110906 ps-ritc-skills australia interim report resources industry

Skills Australia 2011 interim report on resources sector skill needs

Skills Australia May 2011

Skills Australia May 2011

Skills Australia 2011 interim report on resources sector skill needs

ii 2011 interim report on resources sector skill needs: Skills Australia

2011 interim report on resources sector skill needs: Skills Australia iii

Table of ContentsExecutive Summary ................................................................................................v

1. Introduction .........................................................................................................11.1 Introduction..........................................................................................................................1

1.2 Thescopeofthereport......................................................................................................1

1.3 Structureofthereport........................................................................................................2

1.4 Futurework...........................................................................................................................2

2. International and domestic economic outlook ...............................................42.1 Introduction..........................................................................................................................4

2.2 Internationaleconomicoutlook..........................................................................................4

2.3 Domesticeconomicoutlook...............................................................................................5

2.4 Conclusions..........................................................................................................................6

3. Current and future major projects in Australia’s resources sector ...............73.1 Introduction..........................................................................................................................7

Total projects ..........................................................................................................................8Advanced projects ..................................................................................................................8Less advanced projects ..........................................................................................................9

3.3 Wherearemajorprojectslocated?....................................................................................9

3.4 Inwhichresourcessectorsdomajorprojectslie?.........................................................10

3.5 Conclusions........................................................................................................................10

4. Resources sector production and export outlook by commodity, 2009 to 2016 .................................................................................114.1 Introduction........................................................................................................................11

4.2 Productionoutlookbycommodity...................................................................................11

4.3 RisksandUncertainties.....................................................................................................13Uncertainties about growth in international demand for Australian commodities ...............13Uncertainties about supply capacity ....................................................................................14

4.4 Conclusions........................................................................................................................14

5. Recent trends in the Australian labour market ...........................................155.1 Introduction........................................................................................................................15

5.2 Developmentsbeforeandaftertheglobalrecession....................................................15

5.3 Morerecentlabourmarketdevelopments......................................................................15Employment .........................................................................................................................15Unemployment .....................................................................................................................16Participation rate ...................................................................................................................16Long-term unemployed ........................................................................................................17State labour market differences ...........................................................................................17Regional labour market developments .................................................................................18Employment growth by industry ..........................................................................................18Employment growth by occupation .....................................................................................19Employed and Unemployed by Occupation .........................................................................20

5.4 Conclusions........................................................................................................................21

iv 2011 interim report on resources sector skill needs: Skills Australia

6. Existing skill shortages in occupations relevant to the resources sector 226.1 Introduction....................................................................................................................... 22

6.2 Skillshortagesinoccupationskeytotheresourcessector......................................... 22Managers, professionals and associate professionals .........................................................24

6.3 Conclusions........................................................................................................................31

7. Trends in wages, economy wide, by industry and state .............................327.1 Introduction....................................................................................................................... 32

7.2 OverallrecenttrendsinwagesinAustralia................................................................... 32

7.3 Wagetrendsbyindustry.................................................................................................. 32

7.4 Wagesgrowthbystate.................................................................................................... 34

7.5 Trendsinwagearrangementsunderenterpriseagreements...................................... 34

7.6 Conclusions....................................................................................................................... 36

8. Trends in demand for labour in the resources sector ..................................378.1 Introduction....................................................................................................................... 37

8.2 Trendsindemandforlabourforminingoperations..................................................... 37Methodology ........................................................................................................................37Skills Australia has adopted a similar approach. .................................................................. 38

8.3 Trendsindemandforlabourforprojectconstruction.................................................. 38Methodology ....................................................................................................................... 38Modelling outcomes ............................................................................................................ 39

8.4 Trendsindemandforlabourforoilandgasoperations.............................................. 40Methodology ....................................................................................................................... 40Modelling outcomes .............................................................................................................41

8.5 ReplacementDemand..................................................................................................... 42Turnover ................................................................................................................................42Potential job vacancies ........................................................................................................ 43

8.6 Conclusions....................................................................................................................... 43

9. The supply of skills available to meet the resources sector’s skill needs 449.1 Introduction....................................................................................................................... 44

9.2 AnalysisofthesupplyofskillspresentedintheNRSETreport.................................. 44

9.3 Nationaltrendsinapprenticeshipcommencements.................................................... 45Recent trends in apprenticeships in the resources sector ...................................................47

9.4 Trendsinhighereducationcommencements............................................................... 49

9.5 Recenttrendsinskillssupplyfrommigration............................................................... 50Subclass 457 visa trends ......................................................................................................51Professionals and the subclass 457 visa ............................................................................. 52Tradespeople and the subclass 457 visa ............................................................................. 52Other occupations and the subclass 457 visa ..................................................................... 53Long term migration - skilled migration ............................................................................... 54

9.6 Conclusions....................................................................................................................... 57

10. Industry’s perspectives on future skill needs ..............................................5810.1 Introduction....................................................................................................................... 58

10.2 Nationalperspectives....................................................................................................... 58Australian Mines and Metals Association ........................................................................... 58Minerals Council of Australia ............................................................................................... 58Australian Petroleum Production and Exploration Association ........................................... 59

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10.3 WesternAustralianperspectives.................................................................................... 59Department of Training and Workforce Development ........................................................ 59Department of Mines and Petroleum .................................................................................. 60Western Australia Chamber of Commerce and Industry .................................................... 60Western Australia Chamber of Minerals and Energy .......................................................... 60

10.4 Queenslandperspectives..................................................................................................61Construction Skills Queensland ...........................................................................................61Energy Skills Queensland .....................................................................................................61Queensland Major Contractors Association .........................................................................61Chamber of Commerce and Industry Queensland.............................................................. 62Queensland Resources Council .......................................................................................... 62

10.5 NewSouthWalesperspectives....................................................................................... 62New South Wales Minerals Council .................................................................................... 62

10.6 NorthernTerritoryperspectives...................................................................................... 63Northern Territory Department of Business and Employment ........................................... 63Chamber of Commerce (Northern Territory) ....................................................................... 63

10.7 SouthAustralianperspectives........................................................................................ 63South Australian Chamber of Mines and Energy ................................................................ 63

10.8 Perspectivesfromotherstakeholders............................................................................ 64Rio Tinto .............................................................................................................................. 64BHP Billiton.......................................................................................................................... 64Technical and Further Education New South Wales ........................................................... 64

10.9 Consultationswithstakeholders..................................................................................... 65

10.10Conclusions..................................................................................................................... 66

11. Key Conclusions ...............................................................................................6711.1 Keyconclusions................................................................................................................. 67

Appendix 1: Broad method of the NRSET to determine demand and supply for labour in the resource sector ............................. 69

Appendix 2: Australia’s General Skilled Migration program ..........................71

Appendix 3: Case Studies – Recruitment experiences in regions heavily reliant on the resources sector ........................................72

Pilbara..........................................................................................................................................72

Goldfields/Esperance.................................................................................................................72

Appendix 4: Occupational profile of the Mining industry ...............................74Drillers,minersandshotfirers(ANZSCO–7122)...................................................................74

Metalfittersandmachinists(ANZSCO–3232).......................................................................74

Otherbuildingandengineeringtechnicians(ANZSCO–3129).............................................75

Truckdrivers(ANZSCO–7331).................................................................................................75

Electricians(ANZSCO–3411)....................................................................................................75

Miningengineers(ANZSCO–2336).........................................................................................75

Productionmanagers(ANZSCO–1335)..................................................................................76

Earthmovingplantoperators(ANZSCO–7212)......................................................................76

Structuralsteelandweldingtradesworkers(ANZSCO–3223)............................................76

Geologistsandgeophysicists(ANZSCO–2344)....................................................................76

vi 2011 interim report on resources sector skill needs: Skills Australia

Appendix 5: History of skill shortages, selected key occupations to the resources sector ..................................................................77

Appendix 6: List of tables ...................................................................................78

Appendix 7: List of figures ..................................................................................79

Appendix 8: List of acronyms ............................................................................ 80

Appendix 9: References ...................................................................................... 82

This report uses data available as at 26 May 2011

2011 interim report on resources sector skill needs: Skills Australia vii

Executive SummaryIntroductionFollowing its consideration of the National Resources Sector Employment Taskforce (NRSET) report published in June 2010 (DEEWR 2010) the Australian Government has requested that Skills Australia prepare annual reports about the resources sector’s likely demand for labour and the supply of skills available to meet the sector’s skill needs. The aim is to better inform industry forward planning for future major projects, assist in better meeting industry skill needs, and to inform further policy responses to the emerging needs of the resources sector, which NRSET defined as including mining operations, major project construction and gas operations.

The 2011 report, the first report prepared by Skills Australia, updates the work undertaken by NRSET. The report has been prepared in conjunction with relevant Australian and state government agencies, and with the assistance of industry. The conclusions presented in the report have been tested with industry stakeholders.

The key findings of this report include:

• The Australian economy is expected to strengthen in the next 12-24 months, underpinned by an improved international economic outlook. The International Monetary Fund (IMF) forecasts continued strong growth for Australian resources exports in key developing economies such as China and India.

• The outlook is for even stronger growth in production and exports of resources commodities than estimated by NRSET, accompanied by greater expansion of productive capacity in the resources sector than anticipated by NRSET. Many major resource investment projects which were previously tentative have now been confirmed. Advanced major projects in April 2011 were valued at $173.5 billion, compared to $109.6 billion when NRSET reported in June 2010, representing an increase of $64.4 billion.

• The Australian Bureau of Statistics (ABS) anticipates Mining capital expenditure will rise by 62.5 per cent to $83.3 billion in 2011-12 when Mining investment is expected to rise to 59.7 per cent of total national capital investment.

• It therefore seems likely that there will be a more rapid and protracted build up of construction labour demand than was the case when NRSET reported.

• The national labour market continues to tighten post recovery from the global economic recession, although the pattern of recovery is uneven across industries and regions. Industries, that are exposed to the high terms of trade dollar including manufacturing and tourism, and the regions that rely on those industries such as Far North Queensland are experiencing relative weak labour market conditions. Overall however, the labour market appears to be reaching capacity with sustained reductions in the number of unemployed, including in key skilled occupations relevant to the resources sector. Unemployment has declined by 53 200 (or 8.4 per cent) over the last year since NRSET reported to stand at 583 000 in April 2011. Unemployment in resource states of Queensland and Western Australia, has also declined by 7 800 persons and by 6 800 persons respectively over this period.

• To date employers appear to be experiencing less difficulty recruiting skilled workers than they did immediately prior to the onset of the global recession and wage pressures are relatively contained in the resources sector.

• However, based on the NRSET approach to modelling demand for skills in the resources sector, Skills Australia anticipates very strong growth in employment in the resources sector, including mining operations. Potential employment in gas operations has been underpinned by Final Investment Decisions (FIDs) for major gas projects in Queensland. Santos has estimated that 1 500 new jobs will be created from its project by June 2011, and BG Group’s project will employ more than 3 000 people during construction.

viii 2011 interim report on resources sector skill needs: Skills Australia

• The supply of skills through training effort is increasing but the data highlight the need for further skills formation in the sector. National Centre for Vocational Education Research (NCVER) Apprentice and Trainee Destinations data suggest that apprentices and trainees mostly remain with the employer with whom they undertake their apprenticeship or traineeship, which means investment by the sector in new apprenticeships could assist the longer term supply of skilled workers. However the supply of skills through short term or long term migration may be waning. Grants for the temporary business visa (subclass 457 visa) declined by 31 per cent from 50 660 primary grants in 2008-09 to 34 790 in 2009-10 and visa grants under the General Skilled Migration (GSM) program decreased by 13 per cent from 69 153 in 2008-09 to 59 890 in 2009-10 (DIAC 2010b). The Australian Government 2011-12 Budget introduces Enterprise Migration Arrangements (EMAs) as recommended by NRSET to streamline arrangements for access to overseas workers, which will assist more flexible labour market responses through migration, as will the Critical Skills Investment Fund and the Cairns based Fly-In Fly-Out (FIFO) Coordinator.

• The data highlight the need for further policy responses if the resources sector’s skill needs are to be met without adverse impacts on the rest of the economy. The policy mix should include:

– Further consideration of measures to achieve sustained increases in labour force participation to better meet Australia’s overall skill needs as well as the resource sector’s skill needs;

– Options to facilitate greater increases in labour mobility, both by region and from declining to emerging industries;

– Possible measures to increase participation by Indigenous people so they can take advantage of entry level job opportunities in the resources sector; and

– A strong policy focus on means by which more women can also be encouraged to take advantage of entry level work opportunities which can be accessed relatively quickly through training provision in the resources sector, given that women continue to be significantly under-represented in this sector.

Key messages in more detail

National economic trendsThe international economic outlook is of significance to the resources sector given the high proportion of resources sector output that goes to international markets. The domestic economic outlook is also important as strong growth in other sectors may increase competition for skills that are critical to the resources sector.

Treasury and the Reserve Bank of Australia (RBA) anticipate relatively strong domestic growth in the medium term after recovery from the impact of Queensland floods and cyclone. Beyond the short term impact of the natural disasters, Treasury forecasts Australia’s real Gross Domestic Product (GDP) growth to strengthen to 4 per cent in 2011-12 and 3¾ per cent in 2012-13 (Department of the Treasury 2011) although some regions are experiencing slow growth, for example Far North Queensland, which is dependent on the Tourism and Hospitality sector. Treasury anticipates the unemployment rate is forecast to fall gradually from around 5 per cent currently to 4½ per cent in the June quarter of 2013 as the economy approaches capacity.

Current and future major projects in Australia’s resources sectorDemand for labour in the resources sector depends in part on the extent of major project construction activity and trends in production. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) Major development projects – April 2011 listing published in May 2011 now lists 399 projects valued at $429.9 billion, including 94 advanced projects valued at $173.5 billion where final investment decisions have been made. This is a very significant increase (63.9 per cent) in the value of confirmed projects compared to NRSET’s 2010 report when there were an estimated $109.6 billion of advanced projects in the ABARES data base. This provides much more certainty about the value of likely construction projects and potential labour needs to construct these projects.

2011 interim report on resources sector skill needs: Skills Australia ix

The total value of projects identified in April 2011 was nearly 20 per cent higher than when NRSET reported. The increase in project construction is likely to increase demand for labour in this area of resources to a greater extent than envisaged at the time the NRSET report was prepared. The outlook is also for a more rapid and protracted build up in labour demand than when NRSET reported.

It should also be noted that Shell’s Prelude LNG project located off shore from Western Australia is not included as an advanced project in the April 2011 list, and while the giant BHP Billiton Olympic Dam project in South Australia is recorded in the ABARES data base as a less advanced project at this stage, there is no monetary value given to this project in the data base. Media estimates suggest this project could entail construction outlays of over $20 billion, which would have an immense impact on the South Australian economy. Skills Australia understands that the project may come forward for environmental approval in 2012, with a Final Investment Decision (FID) to be made after environmental approvals are received.

Resources sector production and export outlook by commodity, 2009 to 2016Demand for labour in the resources sector also depends on growth in resources outputs. Strong growth in production is anticipated to continue until at least 2016, with very strong growth in production projected for commodities such as Liquefied Natural Gas (LNG), uranium, thermal coal, copper, and iron ore. The estimates reflect anticipated strong growth in demand from Australia’s major resources export markets, particularly China. ABARES predicts Australian energy and mineral export earnings will increase from around $186 billion in 2010–11 to around $219 billion (in 2010–11 dollars) in 2015–16, an 18 per cent increase.

The projections prepared by ABARES with respect to likely growth in output by commodity are subject to risks and uncertainties. These risks and uncertainties include:

• Uncertainties about growth in demand for commodities. A substantial proportion of Australia’s commodity exports go to countries such as China, Japan, Korea and India, so demand for Australia’s commodities is dependent on growth in demand for commodities in these countries.

• Uncertainties about the capacity to supply these international markets to the extent envisaged by ABARES because of the Queensland floods and cyclone.

Nonetheless, if the ABARES projections are realised, it is likely that demand for labour will rise substantially in mining and gas operations, potentially to a greater extent than projected in the 2010 NRSET report.

