For the record: Labour shortages to worsen

A new report from the Chamber of Commerce and Industry WA has highlighted the scale of labour shortages facing Western Australia if current economic and demographic trends continue.

The CCI’s Building Human Capital report, released last week, has concluded that there will be a shortfall of 150,000 workers in WA by 2017, substantially higher than other projections.

Crucially, this conclusion is based on very bullish growth forecasts.

The CCI has forecast growth in the WA economy will reach 7 per cent in 2006-07 before easing slightly to 6.75 per cent in 2007-08, 6 per cent in 2008-09 and 5.25 per cent in 2009-10.

In contrast, the Department of Treasury and Finance, which traditionally has been conservative in its forecasts, anticipates growth of 6 per cent in 2006-07 followed by 4.5 per cent in 2007-08 and 5 per cent in 2008-09.

Looking further ahead, Treasury assumes – as a matter of policy – that economic growth will revert to the long-term 15-year average of 4.5 per cent per year.

CCI said WA’s rapid economic growth over the past six years had created 186,300 new jobs and pushed the state’s unemployment rate to 20-year lows.

“Labour market conditions have probably never been tighter,” its report said.

The tightness is also reflected in recent business surveys, with three-quarters of WA businesses describing the supply of labour as “scarce”.

The CCI report followed two similar studies in recent months.

Modelling undertaken by the State Training Board in its report, Beyond the Resources Boom, concluded that an additional 180,000 skilled jobs would be required in the WA economy by 2016.

The Minerals Council of Australia and the Chamber of Minerals and Energy in their report, Staffing the Supercycle: Labour Force Outlook in the Minerals Sector, 2005 to 2015, found that the WA minerals sector alone would need an additional 42,000 employees in order to achieve predicted increases in output.

“If anything, these studies may in fact underestimate the true needs of the state over this period,” the CCI concluded.

“WA’s economic potential is very strong given the positive long-term global growth outlook.

“The extent to which such potential can be realised will, however, depend crucially on a productive and available workforce.”

Economic modelling by CCI concluded that, if economic growth were maintained at the average rate experienced over the past six years, an additional 400,000 workers would be required in WA over the next 10 years.

“However, these additional labour needs cannot be met on the basis of the current labour market and population trends,” the CCI said.

“To put this into perspective, on the basis of current strong population growth trends (which are significantly higher than the ABS projections), it is estimated that there will still be a shortfall of 150,000 workers in WA by 2017).

“Labour shortages of such magnitude will make it difficult (if not impossible) for the WA economy to realise its full potential in the medium to longer term, unless measures are put in place to ensure that the labour force is able to grow in line with future economic activity.

“Increasingly scarce labour will place significant pressure on businesses of all sizes and across all sectors of the economy, but particularly on those sectors which are labour intensive – such as health, education and retail sectors.”