Skills problem needs urgent action

The shortage of skilled labour has been arguably the biggest problem facing Western Australia’s business sector for nearly two years, and the problem shows no sign of abating.

“The size of the problem is huge and if you are a student of demographic trends you will know the problem is not going to go away,” said Neville Andrews, WA general manager of recruitment firm Hudson.

The state and federal governments have introduced a series of policy reforms, including increased skilled migration and new training initiatives, to try and tackle the problem.

While these changes have been welcomed, the participants in the boardroom forum agreed that more needs to be done, not just by government, but also by industry.

“From a trade point of view, we know there is not enough being done on the government reform side of things, but industry has got to commit itself,” Dale Alcock, a director of home building company Alcock/Brown-Neaves Group, said.

His view was supported by John Rothwell, executive chairman of shipbuilding company Austal.

“I blame industry for the skills shortage as much as government, probably more so,” Mr Rothwell said. “Industry is far too focused on short-term solutions than long-term vision.”

Mr Rothwell said incentive programs for training could be higher “but, bloody hell, industry has a responsibility to do something itself”.

The shortage of skilled labour flows in part from a long-term decline in the number of people going into traditional trades, resulting in shortages of bricklayers, welders, chefs, mechanics and so on.

However, the problem is much wider, extending to professions such as engineering and accounting.

“It’s not just a trade problem; we are in a severe shortage of professionals today, let alone where we will be in the future,” said Claire Thomas, an executive with the Chamber of Minerals and Energy.

Matt Davis, director of Wood & Grieve Engineers and WA president of the Association of Consulting Engineers of Australia, said his profession has been hit hard.

“There simply are not enough engineers in Australia to satisfy the volume of work we have got in front of us and consulting engineers are squealing for staff,” he said.

Mr Andrews said just about every industry he dealt with was affected by the skills shortage, from the trades through to the professions. And Australia was not alone.

“All the other developed economies have exactly the same issues,” he said.

Mr Alcock said residential and commercial building normally peaked at different times, but in WA over the past two years they had both been very strong.

It’s a similar story in the resources sector, according to Mark Nicholas, general manager WA with recruitment firm Beilby.

He said the oil and gas sector and the ‘hard rock’ mining sector were typically counter cyclical, but now they were “absolutely in sync and there is no sign of softening”.

For firms like Wood & Grieve, the combined effect of these trends is that the volume of work has grown at “an incredible rate”, Mr Davis said.

Many employers have responded to the skills shortage by stepping up their retention and recruitment programs, but this is driving up labour rates.

“One of the feelings I get very much is that all industries in the state are just shifting people from one seat to another,” Mr Alcock said. “It’s really just a revolving door and whoever’s got the deepest pocket ends up getting the staff on board.”

Mr Nicholas agreed that the “revolving door” was a real issue.

The skills shortage is already affecting economic activity in WA, according to participants in the boardroom forum.

Mr Alcock said “the construction times of the average home in certain places [in Perth] has gone out to at least double what it was two to three years ago”.

The skill shortage, and the associated increase in labour costs, has also added to the cost blow-outs on construction projects.

This has affected both the private sector – including mining companies, which have reported big cost increases on proposed developments – and the State Government, which recently reported higher costs on the Peel Deviation road project.

The Australian Hotels Association is worried that tourism and hospitality businesses could suffer because they cannot find appropriate staff, or in some cases any staff, especially in regional areas.

“The perception of tourism is quite frankly very much at risk because of the skills shortage,” said Paul Brockschlager, the AHA’s general manager corporate affairs WA.

The Gallop Government is touting a 40 per cent increase in the number of people in apprenticeships and traineeships since 2001 as the centrepiece of its response to the skills shortage.

This corrects WA’s low per-capita ranking in terms of the number of people in formal training.

The State Government has also taken some tentative steps toward more flexible training arrangements, which industry has long been calling for.