Recent trends in the Australian labour marketWhile there are differences in the strength of local labour markets across Australia, the labour market overall has strengthened in the last year. Employment has risen (with significant growth in employment in the Mining industry) and the number of unemployed has fallen, reducing potential skills supply to the resources sector (including falling unemployment in skilled occupations relevant to the resources sector, such as the mechanical, electrical and fabrication engineering trades).

Existing skill shortages in occupations relevant to the resources sectorThe Australian labour market has tightened but the Department of Education, Employment and Workplace Relations (DEEWR) research indicates employers are experiencing less difficulty recruiting skilled workers than they did immediately prior to the onset of the global recession with employers recruiting to fill skilled vacancies more easily than in 2008.

However, the trades labour markets tightened notably in 2010, with shortages re-emerging in trades which experienced a sharp fall in demand with the onset of the global recession. This was particularly apparent in the construction, engineering and automotive trades. The resources sector also requires relatively large numbers of engineers, mining professionals and accountants. Skill shortages also exist for a number of key construction occupations.

The data highlight the importance of increasing labour force participation, including by Indigenous people and by women (the latter being noticeably underrepresented in the resources sector as

x 2011 interim report on resources sector skill needs: Skills Australia

females accounted for only 16.1 per cent of total employment in the Mining industry over the year to February 2011) if the resources sector’s skill needs are to be met without adverse flow on effects to other areas of the economy.

Earnings trends in the resources sectorIf wages rise rapidly, this can indicate that employers need to pay more to attract employees than was previously the case. This section of the report examines trends in wages for the economy as a whole and in the resources sector, to assess whether wage inflation is apparent.

To date, wage pressures have remained broadly contained across the economy, and recent wage growth within the resources sector (i.e. in the Mining and Construction industries) has been in line with historical trends. Looking ahead, data from the DEEWR Workplace Agreements Database suggest that in the medium term wage movements under collective agreements in these industries will be in line with historic trends.

Trends in demand for labour in the resources sectorEmployment in mining operations grew more rapidly between 2008 and early 2011 than anticipated by the NRSET. Skills Australia projections now suggests that very strong employment growth will continue in the resources sector with employment in mining operations projected to rise from 187 700 persons in November 2010 to 270 600 persons in 2016, a rise of 83 000 persons or 44 per cent. Skills Australia now estimates the number of short term project construction jobs could range from around 154 500 (low scenario) to

287 000 (high scenario) compared to NRSET projections of 103 000 (low scenario) to around 255 000 (high scenario) short term construction jobs.

As FIDs have been made for some major projects in Queensland, Skills Australia considers NRSET projections of two to four new trains operating in Queensland by 2015, and four to six new trains in Western Australia are more likely to be realised which would potentially create between 1 200 and 2 500 professional and trade jobs in gas operations in Queensland and between 600 and 700 jobs in Western Australia (NRSET 2010).

The local impacts of new projects can be significant. For example, at Gladstone, Santos has estimated that 1 500 new jobs will be created from its project by June 2011. Another project, Queensland Curtis LNG (QCLNG) is one of Australia’s largest capital infrastructure projects, spanning 400 kilometres from the gas fields of the Surat Basin west of Brisbane to Gladstone and nearby Curtis Island. The project is being developed by QGC, a BG Group business, to produce coal seam gas for transportation by pipeline to Gladstone. The gas will be chilled in a liquefaction plant on Curtis Island to form LNG. The project will employ more than 3 000 people during its construction phase.

Based on 2010 Australian Bureau of Statistics (ABS) employment data it appears around 19 000 replacement job opportunities (compared to the earlier NRSET estimate of 16 000 job opportunities) are likely to arise each year in mining operations (including around 3 000 retirements). There will also be around 2 000 replacement job opportunities in oil and gas each year as workers leave the industry for other industries or to retire (including around 500 retirements).

The supply of skills available to meet industry demandSkills Australia has examined recent trends in commencements in the trades and in higher education in skills relevant to the resources sector, as well as recent trends in migration.

There has been a recent increase in the number of apprentice and traineeship commencements reflected in a 22.5 per cent increase in the number of apprentices in training in occupations related to the resources sector in 2010. However, given likely growth in demand for skills in the resources sector, the data highlight the need for further skills formation in the sector, especially as NCVER Apprentice and Trainee Destinations data also suggest that apprentices and trainees mostly remain with the employer with whom they undertake their apprenticeship or traineeship.

2011 interim report on resources sector skill needs: Skills Australia xi

On the other hand, supply of skills from both temporary migration through subclass 457 visas and through the General Skilled Migration program (GSM) in skills relevant to the resources sector appears to have declined in 2009-10.

Recent Government initiatives, including the introduction of EMAs to streamline arrangements for access to overseas workers, the establishment of the Critical Skills Investment Fund and the Cairns based FIFO Coordinator will also play a key role in this response.

Future workThis report is the first of what will be an annual review of skills needs in the resources sector. It has largely concentrated on analysis of what has changed in the 12 months since NRSET reported. Subsequent reports will involve more detailed analysis and will include:

• A review of modelling of demand for labour to ensure that the modelling approach used by Skills Australia in future reports remains appropriate to best estimate new demand for labour in the resources sector in the period ahead.

• Detailed modelling by occupation of likely skills demand in mining operations and in construction projects.

• Updated estimates of the timing of the construction of major projects and related skill needs.

• A detailed breakdown of major projects and resources skill needs by state.

• Updated modelling about the supply of skilled labour from vocational education and training and higher education.

• A review of the initial impact of recent government initiatives, including the Critical Skills Investment Fund, which were designed to assist in meeting the resources sector’s skill needs.

• A continued strong focus on testing projection outcomes with industry. Skills Australia proposes a series of national and state industry focus groups to test projection outcomes, supported by a broader industry survey and possibly through a national conference addressing the resource sector’s skill needs.

• Renewal of replacement demand estimates. New data has become available from the Australian Bureau of Statistics on labour mobility which will allow for a more detailed analysis of replacement demand for skills in the resources sector than is possible in the time available to prepare the 2011 report.

• A detailed analysis of the extent and impact of FIFO labour and the effect of the Cairns based FIFO coordinator on enhancing use of FIFO labour.

• A review of how far the resources sector has extended its use of Indigenous and female labour since NRSET reported. Improving access by these groups was a key focus for NRSET and given that the labour market is edging towards full capacity, increased participation by these groups is vital if the resources sector is to meet its skills needs without undue impact on other areas of the economy.

• Changes in the extent of employer satisfaction with vocational education and training since NRSET reported.

• A detailed analysis of the broader community flow on effects of growth in the mining sector.

xii 2011 interim report on resources sector skill needs: Skills Australia

2011 interim report on resources sector skill needs: Skills Australia 1

1. Introduction1.1 IntroductionFollowing its consideration of the National Resources Sector Employment Taskforce (NRSET) report published in June 2010 (DEEWR 2010) the Australian Government has requested that Skills Australia prepare annual reports about the resources sector’s likely demand for labour and the supply of skills available to meet the sector’s skill needs. The aim is to better inform industry forward planning for future major projects and assist in better meeting industry skill needs.

The Skills Australia 2011 interim report updates the work undertaken by NRSET.

The continued importance of the Australian Mining industry is emphasised by the sector’s contribution to Australian exports. In 2009-10 there were 536 goods exporters in the Mining industry. Although these businesses represented 1 per cent of the total number of Australia’s goods exporters, they contributed $97 billion (48 per cent) of the total value of Australia’s goods exports in 2009-10 (ABS 2011a). It is therefore important for Australia’s economic future that the sector’s growth is not constrained by labour or skill shortages.

This report is the first prepared by Skills Australia following the Government’s consideration of the NRSET report. It has been guided by a steering committee comprised of industry experts and has been prepared in conjunction with relevant Australian and state government agencies. In particular, the conclusions presented in the report have been tested with industry stakeholders.

The ongoing importance of addressing skill needs in the resources sector is highlighted by comments in the Queensland Resource Council’s (QRC) State of the sector report, March 2011 (QRC 2011b).

The QRC CEO Sentiment Index is a survey of the QRC’s full member company chief executives. These companies cover the majority of mining, minerals processing, contracting, exploration, electricity generation and oil and gas extraction activity in Queensland. Despite the difficulties associated with recent flooding in Queensland, the QRC reported that for its CEOs the attraction and retention of skilled employees continues to rank as the highest order issue with a ‘very strongly’ rating over the past three quarters (QRC 2011b).

1.2 The scope of this report This report examines current data concerning demand for skills from the resources sector and the supply of skills available to meet these needs.

Skills Australia follows the broad approach established in the National Resources Sector Employment Taskforce report. We have used updated and new information as available at the time of writing to update analysis of trends in demand for labour from the resources sector and the supply of skills available to meet demand for labour by the resources sector.

As part of the NRSET work, Resourcing the Future, a comprehensive analysis was undertaken to model the future demand for skills and supply of skills in the short to medium term (2010 to 2015) in the resources sector.

As part of the NRSET analysis three separate models were developed, to assess the demand for skills in:

• Mining – based on a similar approach to a National Institute of Labour Studies model which uses projected growth in commodity output to model employment growth. Commodity projections were taken from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Access Economics and BIS Shrapnel and then averaged to gain a ‘consensus’ view on likely growth paths;

2 2011 interim report on resources sector skill needs: Skills Australia

• Construction – the model was based on three scenarios of projected capital expenditure as identified by ABARES; and

• Oil and gas – Estimates of demand for skills for gas operations were based on modelling existing employment profiles in gas operations and then estimating additional demand for skills based on likely new gas plants in consultation with industry in Queensland and Western Australia.

NRSET used data from the Australian Bureau of Statistics (ABS), the Department of Immigration and Citizenship (DIAC), the National Centre for Vocational Education Research (NCVER), and the Department of Education, Employment and Workplace Relations (DEEWR) higher education statistics to determine labour supply for the resources sector. NCVER was engaged to develop projections for the future supply of tradespeople and DEEWR higher education statistics were used to estimate the future supply in professional occupations. NRSET also examined trends in subclass 457 visa applications.

In developing this report, Skills Australia has followed a similar approach to NRSET. More detail on the methodology is provided at Appendix 1.

1.3 Structure of the report This report examines:

• current and future major projects in Australia’s resources sector

• resources sector production and export outlook, by commodity, 2009 to 2016

• current economic trends

• recent trends in the Australian labour market

• existing skill shortages in occupations relevant to the resources sector

• earnings trends in key occupations relevant to the resources sector

• trends in demand for labour in the resource sector

• the supply of skills available to meet industry skill needs

• industry’s perspectives on future skill needs.

1.4 Future workAs noted earlier, this is the first annual report by Skills Australia about the state of the resources sector labour market following the Government’s consideration of the report by NRSET. Skills Australia will prepare further reports in 2012 and 2013.

Key tasks in preparing reports in future years will include:

• A review of modelling of demand for labour to ensure that the modelling approach used by Skills Australia in future reports remains appropriate to best estimate new demand for labour in the resources sector in the period ahead.

• Detailed modelling by occupation of likely skills demand in mining operations and in construction projects.

• Updated estimates of the timing of the construction of major projects and related skill needs.

• A detailed breakdown of major projects and resources skill needs by state.

• Updated modelling about the supply of skilled labour from vocational education and training and higher education.

• A review of the initial impact of recent government initiatives, including the Critical Skills Investment Fund, which were designed to assist in meeting the resources sector skill needs.

• A continued strong focus on testing projection outcomes with industry. Skills Australia proposes a series of national and state industry focus groups to test projection outcomes, supported by a broader industry survey and possibly through a national conference addressing the resource sector’s skill needs.


• Renewal of replacement demand estimates. New data has become available from the Australian Bureau of Statistics on labour mobility which will allow for a more detailed analysis of replacement demand for skills in the resources sector than is possible in the time available to prepare the 2011 report.

• A detailed analysis of the extent and impact of Fly-In Fly-Out (FIFO) labour and the effect of the Cairns based FIFO coordinator on enhancing use of FIFO labour.

• A review of the extent to which the resources sector has extended its use of Indigenous and female labour since NRSET reported. Improving access by these groups was a key focus for NRSET.

• Changes in the extent of employer satisfaction with vocational education and training since NRSET reported.

• A detailed analysis of the broader community flow on effects of growth in the Mining industry.


2. International and domestic economic outlook

2.1 IntroductionThis section of the report provides a review of recent international and domestic economic trends. The international economic outlook is of significance to the resources sector given the high proportion of resources sector output that goes to international markets (for example, in 2010-11 nearly 70 per cent of Australia’s production of thermal coal and over 90 per cent of iron ore production will be exported). In 2010–11, Australia’s Liquefied Natural Gas (LNG) exports are forecast to increase by 4 per cent to 19 million tonnes, supported by the anticipated higher demand from Australia’s major export destinations, including Japan, the Republic of Korea and China. For Mining, major markets include Japan, China, Korea and India.

The domestic economic outlook is also important as strong growth in other sectors may increase demand for skills that are critical to the resources sector.

2.2 International economic outlookIn its April 2011 World Economic Outlook (WEO) (written shortly after the Japanese earthquake and tsunami) the International Monetary Fund (IMF) noted that its projections for global real Gross Domestic Product (GDP) growth in 2011–12 were little changed from the January 2011 WEO Update (IMF, 2011).

However, the IMF noted that downside risks have risen. World real GDP growth is forecast to be about 4½ per cent in 2011 and 2012, down modestly from 5 per cent in 2010. Real GDP in advanced economies and emerging and developing economies is expected to expand by about 2½ per cent and 6½ per cent, respectively. The IMF observed that downside risks continue to outweigh upside risks. In advanced economies, weak sovereign balance sheets and still-moribund real estate markets continue to present major concerns, especially in certain euro area economies; financial risks are also to the downside as a result of the high funding requirements of banks and sovereigns.

The IMF also commented that new downside risks are building on account of commodity prices, (notably for oil) and geopolitical uncertainty, as well as overheating and booming asset markets in emerging market economies. However, there is also the potential for upside surprises to growth in the short term, owing to strong corporate balance sheets in advanced economies and buoyant demand in emerging and developing economies (IMF, 2011).

The Organisation for Economic Cooperation and Development (OECD) suggested that the outlook for growth today looks significantly better than it looked a few months ago (OECD, April 2011).

The OECD suggested that growth perspectives are higher across all of the OECD area, and the recovery is becoming self-sustained, which means there will be less need for fiscal or monetary policy support.

The OECD noted that in Japan following the earthquake and tsunami there is uncertainty over the near-term outlook, and it is still too early to determine the full cost to the economy. For this reason, the OECD’s Interim Assessment for 2011 contains no projections for Japan.

The OECD advised that early estimates from Japanese authorities suggest that the loss of physical capital amounted to somewhere between 3.3 to 5.2 per cent of annual GDP. As a first estimate, growth in Japan might be reduced between 0.2 and 0.6 percentage points (non-annualised rates) in the first quarter and by somewhere between 0.5 and 1.4 percentage points in the second quarter.

Against this background, the OECD says that economic growth in the G7 economies outside Japan could rise to an annualised rate of about 3 per cent in the first half of 2011.


For its part, in its recent Statement on Monetary Policy released in May 2011, the Reserve Bank of Australia (RBA) (RBA, 2011) expected world output to expand at an ‘above-average pace over the next few years’, with real GDP growth of around 4½ per cent per annum for calendar years 2011, 2012 and 2013.

It should be noted that despite the rise of China, Japan remains an important market for many Australian commodities including LNG, iron ore and thermal coal as well as uranium. Therefore developments in Japan remain important to Australia’s commodity exports prospects. Japan is the world’s largest importer of LNG and remains Australia’s largest market for LNG exports (ABARES 2011b).

2.3 Domestic economic outlookFor Australia, the RBA notes that the rise in commodity prices is providing ‘a significant lift to real national income’, which is ‘underpinning very strong investment plans in the resources sector’ (RBA 2011). The RBA states that Australia’s terms of trade are ‘likely to rise further in the June quarter, to be above the level assumed a few months ago – and at their highest level in at least 140 years – boosted in particular by high prices for iron ore and coal’. In effect, the confluence of demand-pull and cost-push factors currently at play could give rise to a substantially higher rate of inflation in the period ahead.

