Training Centres with the highest priority under the Program are the following Australian Qualifications Framework (AQF) qualifications: –AQF Certificate III or above qualifications in traditional trade occupations experiencing skills shortages; –AQF Certificate III or above qualifications in emerging industries; and –other eligible AQF Certificate III qualifications as outlined in Sub-section 3.2.3.

12. Importance of skills to remain competitive World Class Skills for World Class Industries Report, May 2006

13. Qualifications for jobs and the qualification profile Potential qualifications pathways for jobs % of employment Jobs that currently and potentially have a university pathway24.0 Jobs that currently and potentially have a VET pathway62.3 Jobs not requiring qualifications13.7 Current qualifications profile of the population % of 15-64 population University qualifications20.0 VET qualifications29.9 No qualifications50.1

14. Fastest Growth Areas

15. Current Economic Picture as reported in the National Accounts …

16. Employment is forecast to fall, pushing unemployment to beyond 6% in 2009 …

17. Business Skilling Intentions for 2009 Ai Group’s latest survey results:  250 companies  Manufacturing, Construction, Services  $21.1 billion turnover in 2008  48,000 staff in 2008

18. Impact of economic downturn on business and skilling efforts

19. Planned training expenditure for 2009 compared to 2008

20. Reasons for reduction in training expenditure

21. Skills shortages 2008 compared 2009

22. Expected 2009 skill shortages by occupation

23. Approaches to meet skill needs in 2009

24. Skill implications of the green economy…..  Green skills’ required for up to 3.25 million workers in sectors that have a ‘high environmental impact’  Combination of new technology and ‘re- tooling’ for existing technologies

25. Green skills confidence levels

26. Occupations needing green skills improvement

28. Teenagers not engaged full-time 13.8% (or 196,200) teenagers not in full-time learning or work.

29. It’s Crunch Time: engagement  13.8% of teenagers not fully engaged  22% of young adults not fully engaged  526,000 or 18% of 15-24 year olds not fully engaged  306,000 or 11% of 15-24 year olds unemployed, underemployed or marginally attached to work

30. It’s Crunch Time: attainment  School or Cert III completion rate of 81 percent  Relatively static for more than a decade  Indigenous completion at half this rate  25-34 yo: 20th in OECD for school completion  46% of school leavers not in post-school study  47% overall traineeship completion rate  60% traditional apprenticeship completion rate  Early leavers profoundly disadvantaged in Australia

31. Skill shortages and school completion rates  Supply of VET qualifications remains the same as 2005 there will be a shortfall of 240,000 jobs over the next decade  To meet this shortfall net completions need to increase by 2% pa for a decade  Australia’s rates have barely shifted over the last 15 years

32. Why do schools and industry need to work together? Key social and economic factors:  Globalisation  Knowledge economy  Skills shortages  The need for a new workforce

33. It ’ s Crunch Time policy goals Subject to their ability, every young Australian will:  attain Year 12 or an AQF III qualification  be engaged in full-time work or learning or a combination of these  be provided with the resources, relationships & integrated pathways to achieve these outcomes

34. Some Targets  85% of young people leaving school or complete Certificate III by 2011 increasing to 90% by 2015  more than 90% of teenagers (15 – 19) participate in full-time study, full-time work or a combination by 2011  more than 85% of young adults (20 – 24) participate in full-time study, full-time work or a combination by 2011

35. Final Comments … Myth or reality?  a complicated notion – term is often used without precision  despite this, it is no myth – very real  skill shortages can co-exist with increasing levels of unemployment  new employment opportunities emerging in the green skills economy  schools and their programs can have little impact on skills shortages  the focus needs to be more effective support for young people making the transition to training and the workplace