The scars of the skills shortages experienced in WA in 2007 are still visible, so is round two really around the corner?
With the lowest unemployment rate in the country and labour demand forecast at near-record highs, Western Australia’s jobs market has interesting times ahead.
The high demand for workers is driven mainly by the continuing large-scale growth in the minerals and resources sectors.
The Chamber of Minerals and Energy of WA is forecasting the industry’s workforce will peak at 119,500 in 2012 – an increase of 43,800 on the 2009 level.
That will eventually spread to other sectors and the chamber predicts in its State Growth Outlook 2011 that over the period to 2020, an additional 30,000-50,000 people will be employed in industry sectors related to mining.
And the indirect employment stimulated by the sector’s growth could mean a total of 70,000 additional workers employed by 2012.
The added pressure of retiring baby boomers could exacerbate the skills shortage fire, but some suggest the demand for labour is mirroring the two-speed economy.
“We are seeing very much a multi-speed world,” CommSec chief economist Craig James said.
“In some regions you have unemployment rates as high as 7 or 8 per cent and it may be tourism or manufacturing regions, but then you have the mining regions, which are doing well.
“Even areas close to capital cities have fairly tight job markets. There are mixed conditions and it differs with industries as well as regions.”
Recruitment firm Programmed Group managing director Chris Sutherland does not believe there is a shortage of skilled onshore, blue-collar workers.
Mr Sutherland said the company was not even close to having the same difficulties it experienced in 2007 in filling these sorts of roles, when anywhere up to 15 per cent of the company’s weekly orders could not be filled.
He said that while the marine oil and gas industry was experiencing some skills shortages, when it comes to onshore jobs, he could not foresee a shortage of skills in the next 12 months and believed the projected workforce requirements of the mining and resources sector could be met.
“Relatively speaking, it (43,800) is not that many. If you think about manufacturing in Australia employing a million people, if they shed 5 per cent that is 50,000 people,” he said.
“I am not saying they are all the right people, but there is that churn and we are filling all our orders.”
Bruce Campbell-Fraser, the CME’s people strategies executive, said the sector represented by his organisation was facing skills shortages.
“University qualifications and key trade skills are in highest demand. Jobs like engineers, geologists and metallurgists at a university graduate level through to key electrical contractors and others at a trades level,” Mr Campbell-Fraser said.
Lincoln Crawley, managing director of the Australian branch of multinational workforce solutions company Manpower Group, has gone as far as to say WA’s talent war is already ‘running rife’, despite the projections for most WA regions’ workforce requirements to peak in 2012 or 2013.
“A number of major projects in Western Australia are overdue for completion, which has delayed the release of key skills to other projects that had anticipated a talent transfer,” Mr Crawley said. “We have also seen strong competition for talent coming from large projects in Queensland, where Western Australia is seen as a talent-rich sourcing pool.”
Mr Crawley raises one of the common issues associated with the four major options for accessing skilled labour.
They are interstate migration, skilled international migration with 457 visas, training local people either disengaged from the workforce or upskilling employed people and, the most common for WA’s resources sector, engaging a fly-in, fly-out workforce.
WA recorded net interstate migration losses between 2000-03, which bottomed out at 3,600 in one year, but has recorded gains since then, which peaked at 5,200 in 2006-07, figures from the Australian Bureau of Statistics show.
Mr Campbell-Fraser said: “Historically, interstate migration has played a very low part in our increasing population. In good years we get between 4 and 8 per cent of that increase through interstate migration.
“There seems to be a lot of south-north or north-south migration on the east coast, but very few people, despite the enormous economic opportunity that exists, are relocating to WA.
“It is a challenging one, in terms of a policy response, and I think potentially there are a couple of barriers. Decreasing housing affordability has played a part in keeping people away in recent times.”
He said the increasingly urbanised living since the 1920s, when 40 per cent of the population lived in urban areas compared to 60 per cent in 2006, has increased the difficulty in attracting people to relocate to areas like the Pilbara from either Perth or the eastern states.
Out of the four main workforce-access strategies, Mr Campbell-Fraser said the resources sector’s most favourable option was training.
“If you have an underutilised local person who has housing and the appropriate skills, for a company it makes enormous sense to utilise that person,” he said.
“That is why companies are putting a lot of effort into indigenous work readiness and training. Companies are always going to commit to training. They realise that is long-term productivity and there is a good return on that investment.”
A fly-in, fly-out workforce is an expensive option, but one that is playing a major role in the state’s labour market.
It has grown in WA since the early development of the North West Shelf but has picked up as a labour strategy since then.
The CME suggests 92 per cent of the incremental workforce required by the industry by 2012 will be met by fly-in, fly-out operations.