After taking into account the expected decline in real GDP in the March quarter 2011 and the subsequent expected rebound (as production of coal and iron ore recovers) the RBA has forecast a growth rate of 4¼ per cent over the year to the December quarter 2011. In financial-year-average terms, real GDP is expected to rise by 2½ per cent for 2010-11, 4½ per cent for 2011-12 and 3¾ per cent for 2012-13.

The RBA stated that labour market conditions have ‘gradually tightened’, with ‘solid’ growth in employment. Most leading indicators continue to point to ‘further growth in employment over the months ahead, although at a slower pace than in 2010’.

The RBA comments that ‘while there have been reports of shortages for specific occupations, most firms are not reporting unusual difficulties in hiring new workers’. It states that average hours worked ‘are lower than when the unemployment rate was last around 5 per cent (in early 2006)’, which hints that ‘there may still be some additional capacity in the labour market’. The RBA recognises that a further rise in the participation rate ‘would be helpful in adding to that capacity’. The RBA forecasts the unemployment rate will fall to 4¼ per cent by December 2013.

The Commonwealth Treasury also anticipates strong growth in the medium term after recovery from the impact of Queensland floods and cyclone. Beyond the short term impact of the natural disasters, Treasury forecasts Australia’s real GDP growth to strengthen to 4 per cent in 201112 and 3¾ per cent in 201213, led by record levels of investment in the resources sector (Department of

the Treasury 2011).

Treasury forecast the unemployment rate will fall gradually from around 5 per cent currently to 4½ per cent in the June quarter of 2013 as the economy approaches capacity. Treasury noted that the mining investment boom is also increasing competition for labour and other inputs, raising cost pressures for some businesses.

The main drivers of economic growth are expected to be business investment and commodity exports.


Figure 2.1: Growth in real GDP

0

2

4

6

8

0

2

4

6

8Per Cent Per Cent

Forecasts

30-year average

1992-93 1996-97 2000-01 2004-05 2008-09 2012-13

Source: Australian Bureau of Statistics (2011), Australian National Accounts: National Income, Expenditure and Product (Cat. No. 5206.0) and Treasury

In total, Treasury projected that new business investment will grow by a strong 16 per cent in 2011-12 and 14½ per cent in 2012-13, underpinned by record capital expenditure in the Mining industry, while non-residential building investment is expected to remain subdued.

Treasury also noted that sustained high prices for Australia’s key non-rural commodity exports are driving record investment intentions in the Mining industry and strong forecasted growth in commodity exports. Treasury estimates new engineering construction will grow by 56 per cent over the next two years, underpinned by large LNG projects, driving new business investment to 50-year highs as a percentage of GDP. The surge in investment will expand the economy’s capacity over time, with previous investment in mine and transport infrastructure underpinning a forecast increase in the volume of non-rural commodity exports of over 20 per cent over the next two years.

Treasury suggest that forecasted growth in mining investment is well-supported by projects that are already at an advanced stage and by the longer term outlook for global resources demand. While cyclical fluctuations in global growth will have implications for commodity prices, investment decisions are taken over longer time horizons and are underpinned by projections of the growing resource needs of the large emerging market economies over a period of decades. Treasury noted that in value terms around two-thirds of the large mining projects included in the Treasury economic forecasts have received final investment approval, with the majority of these already under construction.

2.4 ConclusionsInternational economic conditions appear likely to support continued growth in the Australian resources sector, with strong growth likely in Australia’s key Asian markets which will support international demand for Australian commodities (although this outlook is not without risks, as discussed earlier in this report).

Both Treasury and the RBA anticipate sustained economic growth post recovery from the Queensland natural disasters. One consequence is that the RBA anticipates further tightening in the Australian labour market in the period ahead. The likely fall in the unemployment rate may mean that the pool of skilled labour available to the resources sector may decrease in the period ahead.


3. Current and future major projects in Australia’s resources sector

3.1 IntroductionThis section of the report examines current and future major projects in Australia’s resources sector. The discussion includes a review of major projects by location, sector, and state.

The discussion is based on data arising from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) Major development projects – April 2011 listing published in May 2011. ABARES’ list of major minerals and energy projects expected to be developed over the medium term is compiled every six months. Information contained in the list spans the mineral resources sector and includes energy and minerals commodities projects and mineral processing projects.

The information comes predominantly from publicly available sources but, in some cases, is supplemented by information direct from companies. The list is updated to reflect developments in the previous six months. The projects list is released around May and November each year.

The latest projects list contains information on 376 projects, providing the following details:

• project name

• location

• expected start-up date

• capital cost of the project

• proponent company or joint venture

• project status

• additional output capacity

• additional employment, where available.

With the exception of the gold industry1, the ABARES’ list provides details of each announced project for which total capital expenditure is expected to exceed $40 million.

In general, projects included in the ABARES list are at relatively advanced stages of planning. That is, for new projects, stage of planning categories range from ‘pre-feasibility study underway’ through to ‘under construction’. Projects are listed by the principal mineral commodity to be produced, under the broad headings: ‘mining projects – energy’, ‘mining projects – minerals’ and ‘mineral processing facilities’. The list includes new greenfield projects as well as expansions of existing projects.

In the 2011-12 Budget papers, Treasury forecast new business investment will grow by 16 per cent in 2011-12, and 14½ per cent in 2012-13 economy wide, underpinned by strong growth in both engineering construction, and machinery and equipment investment. Non-residential building investment is expected to remain modest over the next two years. New business investment is expected to reach 50-year highs as a share of Gross Domestic Product (GDP) by the end of 2012-13.

Treasury suggests the Mining industry is expected to be the key driver of business investment over the next two years, with continuing strong global demand for Australia’s mineral resources and record levels of profitability underpinning an unprecedented pipeline of investment activity.

1 The gold industry, typically has a relatively large number of smaller projects. For gold, the expenditure threshold for inclusion in the ABARES list is $15 million.


The latest Australian Bureau of Statistics (ABS) capital investment expenditure data reflect this view. The ABS released its latest capital expenditure data in late May 2011. ABS data indicate that in 2009-10, the capital expenditure for Mining was $35.2 billion. It decreased by 7.4 per cent compared with 2008-09. In 2010-11, the annual expenditure for Mining is estimated to have increased dramatically by 45.7 per cent to $51.3 billion. In 2010-11 Mining Investment accounted for 41.3 per cent of the total national capital expenditure, and Mining capital expenditure is expected to rise by a further 62.5 per cent to $83.3 billion in 2011-12 when Mining capital expenditure is expected to rise to 59.7 per cent of total national investment.

Table 3.1: Annual capital expenditure in Mining and total industry between 2009 and 2012

Period Mining $m Total Industry $mProportion of Mining

Expenditure %

2009-10 35184 106995 32.9

2010-11 51277 124096 41.3

2011-12 83326 139538 59.7

Source: Australian Bureau of Statistics (2011), Private New Capital Expenditure and Expected Expenditure, (Cat. No. 5625.0)

3.2 ABARES estimates of new projects

Total projectsAs at April 2011, 399 projects were listed on the 2011 ABARES list, including 94 advanced projects valued at $173.5 billion and 305 projects valued at $256.6 billion which remain uncommitted. However, it should be noted that the Shell’s Prelude Liquefied Natural Gas (LNG) project is not included as an advanced project in the April 2011 list, because the Final Investment Decision (FID) was taken after the cut off date of 30 April 2011 for listing in the ABARES data base. The project will be categorised as an advanced project for the October 2011 listing.

In addition, the giant BHP Billiton Olympic Dam project in South Australia is recorded in the ABARES data base as a less advanced project at this stage. There is no monetary value given to this project in the data base. Media estimates suggest this project could entail construction outlays of over $20 billion, which would have an immense impact on the South Australian economy. Skills Australia understands that the project may come forward for environmental approval in 2012, with a FID to be made after environmental approvals are received.

Advanced projectsAs noted above, at the end of April 2011 there were 94 projects at an advanced stage of development on the ABARES project list. Projects in this category are either ‘committed’ or ‘under construction’. Of the 94 projects, 33 are either newly committed or entered the list at an advanced stage during the previous six months. The total capital expenditure of the 94 advanced projects at the end of April 2011 is a record $173.5 billion, an increase of 31 per cent from October 2010 and an increase of 64.4 per cent compared to when NRSET reported.

The significant increase in the past six months largely reflects the final investment decision on the Gladstone LNG project (Santos, Petronas, Total and Kogas), which has a capital cost of US$16 billion. In addition, there were a number of projects advanced by BHP Billiton, Fortescue Metals Group and Rio Tinto, including metallurgical coal mining and infrastructure projects in Queensland, thermal coal projects in New South Wales and iron ore mining and infrastructure projects in Western Australia, with a total capital expenditure of US$21.7 billion.


Less advanced projectsAmong the capital-intensive projects in the April 2011 ABARES list still undergoing feasibility studies are 15 proposed LNG developments, which collectively could add up to 85 million tonnes to Australia’s annual LNG production capacity in the longer term. These projects include the Browse, Ichthys, Sunrise and Wheatstone projects off the coast of Western Australia and three coal seam gas based LNG projects in Queensland and one in New South Wales.

Among the less advanced iron ore mining projects, 12 have an estimated capital expenditure of $1 billion or more. These include Aquila Resources’ and AMCI’s West Pilbara mine ($5.8 billion); the first stage of Australasian Resources’ Balmoral South magnetite project ($3 billion); Atlas Iron’s Ridley Magnetite Project ($2.7 billion); Asia Iron Holdings’ Extension Hill Magnetite Project ($2.5 billion); Fortescue Metals Group’s Solomon Hub stage 1 (US$2.3 billion); and Sinosteel Midwest’s Weld Range project ($2 billion).

3.3 Where are major projects located?Figure 3.1 is a map of major projects as at October 2010. As the map indicates, major projects exist across Australia, although by value ABARES reports that for advanced projects 63 per cent of projects lie within Western Australia, 28 per cent in Queensland, 5 per cent in New South Wales, and 3 per cent in Victoria, with the rest being spread between the remaining states and territories (ABARES 2011).

Figure 3.1: Major resource projects, Australia, April 2011

Source: Australian Bureau of Agricultural and Resource Economics and Sciences (2011), Minerals and energy: major development projects - April 2011 Listing.


3.4 In which resources sectors do major projects lie?As at April 2011, energy project developments accounted for 35 of the 94 advanced projects of the ABARES list and around 67 per cent (or $116 billion) of committed capital expenditure. Capital expenditure on advanced energy projects increased by 25 per cent in the six months to April 2011. This largely reflects the addition of the Gladstone LNG project, the commitment by BHP Billiton to develop a number of coal projects and cost increases for a number of gas projects. Petroleum projects (comprising oil and gas projects) account for around 92 per cent ($106.1 billion) of the total estimated capital cost of all advanced energy projects.

The largest petroleum project, by capital expenditure, is the Gorgon LNG project, which is a joint venture between Chevron, Shell and ExxonMobil, as well as three Japanese customers that hold minor equity stakes. The 15 million tonne LNG development received a FID in 2009 and is scheduled for completion by 2015. With an estimated capital expenditure of $43 billion, it is the largest single resource project to be undertaken in Australia.

Other significant LNG projects on the list include BG Group’s Queensland Curtis LNG project and the Gladstone LNG project. BG Group approved the development of its Queensland Curtis Island LNG facility in October 2010. Once completed in 2014, the facility will have an annual capacity of 8.5 million tonnes of LNG and will be the first facility in the world to use coal seam gas as a feedstock in the production of LNG. The Gladstone LNG development was approved in early 2011, with an estimated capital cost of US$16 billion. This project will also use coal seam gas as a feedstock for LNG production, and with an annual capacity of 7.8 million tonnes is scheduled to commence production in 2015.

3.5 ConclusionsThe latest ABARES data on major resource construction projects highlight continued significant growth in the value of major resource projects. Much more significant however, is the marked growth in the number and value of major resource projects which can now be considered advanced or committed projects where a FID has been made (an increase of 31 per cent from October 2010 and an increase of 64.4 per cent compared to when NRSET reported only 12 months earlier). This will have significant implications for labour demand for project construction. In addition the development of this new capacity will have major implications for employment in mining and gas operations. The labour implications are discussed in more detail later in this report.


4. Resources sector production and export outlook by commodity, 2009 to 2016

4.1 IntroductionThis section of the report examines likely trends in production, by commodity, in the resources sector in the period from 2010 to 2016. The projections are derived from the Australian Bureau of Agricultural and Resource Economics and Science (ABARES). The section also reviews risks and uncertainties associated with the ABARES commodity projections.

Other things being equal, any marked expansion in output seems likely to need to be underpinned by additional labour supply. This assumes that that human and capital resources are already being used effectively by employers before the expansion in activity. In addition it is assumed that new capital equipment adds to production capacity rather than increasing operating efficiency.

This is consistent with recent trends in the resources sector. Strong growth in output in the Australian Mining industry has been accompanied by very strong growth in employment in the period since the global recession.

4.2 Production outlook by commodityAs discussed in detail in the report by the National Resources Sector Employment Taskforce (NRSET) published in June 2010, forecasts then available pointed to a marked expansion in resources production, driven by export markets, in the period to 2015.

The NRSET based its analysis of likely trends in demand for labour in mining operations on likely trends in production by commodity, using projections from ABARES.

This report provides more recent data than was available at the time of the NRSET report. The data, as shown in Table 4.1, emphasise that strong growth in production is anticipated to continue until at least 2016, with very strong growth in production projected for commodities such as liquefied natural gas (LNG), uranium, thermal coal, copper, and iron ore over this period.


Table 4.1: Australia, projected growth in oil, gas and mine output, by commodity, 2010 to 2016

Commodity 2010 2011 2012 2013 2014 2015 2016

Total growth (per cent)

Average annual growth (per cent)

Crude oil and condensate (Ml) 25572 27802 30077 30221 29266 29122 26923 5.3 0.9

Petroleum products (Ml) 37200 37979 38017 38150 38284 38420 38558 3.7 0.6

Gas (LNG) (Gm) 49 54.3 63.3 65.4 70.9 91.9 129.4 164.1 27.3

Thermal coal (Mt) 202.9 217 232 251.8 277.4 300.9 320.7 58.1 9.7

Uranium (t) 7156 8682 9575 10050 11460 16025 17450 143.9 24

Iron and steel (Mt) 6.89 7.7 7.98 7.98 7.98 8.08 8.1 17.6 2.9

Iron ore (Mt) 423 448 470 511 538 581 619 46.3 7.7

Metallurgical coal (Mt) 163 162 180 182 191 208 220 35 5.8

Gold (t) 240 274 282 291 314 315 315 31.3 5.2

Primary Aluminium (kt) 1918 1962 1997 2009 2029 2052 2071 8 1.3

Alumina (kt) 20057 20170 22100 23420 24360 24360 24360 21.5 3.6

Bauxite (Mt) 67 68 70 74 82 90 91 35.8 6

Nickel (kt) 160 178 203 200 200 203 206 28.8 4.8

Copper (kt) 819 916 1005 1161 1225 1235 1253 53 8.8

Zinc (kt) 1362 1505 1540 1573 1630 1621 1603 17.7 2.9

Source: Australian Bureau of Agricultural and Resource Economics and Sciences (2011), Australian commodities – vol 18 no 1 – March quarter 2011

In its latest analysis of likely trends by commodity, ABARES (2011b) stated that:

• Prices for energy and mineral commodities are forecast to remain high in the short term, supported by strong economic growth, a weak US dollar, and supply disruptions. Beyond 2012, prices are generally projected to decline in real terms, but remain above historical averages.

• Strong increases in demand in China and developing economies will continue to drive growth in energy and minerals commodity markets over the medium term.

• Supply capacity is projected to increase, although there could be some constraints such as rising marginal costs and sovereign risk.

