05/12/2007 - 22:00

Labour shortages to worsen as jobs grow

05/12/2007 - 22:00

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Wesfarmers has become Australia’s largest sector employer, but like all employers it has to grapple with labour shortages.

Labour shortages to worsen as jobs grow

Industrial conglomerate Wesfarmers completed Australia’s largest acquisition this year when Coles Group shareholders voted to accept its $20 billion takeover.

That deal has made Wesfarmers the biggest private sector employer in Western Australia, with nearly 25,000 staff across its various businesses.

Wesfarmers previously employed nearly 6,400 people in its own right, mostly in its Bunnings hardware stores, and the Coles deal has added a further 18,500 WA workers to the payroll.

However, the enlarged Wesfarmers group still faces the same challenges that confront nearly every employer in WA, which has gone from having a skills shortage to having a labour shortage.

Three quarters of WA employers described the supply of labour as “scarce” in a recent survey by the Chamber of Commerce and Industry WA.

This confirmed a mass of anecdotal evidence, from lawyers and accountants, engineers and restaurateurs, that the business sector in WA wants to employ more people but can’t find – or afford – the right candidates.

The drivers of WA’s surging economy are apparent from employment trends during the past decade.

The Australian Bureau of Statistics has estimated that total employment across the state has increased by 29 per cent over the past 10 years to 1.11 million people.

The sectors experiencing the most rapid employment growth include, not surprisingly, mining, which is up 76 per cent to 52,000 people.

The biggest employers in this sector are led by the world’s largest mining company, Melbourne-based BHP Billiton. It employs 7,000 people in WA in its iron ore, nickel, alumina and other business units.

Takeover target Rio Tinto is another big employer, with 6,700 people on its payroll in WA. In addition, a further 6,000 contractors work on its projects, mostly in construction and contract mining roles.

Another fast-growing sector is electricity, gas and water supply – up 77 per cent to 11,100 people. This reflects the need to invest in basic infrastructure to accommodate a growing population and rising business demand.

Major employers in this sector include state-owned agencies Western Power and the Water Corporation. Private sector players such as Alinta and Griffin Energy have added to the sector’s expansion.

Property and business services, government administration and defence, and health and community services have also experienced above-average growth over the past decade.

The construction industry has grown to be one of the biggest employers in WA, with 106,200 people.

Its growth reflects the combined impact of housing construction, non-residential building activity, such as offices, shopping centres and commercial premises, and engineering construction on resources and infrastructure projects.

The biggest employers in this sector include companies such as John Holland, Leighton Contractors, Macmahon Holdings and Monadelphous Group.

It also includes residential building companies such as Len Buckeridge’s BGC Group and Alcock/Brown-Neaves, though many of the people working on their houses are self-employed contractors.

Engineering and construction contractor Monadelphous Group has rapidly increased staff numbers to more than 4,000 but is doubtful that it can continue in the same vein.

“Capacity constraints in the form of labour shortages are now approaching a critical state,” managing director Rob Velletri told the company’s annual general meeting earlier this month.

“Staff attraction, recruitment and retention are an ongoing major focus of the company but in the current environment this will be an even tougher challenge in the year ahead.”

Mining and construction contractor Macmahon Holdings, which employs 3,200 people nationally, faces similar challenges.

Chief executive Nick Bowen said attracting, retaining and developing the company’s people was his number one strategic priority this year.

“We have increased our commitment to providing additional apprenticeships, professional training programs, the graduate employment scheme, tertiary scholarships and by expanding our indigenous employment program,” Mr Bowen told Macmahon’s AGM.

Mr Bowen said creating opportunities for vacation employment for engineering undergraduates and recruiting more graduate engineers were also important priorities.

Government agencies including the Department of Education and Training, the Department of Health, and the Police Service remain among the state’s biggest employers.

Education employs 31,500 teachers, cleaners, administrators and other staff, while health employs nearly 29,000 nurses, doctors and others.

The increased demand for workers from the private sector has added to the staffing pressure facing the state government, which struggles to offer competitive salaries.

The state government has responded with a number of innovative measures to boost staff recruitment and retention.

Premier Alan Carpenter announced last month that workers aged 55 years and over will be encouraged to remain in the public sector workforce by providing access to superannuation entitlements, while continuing to work full time or changing to more flexible working hours.

“The strategy…will help keep key and experienced personnel in the employ of the state government,” he said at the launch.

“It will be particularly helpful in areas such as education, health and police.”

The government has introduced several initiatives to boost teaching numbers in the state’s public schools.

These include a $19 million scholarship program that is expected to provide more than 1,300 scholarships over five years.

It has also been negotiating substantial pay increases for teachers, especially those working in rural and remote locations.

Two recent studies indicate that WA’s labour shortage may get worse before it gets better.

A study commissioned by the State Training Board estimated that up to 17,800 extra skilled workers will be needed each year for the next decade to meet the anticipated volume of work in WA.

The areas in most demand will be electrical and electronic trades, and mechanical engineering trades.

A report from the CCI estimated that labour demand will be even higher.

It found that 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 says.

If economic growth continues at a similar rate, 400,000 additional workers will be needed over the next decade.

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

The CCI anticipates a shortfall of 150,000 workers in WA by 2017.

The CCI’s Human Capital Report called for urgent action to solve the labour gap, including taxation reform, greater innovation in the education sector, and an increase in the permanent immigration intake, as well as making the temporary visa system more flexible for employers.

The business community is keen to increase its use of the section 457 visa program, which allows employers to sponsor skilled workers for a period of up to four years.

There have also been calls for the age limit for immigrants to be increased from 45 years to 50 years.
While employers are striving to bring extra workers into the country, many are responding by employing more workers in offshore offices or awarding contracts to overseas suppliers.

Most of the large oil and gas projects, for instance, currently being developed are getting their facilities built in shipyards and fabrication halls in places such as Indonesia, South Korea and Thailand.

It is inevitable this trend will continue unless there is a sudden and large influx of workers into Australia.

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