Saturday, June 3, 2023

Labour shortage

Recent stories

Even with the current economic uncertainty, if you think the skilled worker shortage problem was all COVID-19 driven and will self-correct over time, then think again.

Australia’s labour shortage has been building for some time and it’s not just confined to our shores, it’s a problem being experienced across the developed world – in the USA, UK, Singapore and Malaysia – and it’s here to stay.

Skilled labour

According to a recent study, 87 per cent of global employers admit that they are currently struggling with skills gaps issues, which is probably why your machinery dealer is telling you that the wait on new equipment is anything up to two years.

At our current unemployment rate of 3.4 per cent Australia has 400,000 unfilled jobs which is pushing wage rates up.

So, what’s driving this worker shortage when the globe has just ticked over 8 billion people, a quarter of them speak English and many would move to take a higher paying job?

The first and obvious point is most of the globe’s population resides in developing countries and it’s not that easy to walk, swim or paddle across borders into a developed country to fill the jobs vacuum.

For those that do make it, there is the challenge of getting a working visa or green card to make them legal. For those lucky enough to navigate that challenge there is the need to have the language skills to work as the bell boy, the technical skills to work on the front desk or the qualifications to be a chef.

Jump all those hurdles and the barriers into the job market remain strong. Unions work hard to ensure the demand part of the labour equation always outstrips supply.

Even for those who get past the unions there are always specific Australian qualifications that are needed in the form of the growing number of safety tickets or passing the local licensing exams – all of which help reduce the numbers of skilled workers.

Even semi-skilled occupations have barriers to entry: For example, to drive a road train you need to have held a car license for three years and a heavy rigid license for a year.

Then there is the simple fact that some jobs are just not appealing to some people. Again, road truck driving, even with annual salaries of between $100,000 and $120,000, there are few takers from the post Generation Ys (1996), in part this is because the lifestyle does not appeal to a younger generation with more options available to them.

Life on the road is not the calling it used to be, nor is life in the bush, or the appeal of a country town (unless it’s Margaret River or Byron Bay), which means attracting people to move from the big city to take up jobs in the regions is yet another challenge.

To this we can add another part of the labour shortage equation that both Australia and the whole of the western world is grappling with: an aging population.

Interesting fact, without net overseas migration adding 1 per cent a year to Australia’s population base since 1947, our population today would have flatlined around the post war number of 7.5 million people in the entire country.

Today Australia is the second most multicultural country in the world after Israel with 5.5 million people born overseas. Without this influx we would have had one of the oldest population cohorts in the world, a problem that is now common across the western world where the average age back in 1960 was 30 years old, growing to 40 by 2000 and now heading for 50 in 2060.

Aging populations have declining workforces and less military-aged people to conscript, which is why Russia and China are on the warpath while they can muster the numbers to fill the ranks.

This aging trend is what will eventually cap the global population by about 2080 at around 10 billion, with studies estimating that by 2030, one in six people in the world will be aged 65 or over and by 2050, one in three.

Add to that the rapid fall in births in countries that have hit middle income status post 2000 and we have the combined effects of an aging population and a declining replacement rate hitting the global workforce – with China, Japan, South Korea and most of Western Europe likely to experience falls.

According to UN and World Bank statistics, 75 countries already have fertility rates that fall well below the replacement rate of 2.1 per cent, and those countries that are growing are not exactly known for their manufacturing prowess.

And while in the old days you could fill a tractor factory job with almost anyone who came in off the street, today the vast array of electronics have made complex machines more complicated and narrows the field of people and countries able to build them.

This does not bode well for the next generation of farm machinery which is full of electronics. Who is going to be able to fix all this gear as it goes down the ranks to smaller farmers or becomes backup equipment? It’s unlikely to be someone coming in from a less tech-savvy place as a new migrant.

By the end of this decade there will be few people in the Wheatbelt with the skills to find the electronic problem in a 30-year-old 2000 model tractor.

Besides if they do, good luck finding the parts. Bigger, more complex 300 – 700hp machines have replaced 100 – 300 hp machines. We can replace the drivers with automation, but will we be able to find the technicians to fix them?

In a recent report by the OECD, they found that Australia is second only to Canada in its shortage of skilled labour, so we are at the forefront of what is a global problem.

We don’t now have high levels of youth unemployment helping to drive people into apprenticeships and training in careers that are hard on the body.

When one in five youth back in the 1980s was unemployed the incentive existed to go get trained up so they were employable, but when the unemployment level falls to one in 30 you are scraping the bottom of the barrel and its then that regional, rural, hot, dirty, hard, boring, low paid jobs are left unfulfilled no matter how much they offer as a pathway to future self-employment or a big income.

What that means is that Australian agriculture will remain short of workers unless we can convince the government to change the model of migration and rerun the Populate or Perish program, along with targeting migrants with visas linked to the regions.

Failing that we need to open Australia to many more semi-permanent visas making it easy for motivated Indians, South Africans, Filipinos and Pacific Islanders who are skilled and semi-skilled to come in on four-year visas linked to jobs in the bush. This is the formula the Middle East offers its workers, albeit we would not be seeking to exploit them as they do.

The other thing we need to do is find a new way to fast track our youth through skilled apprenticeships. If four years is too long to suffer through training, then the government should be offering full-time intensive two-year courses in specific high-tech areas related to mining and agriculture to train up technicians in the machinery skills which we need to fill the workforce gaps.

The State government should be using the new $10m training facility they build at Muresk and pushing through 100 graduates a year in intensive hands-on courses. They won’t be match fit like a four-year apprentice but they will be well on their way to being useful to an employer. With luck some may even stay on and elect to live and work in a country town and not take a job on the mines.

Without policy changes to attract and hold people in the bush the skills shortage will continue to get worse.


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