• Australian energy and mineral export earnings are forecast to increase by 33 per cent to around $186 billion in 2010-11, and by a further 18 per cent to around $219 billion (in 2010-11 dollars) in 2015-16, as higher export volumes and an assumed lower value of the Australian dollar offset the effect on export revenue of lower world prices (ABARES 2011b: 127).

The likely increase in production reflects the development of significant new production capacity for many commodities by 2016.


4.3 Risks and UncertaintiesThe projections prepared by ABARES with respect to likely growth in output by commodity are subject to risks and uncertainties. Uncertainties include:

• Uncertainties about growth in demand for commodities. A substantial proportion of Australia’s commodity exports go to countries such as China, Japan, Korea and India, and growth in demand for Australia’s commodities is therefore dependent on patterns of demand for commodities in these countries.

• Uncertainties about the capacity to supply these international markets to the extent envisaged by ABARES.

Uncertainties about growth in international demand for Australian commoditiesThere is a possibility that China’s demand for Australian commodities may not grow as rapidly as envisaged by ABARES.

The importance of China’s influence on demand for commodities is very significant for some commodities, especially coal. A recent paper prepared by the Lowy Institute stated that in 2009, China accounted for about 47 per cent of world coal consumption, more than 10 per cent of world oil consumption and about 3 per cent of world natural gas consumption (Thirlwell 2011). China also accounted for 16 per cent of world metallurgical coal imports, 12 per cent of world thermal coal imports, and 66 per cent of world iron ore imports. It has also accounted for about 47 per cent of global steel consumption, about 40 per cent of global consumption of aluminium, copper and zinc, and about 36 per cent of global consumption of nickel. The authors concluded that since 2000, China has been the key driver of growth in resource consumption, and the result has been a rise in the (relative) price of resources.

However, strong concerns have emerged recently in China about inflationary pressures, and China is taking initiatives to reduce inflationary pressures (Xinhua 2011a). China’s consumer prices are expected to rise about 4.9 per cent in the first half of 2011, although inflation is expected to ease in the second half of 2011 (Xinhua 2011b). The anticipated easing in inflationary pressures reflects the use of measures to reduce domestic demand in China, including rises in interest rates and rising bank prudential deposit requirements, as well as tax measures in some locations to cool the property market (Xinhua 2011a). This may constrain demand for Australian commodities.

Nonetheless, China’s economy expanded by 9.7 per cent in the first quarter of 2011 compared to a year earlier, and 2.1 per cent from the previous quarter. Previously, China’s economy grew by 9.8 per cent over the year to the fourth quarter of 2010 compared with 9.6 per cent to the third quarter, after slowing from 11.9 per cent annual growth to the first quarter and 10.3 per cent to the second quarter (Xinhua 2011c). Continued growth of this magnitude would be significant in underpinning demand for Australian commodity exports.

There are also uncertainties about demand patterns and trends in growth in demand for Australian commodities by Japan following the recent tsunami and damage to nuclear reactors in northern Japan.

For example, in its latest review of Japan’s debt rating conducted in late March 2011, Standard and Poor’s noted its projections were ‘uncertain’ due to ongoing developments at the Fukishima nuclear power plant, where workers are battling to cool reactors and spent fuel rods to prevent a meltdown or further radiation leaks, meaning that Standard and Poor’s estimates of likely infrastructure repair costs were varying significantly depending on the extent of reconstruction required (The Age 2011).

In the near term, Japan’s manufacturing capacity is being adversely affected in some key industries such as electronics and steel which is also impacting on downstream industries like car production.

In the medium term, demand for commodities such as iron may rise to meet reconstruction needs.

In addition, the nuclear reactor problems may impact on demand for Australian uranium, in Japan and in other markets, including China. There has been extensive coverage in the Japanese press to the post tsunami reactor problems at Fukushima Daiichi including discussion about the extent of future use of nuclear power in Japan. For example, about 5 000 Japanese citizens rallied against


nuclear power in Shibuya on April 24 (Asahi 2011), reflecting the increasing concerns about the energy source following the Fukushima No. 1 nuclear power plant accident (Asahi 2011).

On the other hand, Japan’s difficulties in meeting power supply needs may lead to growth in demand for alternative energy sources, including liquefied natural gas (LNG) from Australia.

The strength of growth in output in India has also been important in underpinning Australia’s economic growth. However, as was the case in China, inflationary pressures are emerging. As noted by Deloitte Access Economics (DAE) (2011:6) in its latest Business Outlook, India’s current account and fiscal deficits are a reminder that other important constraints remain, while the uptrend in inflation suggests that the Reserve Bank of India will need to ‘wind up interest rates over the next year or so – perhaps notably’. DAE observed that this will be frustrating for many manufacturers given that the rupee has already appreciated sharply in recent times.

Uncertainties about supply capacityThere are two significant risks to supply capacity:

• short term disruptions to supply capacity arising from recent floods in Queensland

• failure to grow supply capacity from major new projects as rapidly as anticipated by ABARES.

The Queensland Resources Council (QRC) has estimated that Queensland resources production fell by 9 per cent in the December quarter 2010 (QRC 2011a).

The QRC production index is a composite weighted index that tracks percentage increases and decreases in the total production of Queensland bauxite, alumina, aluminium, coal (all saleable), copper, gold, lead, silver, zinc, oil, gas, and electricity quarter to quarter.

The index at the end of the December 2010 quarter (latest available data) reached 99 index points, nine per cent lower than the previous quarter (100 in June 2006). QRC concluded this was mainly due to the large decrease in coal production emanating from the severe wet weather in the latter half of 2010.

The recent floods in Queensland have impacted on coal production in that state. For example, Macarthur Coal’s production fell 56 per cent from a year earlier in the January-March period as it struggled to recover from the severe wet season in Queensland (Fickling 2011). For example, in late April 2011 Macarthur, the world’s largest pulverised coal miners, said that output from its Moorvale and Coppabella mines in Queensland’s Bowen Basin remained under force majeure, a legal condition allowing miners to break supply contracts when natural disasters intervene (Fickling 2011). However, assuming no further heavy rainfall, the impact of the floods on production will ameliorate over time.

On the other hand, as noted above, ABARES projections are based on two premises, that existing production capacity can be utilised more effectively, and that substantial new production capacity will be developed over the projection period. If this new capacity does not come on line as

anticipated, the commodity growth projections may prove difficult to achieve.

4.4 ConclusionsThis section has outlined ABARES most recent projections of growth in commodities production in the period between 2010 and 2016. ABARES suggest that Australian production of mining commodities is likely to increase substantially over the period from 2010 to 2016. If these projections are realised, it is likely that demand for labour will rise substantially in mining and gas operations. Potential growth in demand for skills from this growth in projected production of commodities is discussed in more detail in later chapters in this report. However, the outlook is not without risks and uncertainties. China’s growth may be more constrained than anticipated if the Chinese authorities see the need for further action to reduce domestic Chinese inflationary pressures. Similar cautions arise in respect to India, while the impact of the tsunami and nuclear disaster in Japan will have both short term and medium term effects on the Japanese economy.


5. Recent trends in the Australian labour market

5.1 IntroductionThis section of the report provides information about recent trends in the Australian labour market, including developments before and after the global recession, more recent developments, including trends in employment and unemployment, labour force participation, trends in state labour markets and recent growth in employment by industry.

5.2 Developments before and after the global recessionOver the five years to September 2008, economic and labour market conditions in Australia had been strong, with employment growing at a healthy annual average rate of 2.8 per cent and the unemployment rate falling to a low of 4 per cent in February 2008. Against the backdrop of the global recession, however, the Australian labour market slowed, with employment growing by only 0.5 per cent over the year to September 2009 and the unemployment rate peaking at 5.8 per cent in October 2009 (ABS, 2011d).

Since late 2009, however, domestic labour market conditions have strengthened considerably, and have been particularly robust over the past year. For instance, employment has increased strongly, by 267 200 (or 2.4 per cent) over the year to April 2011, while the unemployment rate has fallen from 5.4 per cent in April 2010 to stand at just 4.9 per cent in April 2011 (ABS, 2011d).

Looking forward, while the pace of trend employment growth has clearly slowed (to its current average rate of 4 900 jobs per month from its peak of 36 600 in September 2010), leading indicators suggest that the somewhat softer labour market performance achieved recently (compared with the pace of jobs growth achieved over most of 2010) should be temporary, with a pick-up in the pace of employment growth likely in the second half of the year.

5.3 More recent labour market developments

EmploymentWhile employment growth has been strong over the past year, it is important to note that most of the growth over the period has been accounted for by full-time employment (up by 217 500 or 2.8 per cent), while part-time employment has increased by 49 700 or 1.5 per cent (see Figure 5.1). The sizeable increase in full-time employment, in part, reflects a pick-up in activity in the full-time industries of Mining and Construction, which experienced significant declines during the recent global recession (ABS, 2011d).


Figure 5.1: Change in full-time, part-time and total employment (‘000s), April 2010 to April 2011.

137.1

80.4

217.5

15.7

65.449.7

121.4145.8

267.2

50.0

0.0

50.0

100.0

150.0

200.0

250.0

300.0

Males Females Persons

Full-time Part-time Total

Em

ploy

men

t gr

owth

('00

0s)

Source: Australian Bureau of Statistics (2011), Labour Force, Australia, April 2011, seasonally adjusted data, (Cat No: 6202.0)

In terms of gender breakdown, both male employment (up by 121 400 or 2.0 per cent) and female employment (up by 145 800 or 2.8 per cent) have grown strongly over the 12 months to April 2011. Importantly, male full-time employment has increased significantly over this period, up by 137 100 (or 2.7 per cent) to stand at 5 237 400 in April 2011, again, reflecting the strong growth in the male dominated industries of Mining and (to a lesser extent) Construction (ABS, 2011d).

UnemploymentThe level of unemployment in Australia has also declined, by 53 200 (or 8.4 per cent) over the last year to stand at 583 000 in April 2011. Over this period, male unemployment has fallen by 33 100 (or 9.7 per cent), while female unemployment has decreased by 20 200 (or 6.8 per cent) (ABS, 2011d).

Against this background, the unemployment rate has decreased by 0.5 percentage points to stand at 4.9 per cent (see Figure 5.2). The male unemployment rate fell from 5.3 per cent in April 2010 to 4.7 per cent in April 2011, while the female unemployment rate decreased by 0.5 percentage points over the year to stand at 5.0 per cent in April 2011 (ABS, 2011d).

Participation rateOver the last year, the participation rate has increased by 0.1 percentage points to stand at 65.6 per cent in April 2011 (see Figure 5.2). The participation rate for males fell by 0.2 percentage points over the year to stand at 72.3 per cent in April 2011, while the female participation rate rose by 0.4 percentage points over the same period to stand at 59.0 per cent in April 2011 (ABS, 2011d).


Figure 5.2: Unemployment rate and participation rate, April 2001 to April 2011

61.5

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Source: Australian Bureau of Statistics Labour Force, Australia, April 2011, trend data (Cat No: 6202.0)

Long-term unemployedThe substantial increase in the short-term unemployment numbers that can occur as a result of a downturn will often flow through into higher levels of long-term unemployment (those unemployed for 52 weeks or more) for sometime after an economic and labour market recovery has commenced. That is why it generally takes some time after a recovery has begun for long-term unemployment numbers to begin to fall in a consistent manner. Indeed, while the level of long-term unemployment in seasonally adjusted terms has risen by 12 600 or 11.8 per cent over the year to stand at 119 400 in March 2011, it has nonetheless declined by 9 200 (or 7.2 per cent) over the last 5 months alone. The number of very long-term unemployed (those unemployed for 104 weeks or more) has also increased by 11 000 (or 26.5 per cent) over the year to stand at 52 400 in March 2011 (ABS, 2011f).

That said, short-term unemployment has fallen, by 52 100 (or 9.9 per cent) over the last year, reducing in–flows into long-term unemployment. In addition, sustained strong jobs growth (employment has increased by a robust 2.9 per cent over the past 12 months) is likely to continue to place downward pressure on the level of long-term unemployment over the coming year.

State labour market differencesLabour market conditions improved considerably in most states and territories over the year to April 2011, consistent with a strengthening economy. Employment increased in all states and territories over the year to April 2011, with the largest increases (in percentage terms) recorded in Western Australia (up by 3.3 per cent), Victoria (up by 2.9 per cent), the Northern Territory (up by 2.9 per cent) and South Australia (up by 2.8 per cent) (ABS, 2011d).

All of the states and territories saw a decrease in their unemployment rate over the year to April 2011 with the exception of the Australian Capital Territory (which increased by 0.1 percentage points). Victoria (down by 0.7 percentage points to 4.7 per cent), Tasmania (down by 0.7 percentage points to 5.5 per cent), New South Wales (down by 0.6 percentage points to 5.1 per cent) and Western Australia (also down by 0.6 percentage points to 4.1 per cent) recorded the largest decreases in their unemployment rate (ABS, 2011d).

In April 2001 the State unemployment rate was lowest in the Northern Territory, the Australian Capital Territory, and in Western Australia (see Figure 5.3). By comparison, the unemployment rate was significantly higher in Tasmania, South Australia and Queensland.


Figure 5.3: Unemployment rate by state and territory, April 2011

0 1 2 3 4 5 6

NSW

Vic

Qld

SA

WA

Tas

ACT

NT

Sta

tes

and

terr

itorie

s

Percent

Source: Australian Bureau of Statistics (2011) Labour Force, Australia, April 2011 (Cat No: 6202.0),data for the states are seasonally adjusted, while data for the territories are trend.

Regional labour market developmentsReflecting an improvement at the national level, labour market conditions in both metropolitan and non-metropolitan areas have strengthened over the year to March 2011. For instance, employment rose by 170 600 (or 2.4 per cent) in metropolitan areas, while in non-metropolitan areas it increased by a robust 143 400 (or 3.5 per cent) (ABS, 2011f).

Against this background, the unemployment rate in metropolitan areas has declined by 0.4 percentage points to stand at 5.2 per cent over the year to March 2011, while the non-metropolitan areas unemployment rate has decreased by 0.3 percentage points to stand at 5.8 per cent over the same period (ABS, 2011f).

Employment growth by industryIn line with strengthening conditions at the national level, employment increased in 14 of the 19 industries over the year to February 2011 (latest available industry data) (see Figure 5.4). In particular, employment growth in Mining has been very strong, increasing by 29 400 over the year. This represents a growth rate of 16.7 per cent, which is the fastest growth rate of any industry and reflects continuing strong demand for Australian commodities and high levels of investment in new resource sector projects as well as the expansion of existing operations (ABS, 2011g).

Health Care and Social Assistance recorded the largest increase in employment over the year to February 2011, up by 98 700 (or 8.1 per cent), with strong growth projected to continue in this industry over the next five years. Employment in Retail Trade was also strong, increasing by 52 400 (or 4.4 per cent) over the year to February 2011, as staffing was rebuilt following the global recession. This was despite relatively subdued trading conditions reported by many retail employers in more recent months (ABS, 2011g).

While employment in most industries grew solidly over the year to February 2011, employment contracted in several, including Manufacturing, Financial and Insurance Services, and Wholesale Trade.

Most notable was the sharp turn-around in employment growth in Agriculture, Forestry and Fishing over the last year, with employment declining by 30 600 (or 8.3 per cent), although this may have been driven by poor seasonal conditions in Queensland and New South Wales around the February quarter. Manufacturing was an industry that was particularly hard-hit by the recent global downturn and continues to remain subdued, with employment declining by 3 000 over the year to February 2011 (ABS, 2011g).