The Pilbara, which relies on these workers partly because of the remote locations of mine sites and inaccessibility to local workers, is expected to need 34,000 skilled employees by next year on top of the Department of Mines and Petroleum’s 2009 workforce figure of 33,000.
The CME has projected that 90 per cent of those new workers in the next 18 months will be on fly-in, fly-out arrangements, while 83 per cent of the required workforce in the Mid West will travel.
In the Goldfields, 44 per cent are fly-in, fly-out workers, making up a total additional workforce of 16,300 for the region by 2013.
Rio Tinto Iron Ore recently announced it would expand its regional fly-in, fly-out operations for its Pilbara mine sites to include Exmouth and is expected to have 50 or more workers for its Paraburdoo mine commuting from the coastal town.
Rio’s regional travelling program currently provides more than 13 per cent, or 500, of its employees to 14 of its inland mine operations.
“It is expensive to fly people around the country, even Western Australia, to get them to and from work and house them while they are there. It is a challenge, and an expensive one, but it is certainly necessary,” CME’s Mr Campbell-Fraser said.
The concept of fly-in, fly-out workers has developed an image problem in recent years, with the impacts of a transient workforce on local towns and cities one of the major sociological concerns, alongside the impacts to workers’ families.
FIFO Families was started by Nicole Ashby last year in an effort to create a social support network for families, after realising first-hand how her husband was affected by the fly-in, fly-out process.
Ms Ashby said an important issue was the critical need to make rosters more family friendly.
She said the ideal roster of two weeks on and two weeks off being implemented across the industry could reduce the commonly stated major issues of high stress, disconnected families, isolation, loneliness and trust and resentment for the people at home.
“There is a bit of a shift with the skills shortage. Companies are starting to look at what they can do to be seen as an employer of choice,” she said.
Ms Ashby was cautiously optimistic about the federal government’s recent announcement it will conduct an inquiry into the fly-in, fly-out workforce and the impacts on communities and families. She said the board of the inquiry lacked a representative from WA and added doubt as to how effective and representative the outcome of the inquiry would be.
“Hopefully, that will bring in huge changes and the government will introduce some regulations around rosters,” she said.
“The way I see it is, looking after the family improves the retention and productivity of workers, and lowers the absentees.”
Skilled migration is the expensive last resort, according to Mr Campbell-Fraser, but at times of skills shortages for some companies it is the only choice.
According to KPMG migration services partner Jason Berry, who quoted figures from the Department of Immigration and Citizenship, the number of 457 visa applications and visas granted is on the rise.
“In the number of primary applications granted, the two big increases are in construction and mining. Mining is up 23 per cent (since 2009-10) and construction is up 26 per cent (since 2009-10). You can clearly see people coming in on 457s are very much being focused on two particular categories,” Mr Berry said.
In total, the number of 457 primary visa applications lodged to June this year was 39.7 per cent higher than in 2009-10. June 2011 was the highest month for applications since June 2008.
In the past two financial years, the percentage of grants for positions in WA increased from 16.5 per cent to 19.3 per cent.
The Rudd government tightened up 457 visas in 2009, when it lifted the bar on the terms and conditions and applications process.
Mr Berry suggested that broadening the application of the visas would be the easier option to introduce semi-skilled visas and increase Australia’s accessible international labour pool.
“I think an area the government will need to get its mind around is semi-skilled migration, which doesn’t neatly fit within the 457 regime at the moment, but we are already starting to see some suggestion from government and opposition that the scheme may need to be widened,” he said.
“The government could modify the current 457 visa to allow for semi-skilled workers to come in, that would probably be the simpler way of changing it, because you have the existing visa infrastructure within the law.”
Perth was recently reclassified as a regional hardship area by the federal government, alongside Karratha and Port Hedland, in a bid to allow more skilled and semi-skilled overseas workers into the state.
The classification does this by allowing the use of Skilled Designated Area Sponsored visas, a transitionary visa to permanent residence which targets sponsored skilled workers who have been working for 12 months and living in an area for two years.
It also adds accessibility to Skilled Regional Sponsored visas, which is a three-year provisional visa for skilled workers who are unable to meet the criteria for a Skilled Independent visa.
The federal government also introduced Enterprise Migration Agreements earlier this year, an initiative to address the skills needs of the resources sector by easing the skilled migration process for large-scale resources projects with a capital expenditure of more than $2 billion and a peak workforce of more than 1,500 workers.
It is not clear if any companies have taken up this option, but Chevron’s Wheatstone gas project, north-west of Dampier in the Pilbara, was highlighted by the Australian Mines and Metals Association as one of the best suited in WA.