By Clancy Yeates
We must train more of our own people - not poach from elsewhere.
IT'S the question that pops up in every boom and this resources bonanza is no exception. Where will all the workers come from? If you believe the increasingly shrill warnings from some business groups, things have become so dire that we need urgent action to lift the supply of skilled labour.
More companies appear to be taking the easier option of poaching staff from elsewhere, rather than training people.Credit: Rob Homer
Just last week, the chief mining employer lobby group stepped up its plea for ''immediate intervention'', demanding tax changes to support training and incentives to encourage people to move from weak economic areas to mining hubs.
''Australia's $427 billion worth of resources projects will struggle to survive the crippling labour and skills shortage,'' a report from the Australian Mines and Metals Association found. Putting aside the irony of a big supporter of labour market deregulation suddenly pleading for intervention, let's consider that claim - $427 billion is the value of every single resources investment under way or on the drawing board, according to official estimates. If all those projects are in grave danger, our economy's growth engine is at serious risk.
Business Council of Australia president Graham Bradley has also been ringing the alarm bell, saying skills shortages were shaping up as a ''show stopper'' that required urgent reform.
Taking these claims at face value, it would appear skills shortages are running rampant and pose an imminent threat to the economy. But is the problem as serious as business groups claim?
There's no denying some parts of the economy desperately need staff. However, a look at the national statistics suggests the skills problem is not as grave a threat as businesses would have us believe.
For the economy as a whole, skills shortages really raise alarm bells when they trigger an outbreak in wage inflation. This occurs because employers in the booming parts of the economy bid up wages to attract the right people, and the high pay rates eventually spill over into other industries. But despite all the warnings from business, there's virtually no evidence of a wage inflation problem.
The latest figures on wages, for instance, showed mining pay packets jumped 5.2 per cent in the year to May, to an average of more than $110,000 a year. Workers in other industries, however, weren't nearly as fortunate, and average pay even went backwards in retail.
Across the whole economy, annual wages growth has actually slowed in recent months, from 4 per cent to 3.8 per cent. None of this suggests we have a wages outbreak on our hands - as this month's Reserve Bank board meeting minutes made clear.
''Outside the resources sector, there were few reports of labour shortages and liaison suggested that the upward pressure on wages was tending to ease,'' the minutes said.
The NAB business survey's measure of skills shortages - watched closely by the Reserve - is also still below dangerous levels. Less than half of companies say staffing problems were starting to constrain their output, compared with more than 70 per cent in early 2008.
This is not to deny that attracting workers is shaping up as an acute problem for some businesses, especially miners. Just about everyone - politicians, business and unions - agrees the supply of skilled trades will be tested by the boom and government may need to step in. But the evidence suggests the lobby groups' warnings are overblown and skills shortages are a long way from dangerous levels.
Against this backdrop of hyperbole, meanwhile, recent figures on training point to a worrying trend. More companies appear to be taking the easier option of poaching staff from elsewhere, rather than training people. In Western Australia, where the workers are needed more than ever, the number of apprentices in training slumped 10 per cent in the year to June. It's hard to believe and was blamed on an unskilled worker being able to make more than double what an apprentice gets.
Youth unemployment is also stubbornly high around the country, despite all the talk of shortages. There are about 5000 fewer 15 to 19-year-olds in work today than a year ago, the latest labour force figures showed. Yet despite these signs that training of young people is falling behind, the use of temporary skilled workers from overseas has soared to record highs.
The number of 457 visas for overseas temporary workers increased by a third to a record high of more than 90,000 last financial year, the Department of Immigration said this month. A key cause for the increase was a 78 per cent surge in visas for construction workers, who are arriving in droves to help build the country's many resources projects.
This rise is temporary migration is hardly surprising when unemployment is falling, which it did in the year to June. But it should also be kept in mind when business groups call for higher levels of migration and more public support to meet labour shortages.
On top of 457 visas, miners also have access to enterprise migration agreements, a new special visa class that allows the mass importation of skilled workers for the biggest projects. So while training has gone backwards in the epicentre of the boom, miners have more and more options for using skilled workers from overseas.
As the boom takes off, it's hard to dispute that there will be a growing strain placed on the labour market. The International Monetary Fund this month said mining had been the fastest growing employer since 2003, growing by 11.6 per cent a year and creating 100,000 jobs over the period. According to BHP predictions, this rate of jobs growth is set to accelerate further in the next five years, with the industry tipped to create 90,000 jobs.
Such a rapid expansion will only intensify pressure on the government to do more to ensure the miners have enough workers. Some of these initiatives make sense - it's hard to argue with programs that help people move from depressed areas into jobs. But while they're exaggerating the size of the problem and demanding government help, businesses should also live up to their end of the bargain and train more of their own.