Figure 5.4: Change in employment (‘000s) by industry, February 2010 to February 2011

98.7 52.4

35

32.1

29.4

26.6

24.7

22.8

22.4

21.5

16.4

15.2

2.3 1.7

-2.1

-3.0

-6.8

-10.5 -30.6

-20 0 20 40 60 80 100 Health Care and Social Assistance

Retail Trade

Accommodation and Food Services

Administrative and Support Services

Mining

Construction

Rental, Hiring and Real Estate Services

Education and Training

Professional, Scientific and Technical Services

Electricity, Gas, Water and Waste Services

Public Administration and Safety

Transport, Postal and Warehousing

Information Media and Telecommunications

Arts and Recreation Services

Other Services

Manufacturing

Financial and Insurance Services

Wholesale Trade

Agriculture, Forestry and Fishing

Source: Australian Bureau of Statistics (2011), Quarterly Labour Force Survey, trend data (Cat. No. 6291.0.55.003)

Employment growth by occupationLabour market conditions over the year to February 2011 (latest available occupation data) were favourable for most of the higher skilled major groups in the Australian and New Zealand Standard Classification of Occupations (ANZSCO) system (see Figure 5.5). The largest gains in employment over this period were in the Technicians and Trades Workers group, where employment grew by 92 300 (or 5.7 per cent). Professionals (up by 60 800 or 2.5 per cent) and Community and Service Workers (up by 56 800 or 5.6 per cent) also recorded strong employment growth. Employment for Managers, however, declined over the year to February 2011, falling by 50 600 (or 3.4 per cent). This was largely due to a contraction in employment in corporate management roles and among managers (including owner-managers) in the agricultural sector (ABS, 2011g).

Similarly, employment in all lower skilled occupational groups increased over the year to February 2011. Sales Workers (up by 85 900 or 8.2 per cent) grew very strongly over this period while solid gains were recorded for Labourers (up 30 300 or 2.6 per cent) and Machinery Operators and Drivers (up 20 100 or 2.9 per cent). Employment in the Clerical and Administrative group also grew over the year, increasing by 15 900 (or 1.0 per cent) (ABS, 2011g).


Figure 5.5: Change in employment (‘000s) by occupation, February 2010 to February 2011

-50.6

15.9

20.1

30.3

56.8

60.8

85.9

92.3

-60 -40 -20 0 20 40 60 80 100

Managers

Clerical Administrative

Machinery Operators and Drivers

Labourers

Community and Personal Services

Professionals

Sales Workers

Technicians and Trades Workers

Source: Australian Bureau of Statistics (2011) Quarterly Labour Force Survey (Cat. No. 6291.0.55.003), seasonally adjusted and trended by DEEWR

Employed and Unemployed by OccupationTables 5.1 and 5.2 set out the levels of employment and unemployment in a number of occupational groups of particular relevance to the resources sector. The occupational categories are minor groups within the ANZSCO system and comprise professional occupations and technician and trade occupations respectively.

Table 5.1: Number employed and unemployed for selected professional occupations

ANZSCO Code

Professionals (ANZSCO Minor Groups) Employed (‘000s)

Unemployed (‘000s)

Occupational UE Rate (per cent)

212 Media professionals 54.0 1.4 2.6

221 Accountants, auditors and company secretaries 182.1 4.1 2.2

223 Human resource and training professional 88.0 1.8 2.0

224 Information and organisation professionals 124.3 2.7 2.2

225 Sales, marketing and public relations professionals

112.6 2.7 2.4

231 Air and marine transport professionals 21.8 0.4 1.6

232 Architects, designers, planners and surveyors 120.8 1.7 1.4

233 Engineering professionals 134.5 2.9 2.1

234 Natural and physical science professionals 97.8 0.8 0.8

242 Tertiary education teachers 83.9 2.0 2.3

261 Business and systems analysts, and programmers

114.2 2.7 2.3

262 Database and systems administrators, and ICT security specialists

32.6 0.7 2.1

263 ICT network and support professionals 45.3 0.6 1.4

271 Legal professionals 78.7 0.5 0.7

Total Professionals 2427.7 41.4 1.7

Source: Australian Bureau of Statistics, Quarterly Labour Force Survey (Cat. No. 6291.0.55.003), average over four quarters to February 2011


Table 5.2: Number employed and unemployed for selected technician and trades occupations

ANZSCO Code

Technicians and Trades Workers (ANZSCO Minor Groups)

Employed (‘000s)

Unemployed (‘000s)

Occupational UE Rate (per cent)

311 Agricultural, medical and science technicians

48.1 0.6 1.3

312 Building and engineering technicians 120.3 2.4 1.9

313 ICT and telecommunications technicians 55.2 1.7 3.0

321 Automotive electricians and mechanics 103.5 2.0 1.9

322 Fabrication engineering trades workers 92.2 3.2 3.3

323 Mechanical Engineering trades workers 137.1 3.4 2.4

331 Bricklayers, carpenters and joiners 156.9 4.1 2.5

332 Floor finishers and painting trades workers 53.6 2.4 4.3

333 Glaziers, plasterers and tilers 77.1 4.1 5.1

334 Plumbers 87.5 0.9 1.1

341 Electricians 142.2 2.2 1.5

342 Electronics and telecommunications trades workers

97.6 2.8 2.8

362 Horticultural trades workers 92.4 3.5 3.6

394 Wood trades workers 34.9 1.5 4.2

399 Miscellaneous technicians and trades workers

58.4 1.3 2.2

Total technicians and trades workers 1680.0 48.8 2.8

Source: Australian Bureau of Statistics (2011) Quarterly Labour Force Survey (Cat. No. 6291.0.55.003), average over four quarters to February 2011

People are regarded as unemployed in an occupation if they are unemployed, have worked in the last two years and their last job was in that occupation. Occupational unemployment rates are therefore generally lower than the unemployment rate across the whole labour force, since they exclude those who have never worked or who have been unemployed for more than two years. The average unemployment rate across all occupations in the year to February 2011 was 3.2 per cent.

5.4 ConclusionsThis section of the report has reviewed recent labour market developments in Australia. While there are differences in the strength of local labour markets across Australia, generally speaking the labour market has strengthened in the last year. Employment has risen, with significant growth in employment in the Mining industry. The number of unemployed has fallen as has the national unemployment rate (and the number of unemployed has declined in skilled occupations relevant to

the resources sector, including in the mechanical, electrical and fabrication engineering trades).

The data highlight that the supply of skills available to the resources sector has tightened in the past year. Current skill shortages in occupations relevant to the resources sector are discussed in the next chapter, and later this report outlines the very strong growth in employment projected for the resources sector in the period to 2016. The data highlight the importance of increasing labour force participation, including by Indigenous people and by women (the latter being noticeably underrepresented in the resources sector) if the resources sector skill needs are to be met without adverse flow on effects to other areas of the economy.


6. Existing skill shortages in occupations relevant to the resources sector

6.1 IntroductionThis section of the report examines skill shortages both broadly across the economy and with respect to occupations in demand in the resources sector.

The Australian labour market tightened over 2010 and employers experienced greater difficulty recruiting the skilled workers they needed than they did in 2009. However, consistent with a range of labour market indicators such as vacancy levels and unemployment, the Department of Education, Employment and Workplace Relations (DEEWR) research indicates the labour market has not returned to the activity levels recorded in 2007 and 2008, and employers experience less difficulty recruiting skilled workers than they did immediately prior to the onset of the global recession.

Employers recruiting in 2010 filled, on average, 61 per cent of their skilled vacancies compared with 51 per cent in 2008. In addition, there were more suitable applicants per skilled vacancy in 2010 than there were in 2008 (1.6 compared with 1.3).

The trades labour markets tightened notably in 2010, with shortages re-emerging in trades which experienced a sharp fall in demand with the onset of the global recession. This was particularly apparent in the construction, engineering and automotive trades.

DEEWR skill shortage research confirms the impact on the resources sector, in particular Western Australia and the Northern Territory. In 2010, the labour markets in both these jurisdictions were tight, with employers filling just 53 per cent and 55 per cent respectively of surveyed vacancies (compared with 61 per cent nationally). In Queensland, however, recruitment was relatively easy, with 63 per cent of vacancies filled.

Employer contacts across a number of industries suggest, however, that increasing activity in the resources sector has been a key driver of demand for a number of professional and trade occupations, with the flow-on effect felt widely in other sectors of the economy and in a range of locations (especially those which have Fly-In Fly-Out arrangements to mining sites).

The Northern Territory Chief Minister Paul Henderson recently suggested that more subclass 457 visas should be granted for the occupations to ‘backfill’ positions vacated by Australian resident workers who were attracted by higher wages in the resources sector (Northern Territory News, 13 April 2011).

6.2 Skill shortages in occupations key to the resources sectorThe occupational profile of the Mining industry (Table 6.1) suggests that, in terms of highly skilled occupations, the sector requires relatively large numbers of engineers, mining professionals and accountants, as well as engineering, automotive and electrotechnology trades workers. Construction trades are also key to the resources sector although employment of these workers may not be directly in the Mining industry. The latest DEEWR research indicates that skill shortages exist for a number of these occupations, and that, in most instances, these labour markets tightened between 2009 and 2010. Skill shortages in these labour markets, however, generally remain less widespread than they were in 2007 and 2008. A list of occupations in shortage is provided in Table 6.2.

DEEWR research into a range of professional and technician labour markets (including geologists and mining engineers) was completed in March 2011. The bulk of the research discussed in this


report, however, was undertaken in 2010. The DEEWR skill shortage research program focuses on occupations which are highly skilled, that is, those which generally require at least three years of post-school education and training.

Some key occupations in the resources sector have a lower skill level, including drillers, truck drivers and plant operators and these are not assessed through the DEEWR skill shortage research program. Information about some of these occupations is collected, through DEEWR’s program of surveys of employers’ recruitment experiences in regions and industries across Australia. It is important to recognise that these occupations have skills which take some time to acquire, either through formal training or on-the-job training and experience or both.

Table 6.1: Occupational employment in Mining, Top 20 occupations, 2010

ANZSCO code and Occupation Number Employed in Mining in 2010

7122 Drillers, Miners and Shot Firers 34 900

3232 Metal Fitters and Machinists* 15 500

3129 Other Building and Engineering Technicians 10 700

7331 Truck Drivers 10 100

3411 Electricians* 8000

2336 Mining Engineers* 7400

1335 Production Managers* 5400

7212 Earthmoving Plant Operators 5000

3223 Structural Steel and Welding Trades Workers* 4000

2344 Geologists and Geophysicists* 3900

8219 Other Construction and Mining Labourers 3700

2211 Accountants* 3400

5111 Contract, Program and Project Administrators 2700

7129 Other Stationary Plant Operators 2600

2335 Industrial, Mechanical and Production Engineers* 2200

3992 Chemical, Gas, Petroleum and Power Generation Plant Operators 2100

5911 Purchasing and Supply Logistics Clerks 1900

2513 Occupational and Environmental Health Professionals 1800

1323 Human Resource Managers 1800

7123 Engineering Production Systems Workers 1800

Source: Australian Bureau of Statistics, Labour Force Survey, average 2010, Included in Department of Employment, Education and Workplace Relations skill shortage research


Table 6.2: Skill shortages in occupations key to the resources sector, 2008 to 2010*

2008 2009 2010

Managers

Production Manager (Mining) Shortage Shortage

Professions

Accountant Shortage

Surveyor Shortage Shortage Shortage

Chemical Engineer Shortage Shortage

Civil Engineer Shortage Shortage Shortage

Electrical Engineer Shortage Shortage Shortage

Mechanical Engineer Shortage Shortage

Mining Engineer Shortage Shortage Shortage

Petroleum Engineer n/a Shortage Shortage

Geologist Shortage Shortage

Trades

Metal Fabricator Shortage

Welder (First Class) Shortage Regional shortage

Fitter Shortage Shortage

Metal Machinist Shortage Shortage

Carpenter Shortage

Plumber (General) Shortage Shortage

Electrician Shortage Regional shortage

Airconditioning and Refrigeration Mechanic Shortage Shortage Shortage

Motor Mechanic (includes Diesel Mechanic) Shortage Shortage

Automotive Electrician Shortage Shortage Shortage

n/a not assessed * 2010 is the latest complete research set, although a small number of resource occupations have been assessed in 2011. Source: Department of Education, Employment and Workforce Relations (2011), unpublished data.

Managers, professionals and associate professionals

Production managersThe Mining industry employs a very small proportion of total production managers (just 8 per cent working in the Mining industry), with the Manufacturing industry employing two-thirds. Mining production manager is a specialist occupation, however, and it is unlikely that these skills would be readily transferable between sectors. In addition, the Manufacturing industry has experienced weak growth across a range of subsectors which employ relatively large numbers of production managers, suggesting there is unlikely to be competition for skills from this industry.

After abating in 2009, shortages for mining production managers were once again apparent in early 2010. Few advertised vacancies were identified in the survey period in 2011, but those employers who did advertise experienced significant difficulty attracting applicants who had the required mining engineering and management experience. Industry sources suggest these roles tend to be filled from the ranks of highly experienced mining engineers.


EngineersNationally, shortages of professional engineers are similar to those seen before the onset of the global recession. Increased demand has been evident since late 2009 due, in particular, to heightened activity in the resources sector. Shortages are evident for around 80 per cent of surveyed engineering professions, including both civil and electrical engineers which are key skills for the resources sector. Since this research was undertaken, there have continued to be signs of strengthening demand, including from the resources sector where employers maintain relatively high levels of recruitment activity for experienced engineers.

Demand for engineers across the economy is strong. Employment rose by 17 200 (or 14.6 per cent) over the year to February 2011, to 134 400. Over the five years to February 2011, employment grew by more than 25 per cent (29 200).

Advertised vacancy levels, measured by the DEEWR Internet Vacancy Index increased by 75 per cent over the year to March 2011, but remain nearly 35 per cent below those recorded in mid-2008, prior to the onset of the global recession.

Employers commonly seek qualified and experienced engineers (often requiring five to ten years or more of relevant industry experience). Recruitment appears to be significantly easier for graduate positions.

The labour market for mining and petroleum engineers remains very tight. Demand for mining engineers has increased over the past 12 months and the majority of employers surveyed in early 2011 commented that their workload has returned to similar levels to those experienced prior to the onset of the global recession.

In March 2011, slightly more than 40 per cent of surveyed vacancies for mining engineers were filled and, on average, there was less than one suitable applicant per vacancy. Specialised vacancies requiring skills in areas such as hard rock and underground mining were particularly difficult to fill. Most employers received a large number of applications, but many candidates were regarded as being unsuitable due to lack of specialised experience/skills and qualifications.

Very few vacancies were identified for petroleum engineers in early 2011, and industry sources suggest these roles are frequently filled by word of mouth, often from the ranks of experienced mining engineers. Employers who did advertise during this time experienced significant difficulty filling positions, with applicants generally lacking appropriate accreditation.

The Mining industry employs more than one in every two mining engineers. It is also likely that a significant proportion of mining engineers who are employed within the Professional, Scientific and Technical Services industry work indirectly for Mining companies through contract or consultancy arrangements. There is therefore unlikely to be competition from other industries for these skills.

DEEWR research suggests the majority of employers recruiting for engineers receive applications from qualified international candidates. Some do not consider these applicants to be suitable for employment, however, some of the major mining companies regularly recruit engineers from overseas and Department of Immigration and Citizenship (DIAC) figures confirm migration provides large numbers of engineers to the Australian labour market.


Figure 6.1: Proportion of vacancies filled and number of suitable applicants per vacancy, engineering professions, 2007 to 2010

0.0

1.0

2.0

3.0

4.0

5.0

6.0

10

20

30

40

50

60

70

2007 2008 2009 2010

Fill

rate

(%)

Year

Sui

tabl

e ap

plic

ants

per

vac

ancy

Source: Department of Education, Employment and Workplace Relations (2010), Survey of Employers who have Recently Advertised

Resource professionals and associatesShortages of geologists were evident in early 2011, with research indicating the tight labour observed in 2010 has persisted. In 2011, employers filled less than half of their vacancies and attracted 0.4 suitable applicants per vacancy, similar to the results recorded in 2010. Senior level roles continued to be the most difficult to fill. Many employers were looking for staff who had specialised skills, and the majority of roles advertised required several years experience. As a result, employers considered a very low proportion of applicants to be suitable.

The development of new mining projects over the past 12 months has kept demand for exploration geologists high. Demand for resource modelling geologists increased towards the end of 2010 and early 2011 with various projects moving beyond the exploration stage. Employers have also commented on increasing demand for both oil and gas geologists.

During 2009, employment of geologists and geophysicists declined by around one-third as the global economic recession impacted on the Mining industry. Employment levels have since recovered to 9 300 (up by 13.7 per cent over the year to February 2011), a similar level to that recorded in February 2006. Advertised vacancies for geologists and geophysicists declined sharply from late 2008 to mid 2009. Despite more than doubling over the year to March 2011, vacancy levels remain significantly below their pre-global recession peak.

The Mining industry employs slightly more than half of all geologists and geophysicists. It is also likely that most of those who are employed within the Professional, Scientific and Technical Services work indirectly for mining companies through contract or consultancy arrangements, suggesting there is little or no domestic competition for these skills.

Employers of both metallurgists and metallurgical technicians continued to experience little difficulty recruiting in early 2011, with multiple suitable applicants per vacancy and a reasonably high proportion of vacancies filled. Many employers commented that metallurgical roles were the least difficult to fill when compared with other occupations within the resources sector.

Shortages of mine deputies were evident in March 2011, with a very low proportion of vacancies filled. Mine deputies work in safety driven environments and employers experienced difficulty attracting candidates who held the combination of management skills required and specific qualifications such as deputy’s tickets. The majority of employers were advertising due to an increase in workload, notably in areas such as the Hunter Valley and the Bowen Basin.


Figure 6.2: Proportion of vacancies filled and number of suitable applicants per vacancy, Resource sector professions and associates, 2007 to 2010

0.0

1.0

2.0

3.0

4.0

5.0

10

20

30

40

50

60

70

2007 2008 2009 2010 2011

Fill

rate

(%)

Sui

tabl

e ap

plic

ants

per

vac

ancy

Year


AccountantsClearly, the resources sector represents a very small proportion of employment of accountants and competes for these services with a wide range of industries. About half of accountants work in Professional, Scientific and Technical Services. Nonetheless, in 2010, there were 3 400 accountants employed in Mining.

National shortages of accountants were recorded continuously from 2004 to 2008. There was, however, a marked reduction in demand for these professionals from the onset of the global recession. Employment and the level of advertised vacancies have continued to fall, and widespread shortages are not apparent.

Over 2010, DEEWR research suggests the labour market was adequately supplied, with employers experiencing little difficulty filling their advertised vacancies for both entry-level and experienced accountants.

Employment of accountants fell by 7.3 per cent over the year to February 2011, to 165 900. Over the past five years, however, employment has grown by 14.9 per cent. The level of advertised vacancies for accountants fell by more than 60 per cent from its peak in July 2008 to early 2010. Growth in vacancies since this time has been slight (up by 8.1 per cent over the year to March 2011) and vacancy levels remain significantly below those recorded prior to mid 2008.

SurveyorsCartographers and surveyors employed in the Mining industry account for around 11 per cent of the national workforce of these professions.

National shortages of surveyors were evident continuously from 2006 to 2010, with consistently low numbers of suitable applicants per vacancy. Preliminary results from 2011 research indicate that shortages of surveyors persist.

Notably, demand for surveyors in Western Australia is being driven by the resources sector and surveyors with mining experience are especially sought after. Industry bodies and employers expressed concerned about inadequate supply of surveyors in Western Australia and employment across all industries for cartographers and surveyors grew by 68 per cent in the year to February 2011 indicating that demand is strong.


TradesThe labour market for technicians and trades workers was particularly affected by the global recession, with a marked easing from late 2008 bringing an end to shortages which, for many trades, had lasted for much of the previous decade. From late 2009, though, there were signs of increased demand for technicians and trades workers, and the labour market continued to tighten over the course of 2010.

Shortages have become more widespread and are now evident for more than 60 per cent of assessed technician and trade occupations, compared with fewer than 45 per cent in 2009. Despite the tightening labour market, employers continue to find it easier to recruit technicians and trades workers than they did prior to the global recession, when around three quarters of surveyed occupations were in shortage.

Figure 6.3: Proportion of vacancies filled, trade occupation groups, 2007 to 2010

35 37

68

49 50 50

67 64

51

61

75

62

43 40

61 61

0

10

20

30

40

50

60

70

80

90

(%)

Automotive Trades Engineering Trades Construction Trades Electrotechnology and Telecommunications Trades

2007 2008 2009 2010


Figure 6.4: Number of suitable applicants per vacancy, trade occupation groups, 2007 to 2010

Automotive Trades Engineering Trades Construction Trades Electrotechnology and Telecommunications Trades

0.7 0.8

1.6

1.0 1.0 0.9

2.9

1.5

1.0

1.5

2.9

1.5

1.0 0.9

1.9

1.6

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2007 2008 2009 2010

(no.

)



Automotive tradesShortages of automotive trades workers have been persistent over the past decade. Wastage from these occupations is relatively high and although there was a substantial easing in the automotive trades labour markets from late 2008, demand has recovered and employers recruiting in 2010 experienced greater difficulty attracting the skills they needed than they did in 2009 (based on the number of applicants per position, as shown in Figure 6.4). Shortages are once again relatively widespread across these trades although the proportion of vacancies filled in 2010 remains notably higher than the level recorded over 2007 and 2008 (Figure 6.3).

For motor mechanics (including diesel mechanic), the main employing industry, with about 55 per cent of employment, is Other Services which incorporates automotive repair services, followed by Retail Trade which has about 20 per cent of employment of motor mechanics. Shortages are widespread across the sectors so competition for these skills is likely to be strong.

Employment of automotive and engineering tradespeople (disaggregated figures are not available) fell by around 10 per cent during 2009. Although recovering slightly since late 2009, employment in February 2011 remained below the pre-recession peak (361 500 compared with 380 700 in August 2008).

In line with changes in employment, advertised vacancy levels for automotive and engineering tradespeople rose by 14.5 per cent in the year to March 2011, but remain below peak levels recorded in early 2008.

Engineering tradesThe labour market for engineering trades tightened considerably during 2010, driven by expansion in the resources, non-residential building construction and engineering construction sectors. The downturn in the Australian economy from late 2008 had a marked impact on this labour market, and skill shortages, which for the majority of engineering trades had persisted for most of the previous decade have largely eased.

From late 2009, though, there have been signs of tightening in this labour market, and during 2010 relatively widespread shortages re-emerged. All occupations in the group are now considered to be in shortage either overall or in regional locations, with the exception of metal fabricators. Despite this tightening and re-emergence of shortages, employers continue to find it easier to recruit engineering tradespeople than they did in 2007 and 2008.

About 11 per cent of the key engineering trade group of metal fitters and machinists work in the Mining industry. Accordingly, this industry competes with a range of other industries (Manufacturing in particular) for people with these skills. That said, a number of industry sectors that employ people in this occupation have experienced declining employment growth over recent years.

Employment of automotive and engineering tradespeople (disaggregated figures are not available) fell by around 10 per cent during 2009. Although recovering slightly since late 2009, employment in February 2011 remained below the pre-recession peak (361 500 compared with 380 700 in August 2008).

In line with changes in employment, advertised vacancy levels for automotive and engineering tradespeople rose by 14.5 per cent in the year to March 2011, but remain below peak levels recorded in early 2008.


Construction tradesThe demand for construction trades increased in 2010 with labour markets tightening and employers experiencing greater difficulty filling vacancies. Despite strengthening demand in 2010, recruitment is easier than it was prior to the onset of the global recession. Skill shortages are now evident in ten

of the 17 trades assessed, compared with all trades in 2008.

There is, however, substantial variation in construction trades labour markets across the states and territories. Activity levels in residential housing are subdued and there are mixed indications of trades availability in 2011, with DEEWR research, based on a small sample of vacancies, suggesting there has been little change in key labour markets since late 2010. The latest HIA-Austral Bricks Trades also indicates construction trade availability improved overall in the March quarter 2011.

In the year to February 2011, employment of construction trades workers increased strongly, up by 35 900 (10.3 per cent), to a record high of 385 900. The level of advertised vacancies, however, fell by 10.6 per cent over the year to March 2011 and is around 30 per cent lower than the peak level recorded in mid-2008. Although shortages are relatively widespread for a number of construction trades including plumbers and bricklayers, they are not evident for the key trade of carpenter, with DEEWR research in 2011 showing employers experience little difficulty recruiting for this trade. Employers suggest that repair work resulting from recent flooding in Queensland will increase demand for construction trades workers, including in the resources sector.

Electrotechnology and telecommunications tradesThe labour market for electrotechnology and telecommunications trades eased notably in 2009, but by late 2010 shortages were again becoming apparent. Recruitment, though, remained significantly easier than it was in 2007 and 2008. For the key trade of electricians, regional shortages were evident in late 2010. Shortages of airconditioning and refrigeration mechanics have persisted over much of the past decade.

Competition for these trades is likely to be relatively strong from a number of industries as employment is relatively widespread across sectors. Mining accounts for about 5 per cent of employment of electricians, with the majority (60 per cent) employed in Construction. Employment of airconditioning and refrigeration mechanics is mainly in the Other Services and Construction industries (each of which account for about 40 per cent of the trade’s employment).

Employment in the electrotechnology and telecommunications trades has experienced sustained growth over a number of years, rising by 9.1 per cent (or 20 600) over the year to February 2011 to 245 300. Employment in this group is dominated by electricians (150 600). Employment in this trade rose by 17.4 per cent over the year.

The level of advertised vacancies for electrotechnology and telecommunications trades declined by nearly half between February 2008 and September 2009. Despite strong growth over the year to March 2011, up by 20.6 per cent, the level of advertised vacancies remains well below the peak recorded in early 2008.

Lower skilled occupationsDEEWR conducts a program of surveys of employers’ recruitment experiences in regions and industries across Australia. These surveys collect information on the employers’ most recent recruitment activity providing valuable information on the availability and suitability of applicants for various occupations. The following information refers to surveys undertaken across a range of regions over the 12 months to December 2010 in medium to lower skilled occupations key to the resources sector. While the vacancies reported may not be within the resources sector, they are still a good indication of demand for specific skills.


Plant operatorsIn the 12 months to December 2010, employers who had recruited most recently to fill plant operator vacancies reported that 3.6 per cent of vacancies remained unfilled, below the unfill rate for other medium to lower skilled occupations (6.6 per cent) and all occupation skill levels (7.7 per cent). A slightly higher proportion of employers reported difficulty recruiting for this occupation than for other medium to lower skilled occupations (41 per cent compared with 38 per cent). Applicants having insufficient technical skills to perform the job was cited by the majority of employers as the reason for this difficulty. Notably, there were on average, significantly fewer applicants for each vacancy (5.8 applicants compared with an average 11.1 applicants for other medium to lower skilled positions), however of these, a higher proportion (around two fifths of applicants) were considered suitable for the position for which they had applied than for other medium to lower skilled occupations (around one quarter of applicants).

Truck driversIn the 12 months to December 2010 employers who had recruited most recently to fill Truck Driver vacancies reported that 8.3 per cent of vacancies remained unfilled, above the unfill rate for other medium to lower skilled occupations (6.6 per cent) and occupations at all skill levels (7.7 per cent). A slightly higher proportion of employers than average reported difficulty recruiting for this occupation than for other medium to lower skilled occupations (41 per cent compared with 38 per cent), with applicants having insufficient technical skills to perform the job being cited by the majority of employers as the reason for this difficulty. Slightly fewer applicants were received for each vacancy (9.1 applicants per vacancy compared with 11.1 applicants for other medium to lower skilled positions), however of these, a similar proportion of applicants were considered suitable for the position for which they had applied when compared with other medium to lower skilled occupations (around one quarter of applicants).

6.3 ConclusionsAs noted earlier, the Australian labour market tightened over 2010 and employers experienced greater difficulty recruiting the skilled workers they needed than they did in 2009. However, consistent with a range of labour market indicators such as vacancy levels and unemployment, DEEWR research indicates the labour market has not returned to the activity levels recorded in 2007 and 2008, and employers experience less difficulty recruiting skilled workers than they did immediately prior to the onset of the global recession.

Within the resources sector, the latest DEEWR research indicates that skill shortages exist for a number of key occupations for the resources sector, and that, in most instances, these labour markets tightened between 2009 and 2010. Skill shortages in these labour markets, however, generally remain less widespread than they were in 2007 and 2008.

Overall, however, the evidence suggests the resources sector has a strong focus on recruiting experienced people with specialist skills. This suggests a need to consider using the Critical Skills Investment Fund to train people with similar skills such as metal tradespersons working in manufacturing to resources sector skill needs, as well as to upgrade the skills of existing workers in resources to meet emerging roles.


7. Trends in wages, economy wide, by industry and state

7.1 IntroductionIf wages move upwards rapidly, this can be an indicator that employers need to pay more to attract employees than was previously the case. This chapter examines trends in wages for the economy as a whole and in the resources sector against that perspective.

7.2 Overall recent trends in wages in AustraliaThe Australian Bureau of Statistics (ABS) Wage Price Index (WPI) measures the price of wages in the Australian economy and is a key macroeconomic indicator. The stability of the WPI relative to other measures such as the Average Weekly Earnings makes it the preferred indicator of wage trends for the ABS and Reserve Bank of Australia (RBA). The WPI is a subset of the Labour Price Index (LPI) and is contained in the ABS LPI (Cat. No. 6345.0) publication.

Wages growth across the economy remains contained, inflation is also moderate and Australia’s productivity is growing (DEEWR, 2011b). The WPI increased by 3.8 per cent over the year to the March quarter 2011 (seasonally adjusted), down from 3.9 per cent over the year to the December quarter 2010. The latest annual increase is broadly consistent with long term historical trends.

The annual WPI result (3.8 per cent) reflects the solid economic growth in the Australian economy as the demand for skilled labour continues to grow. Wages growth is now around trend, and is expected to increase gradually as the labour market tightens. Over the longer term, the Government’s 2011-12 Budget forecasts the WPI to grow 4 per cent over the year to the June quarters 2011 and 2012, and 4¼ per cent over the year to the June quarter 2013.

7.3 Wage trends by industryWage growth by industry is shown in Table 7.1. In industry terms (original data), the highest rates of increase in the WPI over the year to the March quarter 2011 were in Mining and Professional, Scientific and Technical Services (both 4.6 per cent). The lowest annual increase was in Rental, Hiring and Real Estate Service, Arts and Recreation Services and Other Services (all 3.1 per cent). The Mining WPI recorded a quarterly increase of 1.2 per cent in the March quarter 2011 (down from 1.4 per cent in the December quarter 2010). Annual growth in wages in the Construction industry rose from 4.0 per cent in the year to December 2010 to 4.3 per cent in the year to March 2011.


Table 7.1: Change in Wage Price Index by industry: total hourly rates of pay excluding bonuses (original terms)

Industry

Over the year per cent change toQuarterly

per cent change

December quarter 2010

March quarter 2011

March quarter 2011

Mining 4.6 4.6 1.2

Manufacturing 3.9 4.1 0.7

Electricity, gas, water and waste services 4.7 3.6 0.6

Construction 4.0 4.3 0.8

Wholesale trade 3.5 4.4 1.0

Retail trade 3.3 3.3 0.6

Accommodation and food services 3.5 3.3 0.6

Transport, postal and warehousing 2.9 3.6 1.2

Information media and telecommunications 3.1 3.5 0.8

Financial and insurance services 4.4 3.3 1.0

Rental, hiring and real estate services 3.0 3.1 0.7

Professional, scientific and technical services 4.6 4.6 1.1

Administrative and support services 3.9 3.6 0.4

Public administration and safety 4.0 3.6 0.6

Education and training 4.4 3.8 1.6

Health care and social assistance 3.6 3.3 0.7

Arts and recreation services 3.1 3.1 0.7

Other services 3.2 3.1 0.9

All industries 3.8 3.9 0.9

Source: Australian Bureau of Statistics (2011) Labour Price Index, (Cat. No. 6345.0), March 2011


7.4 Wages growth by state In terms of the resource rich states, wages fell in Queensland and South Australia over the year to March 2011, and wages rose by 4.2 per cent in the Northern Territory (see Table 7.2) and rose slightly in Western Australia, and New South Wales.

Table 7.2: Change in Wage Price Index by state and territory: total hourly rates of pay excluding bonuses (original terms)

State/Territory

Over the year per cent change to Quarterly per cent change

December quarter 2010 March quarter 2011 March quarter 2011

New South Wales 3.8 3.9 1.0

Victoria 3.6 3.9 0.9

Queensland 4.2 3.9 0.6

South Australia 3.9 3.6 0.6

Western Australia 4.0 4.1 0.9

Tasmania 3.3 3.5 1.1

Northern Territory 3.8 4.2 1.2

Australian Capital Territory 3.7 3.6 0.7

Australia 3.8 3.9 0.9

Source: Australian Bureau of Statistics (2011) Labour Price Index, (Cat. No. 6345.0), March 2011

7.5 Trends in wage arrangements under enterprise agreementsTrends in Federal Enterprise Bargaining is a quarterly Department of Education, Employment and Workplace Relations (DEEWR) report containing data about the number of enterprise agreements made in the federal workplace relations system, as well as the number of employees covered and the level of wage increases provided by the agreements. The data in the report are obtained from DEEWR’s Workplace Agreements Database.

The overall AAWI for agreements approved in the September quarter 2010 was 4.2 per cent, up slightly from 4.0 per cent for the June quarter. Being a forward measure of wages growth (that is, the AAWI measures wages growth over the life of agreements approved in the quarter), it is notable that, from a potential wage cost pressure perspective, the private sector AAWI was up slightly from 3.9 per cent to 4.1 per cent. The AAWI for the public sector increased from 4.2 per cent to 4.7 per cent primarily due to some higher AAWI university agreements.

The AAWI outcomes were variable across industry reflecting different circumstances (see Table 7.2). The AAWI outcomes in the Education (includes universities); Transport (particularly maritime); and Construction and Administrative and Support Services (especially employment agencies and labour hire companies) industries were higher than average. AAWIs were lowest for Agriculture, Forestry and Fishing, Rental, Hiring and Real Estate Services, and Arts and Recreation Services. The Manufacturing, and the Public Administration and Safety (primarily APS and local government agreements) AAWIs were 3.7 and 3.9 per cent respectively (a 0.8 per cent jump for the latter).

The Mining AAWI was down from 4.8 to 4.2 per cent, due to the dominance in the quarter of smaller mining agreements with lower AAWIs. Longer term trends are presented in Table 7.3, which examines AAWI for all current agreements between September 2007 and September 2010.

The data indicate that collective agreements in place as at September 2010 were broadly similar in wage outcomes for the Construction and Mining industries for the period 2007 to 2010, although AAWI in Construction has consistently been above that for Mining and for all industries.


Table 7.3: Trends in enterprise bargaining by industry – all current agreements, September 2007 to September 2010

FOR ALL CURRENT AGREEMENTS Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10ANZSIC DIVISIONAgriculture, Forestry and Fishing 190 216 225 232 227 232 245 402 449 441 489 584 605AAWI(%) 2.8 3.0 2.9 3.0 3.3 3.5 3.5 3.7 3.7 3.8 4.0 3.7 3.5Duration 3.3 3.6 3.6 3.6 3.7 3.7 3.5 3.9 4.0 4.1 4.3 4.3 4.2Employees (‘000) 6.5 8.3 8.3 8.6 7.6 8.2 9.1 11.9 12.3 12.2 11.8 13.7 14.2Mining 333 336 332 357 393 417 415 565 565 556 536 552 592AAWI(%) 4.0 4.1 4.1 4.3 4.3 4.4 4.4 4.4 4.4 4.4 4.3 4.3 4.3Duration 3.1 3.1 3.1 3.1 3.2 3.2 3.2 3.4 3.5 3.5 3.6 3.6 3.6Employees (‘000) 25.7 25.5 25.1 28.9 31.6 32.8 33.4 41.0 39.9 38.9 37.1 38.7 41.5Manufacturing 3106 3212 3199 3216 3219 3398 3392 3654 3310 3243 3373 3394 3422AAWI(%) 4.3 4.2 4.2 4.2 4.2 4.2 4.2 4.1 4.1 4.0 4.0 3.9 3.9Duration 2.9 2.9 2.9 2.9 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0Employees (‘000) 226.2 216.0 212.7 213.2 207.9 219.5 219.7 241.7 212.3 209.7 219.6 219.0 221.8Non-metals Manufacturing 1924 2004 1956 1979 1980 2083 2077 2270 2126 2084 2179 2170 2140AAWI(%) 4.2 4.2 4.2 4.2 4.2 4.2 4.2 4.1 4.1 4.1 4.0 4.0 3.9Duration 2.9 2.9 2.9 2.9 3.0 3.0 3.0 3.0 3.0 3.1 3.0 3.1 3.1Employees (‘000) 127.9 130.3 127.4 129.4 128.0 133.2 135.6 147.2 132.7 131.1 139.1 136.9 132.5Metals Manufacturing 1182 1208 1243 1237 1239 1315 1315 1384 1184 1159 1194 1224 1282AAWI(%) 4.4 4.3 4.3 4.3 4.2 4.2 4.2 4.1 4.0 4.0 3.9 3.8 3.8Duration 2.9 2.9 2.9 2.9 3.0 2.9 2.9 2.9 2.9 2.9 2.9 3.0 2.9Employees (‘000) 98.3 85.7 85.4 83.8 79.9 86.3 84.1 94.5 79.6 78.6 80.5 82.1 89.3Electricity, Gas, Water and Waste Services 263 275 275 285 290 323 333 373 367 350 365 370 377AAWI(%) 4.5 4.5 4.6 4.7 4.8 4.9 4.8 4.8 4.8 4.8 4.8 4.8 4.7Duration 2.8 2.8 2.8 2.9 2.9 3.0 3.0 3.0 3.0 3.0 3.1 3.1 3.1Employees (‘000) 23.9 25.6 27.6 25.5 28.9 38.2 36.2 38.6 38.1 37.5 44.7 45.4 43.7Construction 7225 6984 7240 5545 5731 4790 5299 7065 7155 7312 7507 7776 8148AAWI(%) 4.9 4.9 4.9 4.6 4.6 4.8 5.2 5.3 5.3 5.3 5.3 5.4 5.4Duration 2.8 2.8 2.9 3.0 3.0 3.1 3.0 3.1 3.1 3.2 3.2 3.2 3.2Employees (‘000) 129.0 134.1 137.5 121.6 126.5 110.9 118.9 149.5 148.9 149.3 152.7 154.0 157.1Wholesale Trade 199 216 240 238 234 250 258 325 310 300 305 306 346AAWI(%) 3.6 3.7 3.8 3.8 3.9 4.2 4.1 4.1 4.1 4.1 4.1 4.0 3.8Duration 3.0 3.0 3.0 3.0 3.1 3.1 3.1 3.4 3.4 3.4 3.5 3.5 3.4Employees (‘000) 10.4 11.3 12.3 12.3 12.2 13.5 12.6 15.0 14.2 14.2 13.8 13.9 15.3Retail Trade 669 841 1162 1186 1210 1220 1259 1650 1763 1778 1951 1954 1981AAWI(%) 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.6 3.6 3.5 3.5 3.5 3.4Duration 2.9 2.9 3.0 3.0 3.1 3.1 3.1 3.1 3.2 3.2 3.2 3.0 3.1Employees (‘000) 334.2 391.5 394.0 382.4 345.5 370.1 373.6 388.0 361.5 367.8 381.6 469.8 400.5Accommodation and Food Services 1162 1263 1349 1331 1349 1342 1308 1470 1533 1539 1630 1683 1742AAWI(%) 3.3 3.3 3.2 3.2 3.2 3.6 3.5 3.6 3.6 4.0 4.0 3.9 3.9Duration 3.3 3.5 3.6 3.7 3.8 4.1 4.2 4.2 4.3 3.9 3.9 3.8 3.8Employees (‘000) 60.6 62.2 62.7 60.5 59.4 45.1 43.3 55.0 63.6 86.3 98.5 106.6 109.6Transport, Postal and Warehousing 1038 1088 1092 1114 1132 1235 1245 1497 1511 1514 1559 1586 1601AAWI(%) 4.1 4.1 4.0 4.0 4.1 4.1 4.2 4.2 4.2 4.2 4.2 4.2 4.4Duration 3.1 3.1 3.2 3.1 3.1 2.9 2.9 3.0 3.0 3.0 3.0 3.1 3.2Employees (‘000) 106.7 104.2 115.0 100.9 90.4 120.6 125.2 150.0 146.9 150.6 152.3 140.2 137.1Information Media and Telecommunications 176 177 164 162 172 191 229 262 252 242 252 253 233AAWI(%) 3.2 3.3 3.3 3.3 3.9 3.7 3.8 3.7 3.7 3.7 3.8 3.8 3.5Duration 3.1 3.1 3.1 3.1 3.2 3.2 3.2 3.2 3.2 3.2 3.2 3.2 2.9Employees (‘000) 52.4 55.6 55.1 53.6 30.7 33.9 36.8 41.5 41.2 39.5 40.1 40.3 41.6Financial and Insurance Services 147 159 150 142 143 145 139 256 312 308 316 312 310AAWI(%) 3.8 3.8 3.8 3.8 3.9 4.0 4.0 4.0 4.1 3.7 3.6 3.6 3.7Duration 2.4 2.4 2.5 2.7 2.7 2.9 2.8 2.7 2.9 2.4 2.5 2.7 2.3Employees (‘000) 106.6 114.5 103.6 92.7 84.4 78.6 49.3 64.9 65.5 90.2 92.8 88.7 124.0Rental, Hiring and Real Estate Services 150 158 186 186 208 223 227 274 291 302 346 373 385AAWI(%) 4.8 4.8 4.7 4.5 4.5 4.5 4.5 3.4 3.5 3.6 3.6 3.7 3.6Duration 2.9 2.9 3.1 3.9 4.0 3.9 4.0 4.2 4.2 4.0 4.0 4.1 4.0Employees (‘000) 10.3 10.4 11.6 4.9 5.0 5.2 5.3 5.0 5.2 6.2 6.7 6.8 7.6Professional, Scientific and Technical Services 140 152 162 179 183 203 204 325 331 337 349 359 379AAWI(%) 4.0 4.2 4.2 4.0 4.1 4.5 4.5 4.5 4.4 4.4 4.4 4.3 4.2Duration 3.2 3.2 3.3 3.3 3.3 3.0 3.0 3.2 3.2 3.2 3.2 3.2 3.2Employees (‘000) 12.8 13.4 13.4 15.9 15.9 22.1 21.4 26.1 26.2 25.9 27.7 28.1 28.5Administrative and Support Services 339 364 408 419 413 423 450 665 671 673 726 749 771AAWI(%) 3.6 3.6 3.7 3.6 3.6 3.8 3.7 3.8 3.6 3.7 3.7 3.7 3.7Duration 3.2 3.3 3.6 3.8 3.9 3.9 3.9 3.9 3.8 3.9 3.8 3.8 3.9Employees (‘000) 31.2 34.7 40.7 40.1 38.7 38.7 39.3 58.6 66.0 64.8 70.7 71.0 71.8Public Administration and Safety 676 694 699 707 652 669 658 764 721 711 721 720 688AAWI(%) 4.2 4.2 4.2 4.2 4.1 4.2 4.4 4.3 4.1 4.1 4.0 3.9 3.9Duration 3.0 3.1 3.1 3.1 3.1 3.0 3.0 2.8 2.8 2.7 2.6 2.6 2.6Employees (‘000) 265.4 280.6 293.6 302.1 283.4 297.4 239.2 310.9 270.5 294.0 304.4 308.8 288.6Education 620 664 630 649 645 686 671 735 686 713 719 749 803AAWI(%) 4.9 5.0 5.0 4.9 4.5 4.4 4.4 4.4 4.3 4.5 4.4 4.6 4.6Duration 3.1 3.1 3.1 3.0 3.2 3.0 3.1 3.1 3.2 3.1 3.1 3.1 3.1Employees (‘000) 250.3 233.2 223.7 151.8 174.4 179.6 166.4 177.3 156.4 183.4 209.9 236.4 261.8Health and Community Services 1283 1304 1353 1419 1427 1245 1195 1371 1217 1246 1439 1509 1563AAWI(%) 3.9 4.0 4.0 4.0 4.0 4.0 4.3 4.1 4.1 4.1 4.1 4.0 4.0Duration 2.9 2.7 2.7 2.7 2.8 2.8 2.9 3.0 3.1 3.1 3.0 3.0 3.0Employees (‘000) 179.7 157.6 161.4 181.2 190.6 182.0 167.9 215.7 207.4 221.5 276.4 305.5 294.7Arts and Recreation Services 171 187 203 204 223 249 253 290 302 305 341 349 346AAWI(%) 3.8 3.9 4.0 4.0 4.1 4.2 4.3 4.1 4.1 3.9 3.6 3.5 3.5Duration 2.9 2.9 2.9 3.0 3.0 3.0 3.1 3.2 3.2 3.2 3.3 3.3 3.3Employees (‘000) 39.3 39.8 42.1 40.0 45.8 47.9 43.7 47.1 51.7 51.9 53.6 60.5 54.8Other Services 298 335 359 365 346 345 359 426 421 417 436 425 453AAWI(%) 3.9 3.9 4.0 4.0 3.7 3.8 3.8 3.9 3.8 3.8 3.7 3.7 4.0Duration 2.8 3.0 3.1 3.1 3.5 3.5 3.6 3.6 3.5 3.5 3.5 3.6 3.4Employees (‘000) 16.0 17.8 18.1 18.6 14.0 13.8 15.1 19.0 21.4 21.5 22.7 22.4 34.3ALL INDUSTRIES 18185 18625 19428 17936 18197 17586 18139 22369 22167 22287 23360 24003 24745AAWI(%) 4.1 4.1 4.1 4.0 4.0 4.1 4.1 4.2 4.1 4.1 4.1 4.1 4.1Duration 2.9 3.0 3.0 3.0 3.1 3.0 3.1 3.1 3.1 3.1 3.1 3.1 3.1Employees (‘000) 1887.0 1936.1 1958.5 1854.9 1792.9 1858.2 1756.4 2056.7 1949.1 2065.3 2217.2 2369.8 2348.5

Source: Department of Education, Employment and Workplace Relations (2011) Workplace Agreements Database, DEEWR. All estimates are rounded and are subject to revision. Revisions have been made to historical series.


7.6 ConclusionsRapid increases in wage rates can be indicative that employers are having increasing difficulty in recruiting skilled workers. This chapter has examined trends in wages for the economy as a whole and in the resources sector.

To date, the available data suggests that wage pressures remain broadly contained across the economy, and that recent wage growth within the resources sector (i.e. in the Mining and Construction industries has been in line with historical trends in the lead up to the global recession. Data from the DEEWR Workplace Agreements Database, which provides data on wage movements under collective agreements for the period ahead also suggests that in the medium term wage movements under collective agreements in these industries will be in line with historic trends.

That said, the potential for further strong employment growth in mining operations and in construction for major projects highlights the need for a continued strong focus on skills formation to meet the resources sector’s likely needs for skilled labour if wage pressures are to remain contained.


8. Trends in demand for labour in the resources sector

8.1 IntroductionThis chapter reviews trends in demand for labour, including skilled labour, for the Australian resources sector over the period 2010 to 2016. The National Resources Sector Employment Taskforce (NRSET) had previously examined demand for labour in the period to 2015. The timeframes for the projections reflect the availability of data to underpin the modelling.

The analysis presents information about potential growth in demand for labour arising from extra production capacity installed to meet rising demand for Australian mining commodities, from growth in output, and replacement demand for labour arising from losses of labour to retirement or to other industries.

The approach used below to model demand follows the approach established for NRSET. However, as noted by the Western Australian Government (WADT&WD 2010) ‘The frequently changing level of expected investment results in substantial and sudden changes in the forecast demand for labour. The cyclical nature of the demand for commodities, financing difficulties and changes to infrastructure costs may all result in planned projects not proceeding past feasibility. As such, employment forecasts for the resources sector have proven to be notoriously inaccurate and date very quickly’. For this reason, the results of the modelling of resources sector skills demand outlined below should be treated with caution and Skills Australia suggests that the main focus should be with respect to advanced projects where Final Investment Decisions (FIDs) have been made.

8.2 Trends in demand for labour for mining operations

MethodologyIn its Technical Report (2010) NRSET discussed the Department of Education, Employment and Workplace Relations’ (DEEWR) projections for employment growth. More recent DEEWR projections over the five years to 2015-16 suggest that employment in all Mining sectors, with the exception of Other Non-Metallic Mineral Mining, is expected to grow at average rates that are well in excess of the average rate for all employment (of 2.1 per cent per annum over this period). The average annual rates of growth over the next five years are projected to be particularly strong in Coal Mining (7.7 per cent per annum), Metal Ore Mining (7.6 per cent per annum) and Oil and Gas Extraction (7.3 per cent per annum) (DEEWR, 2010).

NRSET modelled projections of potential employment growth for mining operations based on the approach used by the National Institute of Labour Studies (NILS) (Lowry et al 2006) in preparing projections of employment growth on behalf of the Chamber of Mines in Western Australia in 2006 and subsequently for the Minerals Council of Australia (MCA) in 2008. This model appears to project recent employment changes reasonably well.

NILS used the basis of projections of growth in output by commodity to model employment growth (Lowry et al 2006). For example growth in employment in coal mining in the base period, 2008, is assumed to be the same as the growth in output over the projections time period. Commodity projections from Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Access Economics and BIS Shrapnel were averaged to gain a ‘consensus’ view on likely growth paths.

The projections for employment growth for each commodity/industry were then aggregated to get overall industry employment at the end of the projection period. The approach assumes the


occupational composition of jobs in mining remains static over the projection period and there is no change in labour productivity.

NRSET noted it is possible to assume productivity improvements through more advanced mining techniques, which would reduce employment growth. It is also possible to assume productivity could fall given many projects now target ore deposits which are more difficult to access (Richardson 2010). On balance, NRSET assumed no change in labour productivity in modelling employment growth.

Skills Australia has adopted a similar approach.

Modelling outcomesIn its report NRSET suggested that employment growth in mining operations (excluding oil and gas operations) of 61 500 persons or 39.9 per cent from 2008 to 2015, an average annual growth rate of 4.9 per cent per annum. Further modelling of employment growth, disaggregated by major cities and other places of employment, suggested that around 25 per cent of mining industry professional employment growth would occur in capital cities and the main growth in regional areas would be for technicians and tradespeople, and for machinery operators and drivers (NRSET analysis, unpublished 2010).

Australian Bureau of Statistics (ABS) data indicate that employment in mining operations actually grew significantly more rapidly between 2008 and early 2011 than anticipated by NRSET. By November 2010 employment in mining operations across Australia rose to 187 700 persons, arise of 33 300 persons or 21.6 per cent from 2008.

Skills Australia projections now suggest that, based on ABARES projections of likely increases in production of mining commodities between 2010 and 2016, employment in mining operations will rise from 187 700 persons in November 2010 to 270 600 persons in 2016, a rise of 82 900 persons or 44 per cent. Skills Australia will present more detailed projections of growth in employment by occupation in mining operations in its 2012 report.

8.3 Trends in demand for labour for project construction

MethodologyAs noted in the NRSET Technical Report (DEEWR 2010:13), the scale of investment in resources projects has grown dramatically in recent years. As noted by Richardson (2010), in real terms the volume of engineering construction in Australia increased from $9.5 billion in 2000–01 to $47.6 billion in 2008–09. The NRSET Technical Report also noted that at the time the NRSET report was written, the anticipated scale of resources sector project construction in the next five years identified by ABARES and considered by the Reserve Bank of Australia (RBA) in its May 2010 statement on monetary policy and by Treasury in the 2010–11 Budget papers was unprecedented.

NRSET therefore considered using employment projections for the whole construction sector, to estimate potential growth in resources construction, would be inappropriate although Skills Australia notes DEEWR projections that over the five years to 2015-16 relatively large employment gains are projected for the Construction industry (up by 195 800 or 3.6 per cent per annum) (DEEWR 2010).

NRSET therefore modelled an alternative approach to estimating the demand for labour over the next five years. It involved using a typical construction industry occupational profile for a given value of construction and then applying it to the expected value of major resources project construction activity as identified by ABARES. At the time the NRSET report was prepared the latest data suggest 958 employees were required per $1 billion expenditure on heavy engineering construction.

Skills Australia has followed this approach, updating the approach by using Australian Bureau of Statistics (ABS) data on the value of engineering construction work done in 2010 compared to numbers employed in heavy engineering and civil construction.


For example, in the December quarter 2010 the seasonally adjusted estimate for the value of total engineering construction work done in Australia rose 8.6 per cent to $21 579.6 million and for 2010 as a whole, the value of total engineering construction work done was $79 796 million (original data). This data also highlights the potential rapid growth in the value of engineering construction work anticipated in the period ahead, as the value of engineering work commenced in the December quarter 2010 was $28 759.6 million, an increase of 60.2 per cent from the September quarter (ABS 2010: 8672.0).

Across 2010, ABS Labour Force Survey data indicate there were an average of 70 700 people employed in heavy engineering and civil construction in 2010 (ABS 2011c: 6291). This implies that in 2010 approximately 890 persons were employed per billion dollars of construction work, somewhat less than in 2009.

Modelling outcomesNRSET projected that demand for new short term construction jobs for major resources projects around three scenarios and suggested that the number of new short term jobs for major construction projects could range from approximately 103 000 new jobs (low scenario) to around 255 000 new jobs depending on the extent to which major projects under consideration received a positive Final Investment Decision.

Skills Australia has also prepared projections of demand based on three scenarios:

• The low-growth scenario is based on all advanced projects proceeding ($173.5 billion as at April 2011).

• The medium-growth scenario is based on 50 per cent of the value of all projects on the ABARES database proceeding ($214.95 billion as at April 2011).

• The high-growth scenario is based on 75 per cent of the value of all projects on the ABARES database proceeding ($322.4 billion as at April 2011).

The projections below reflect the value of major projects recorded in the ABARES database as at April 2011. Given the substantial increase in the value of major projects and in particular the very substantial increase in the value of advanced projects where Final Investment Decisions (FIDs) have been made, Skills Australia now estimates the number of new short term project construction jobs could range from around 154 500 new jobs (low scenario) to 191 300 new jobs (medium scenario) to 287 000 new jobs (high scenario) (see Table 8.1). This is a very substantial increase on the estimates derived at the time the NRSET report was prepared.

On balance, Skills Australia suggests the medium scenario may be the most likely outcome, given that advanced projects now comprise nearly half of all major projects on the ABARES database. NRSET took a similar perspective. On the other hand, given that around half of all projects recorded by ABARES have now received final investment approval, it is feasible that a stronger outcome could eventuate.

Table 8.1: Modelling of demand for new project construction jobsValue $ billion Projected jobs

Low growth (advanced projects) 173.5 154415

Medium growth* 214.95 191305.5

High growth** 322.425 286958.25

Sources: Estimates by Skills Australia, NRSET (2010) and Australian Bureau of Statistics (ABS) (2010a), Labour force: Four quarter average to February 2011, cat. no. 6291.0.55.003, ABS, Canberra, Australian Bureau of Statistics (ABS) (2011b), Construction work done, Australia: Four quarter average to December 2009, cat. no. 8755.0, ABS, Canberra Australian Bureau of Agricultural and Resource Economics and Sciences (2011), Major development projects – April 2011 listing


This is a significant increase in the estimated number of new jobs under the low scenario. As discussed earlier many less advanced projects which were under consideration at the time NRSET reported have now been confirmed to go ahead. However, it needs to be emphasised that these are not permanent jobs, and that in many cases workers will move from job to job as some projects complete and others commence.

The Skills Australia result based on 2010 engineering construction value and employment data may reflect the effects of offshore modular construction for major gas projects. Given the large share of major gas projects in overall major resources projects, this trend could become more pronounced in the period ahead.

On the other hand, it should also be noted that if the NRSET analysis based on 958 employees required per $1 billion expenditure on heavy engineering construction was used against current major projects, labour demand would be a further 7.6 per cent higher against all scenarios.

The potential impact by occupation is outlined in Table 8.2.

Table 8.2: Projected short term construction jobs over the period 2011 to 2017Low Medium High

Managers 16205 20076 30114

Professionals 15147 18766 28149

Technicians and Tradespeople 35359 43807 65710

Community and personal service workers 350 433 650

Clerical and administrative workers 18821 23318 34977

Sales workers 1258 1559 2338

Machinery operators and drivers 32712 40527 60790

Labourers 32054 39712 59568

Other 2509 3108 4662

Total 154415 191306 286958

Sources: Estimates by Skills Australia, NRSET (2010) and Australian Bureau of Statistics, Labour force: Four quarter average to February 2011, (Cat. No. 6291.0.55.003), Australian Bureau of Statistics (2011), Construction work done, Australia: Four quarter average to December 2009, (Cat. No. 8755.0) and Australian Bureau of Agricultural and Resource Economics and Sciences (2011), Major development projects – April 2011 listing

The projections highlight potential strong demand for high level professional and technical and trades level skills. At the same time the estimates highlight that there is likely to be very strong demand for machinery operators and drivers as well as labourers, where the availability of foundation skills training in literacy and numeracy may aid employment prospects.

8.4 Trends in demand for labour for oil and gas operations

MethodologyIn its report NRSET estimated likely employment in gas operations based on the potential number of new gas platforms possibly coming on line over the period to 2016 based on typical employment profiles for off shore platforms in Western Australia and in coal seam gas developments in Queensland. Skills Australia has adopted a similar approach.

Skills Australia notes that, at the time the NRSET report was published, several potential major projects in Queensland were yet to be confirmed. Since that time, final investment decisions have been confirmed for over $30 billion worth of gas projects in Queensland.


The projects where final investment decisions have been made include:

• In October 2010, the United Kingdom-based BG Group gave final investment clearance to a $15 billion project to convert coal seam gas from the Surat and Bowen basins into LNG for Asian and domestic energy markets at processing plants at Gladstone. BG expects first LNG exports from 2014. Santos’s schedule sees first shipments from its two-train project in 2015.

• In January 2011 Adelaide-based oil and gas explorer Santos, which owns 30 per cent of the Gladstone liquefied natural gas (GLNG) project, and offshore partners Petronas, Total and Kogas, announced a final investment decision for its $16 billion project (Sinclair 2011).

Modelling outcomesThere have been no announcements of potential major new projects in gas operations since NRSET reported.

At the time when NRSET reported, Energy Skills Queensland (ESQ) has projected new jobs growth, based on slow, moderate and rapid growth scenarios This modelling assumes base employment of 1 000 people in all scenarios, that is, there were 1 000 people already employed in the industry in 2009.

In Queensland all of the coal seam gas (CSG)/liquefied natural gas (LNG) projects will be greenfields. Owing to the nature of CSG technology, which requires significant numbers of drillers, each train will need between 550 and 650 professional and technical staff during operations.

On the basis of ESQ’s modelling, NRSET considers that if only two trains become operational by 2015, the number of professional and technical staff needed for operations in Queensland will be around 1 200.

NRSET based employment projections for Western Australia on consultations with the Australian Petroleum Production and Exploration Association (APPEA) and industry representatives. Differences in the extraction process means there is a different employment profile in Western Australia.

In Western Australia, the number of employees required per train will depend on the workforce model adopted (i.e. Fly-In Fly-Out (FIFO), residential or a mix of the two) and the number of greenfields projects. When an additional LNG train is built alongside an existing train (a brownfields development), it requires significantly fewer operational employees due to existing processes, work flows and team capability.

Discussions with industry suggest the number of employees required for a train at a greenfields site can range from around 150 to 300 depending on whether the workforce is residential, a mix of residential and FIFO, or all FIFO. A typical workforce includes plant operators (around 50 per cent), maintenance technicians (mechanical and electrical trades — around 35 per cent) and engineering professionals and paraprofessionals (around 15 per cent). Additional trains in the same LNG brownfields development require about 10 to 20 per cent of the number of employees required for the first train.

NRSET considered it likely that there would be two to four new trains operating in Queensland by 2015, and four to six new trains in Western Australia. This would create between 1 200 and 2 500 professional and trade jobs in operations in Queensland and between 600 and 700 in Western Australia.

These estimates did not account for any increase in employment in Western Australia’s offshore LNG industry. Employment growth offshore is expected to be low, so NRSET has not attempted to make any projections. The number of new jobs will depend on the development concepts that are approved.

Companies in the gas sector predicted a growth in demand for occupations across the entire scope of operations and maintenance, as the sector rapidly expands in new fields, such as CSG. A LNG train typically takes three years to build, so the operational workforce is expected to grow significantly from 2013 to 2015.


One of Skills Australia’s more important tasks in 2012 in developing a better understanding of future skill needs for the resources sector will be to monitor employment growth in gas operations against these projections. In its latest set of commodity forecasts ABARES noted that over the next five years, Australia’s LNG exports are projected to increase at a rate of 19 per cent a year, underpinned by a number of new projects under construction. This expected growth reflects Australia’s attractiveness as a location for investment given its perceived lower security and political risks compared with competitors such as those in the Middle East or West Africa (ABARES 2011c: 145). If the ABARES growth projections are realised, significant growth in gas operations employment over this time frame would also seem likely.

8.5 Replacement Demand Replacement demand for labour can add a significant dimension to employers recruiting needs even when an industry is not growing. This section of the report addresses potential replacement demand for labour in mining and gas operations. Given the generally temporary nature of many resources construction jobs, replacement demand for these jobs has not been estimated although Skills Australia notes industry advice that labour turnover in resources construction jobs can be significant.

Over time, people leave their current jobs for jobs in the same industry (turnover) or they leave the industry for another industry or to retire (replacement demand). NRSET noted there is limited data available concerning these movements but presented information from the resources sector Industry Skills Council, SkillsDMC, the NRSET industry survey and on DEEWR analysis of Gross Replacement Demand from the ABS 2008 Labour Mobility survey.

Key conclusions from this analysis are presented below, against the frame of later employment data than was available at the time NRSET reported.

TurnoverIn its 2011 Environmental Scan SkillsDMC (2011) estimated annual labour turnover rates:

• of up to 26 per cent in drilling. In all cases, the occupation with the highest turnover figure was for drillers assistants/other assistants. This information reflects the sentiments of companies who have experienced difficulty in recruiting and retaining drillers on staff. A number of organisations further cited that the mining industry and coal seam and gas sectors were attractive employment options for drillers in terms of remuneration and career pathways (SkillsDMC 2011:12)

• were over 30 per cent in some occupations in the civil sector (SkillsDMC 2011:22)

• were over 30 per cent for managers and mine managers in the coal sector, but less than 10 per cent in most other occupations in this sector (Skills DMC 2011:35)

• at up to 50 per cent for statutory officials in the metalliferous sector, with annual turnover in the 15 -25 per cent range for most other occupations in this sector (SkillsDMC 2011:36).

By comparison, 20 of the 34 resources companies that responded to the NRSET Survey answered questions about their company’s annual labour turnover rate:

• In 2007, the rate ranged between 0 and 40 per cent, with most companies reporting rates between 5 and 20 per cent.

• In 2008, the rate ranged between 1 and 85 per cent, with most companies reporting rates between 20 and 30 per cent.

• In 2009, the rate ranged between 0 and 90 per cent, with most companies reporting rates between 5 and 20 per cent. Compared to 2007 and 2008, more companies reported rates of 40 per cent or higher—five companies experienced turnover rates of between 40 per cent and 90 per cent.

Industry turnover rates vary substantially, including across types of workers. For example, a large resources company advised NRSET that turnover for its FIFO workers (up to 30 per cent per year) is double that of other employees.


Potential job vacanciesThe concept of Gross Replacement is a measure of the amount of recruitment needed to effectively replace people leaving an occupation. A potential job vacancy can be created in three ways:

• by a person leaving the job to work in another job in the same occupation (‘occupational churn’, which makes no net change to occupational employment numbers)

• by a person leaving both the job and the occupation to work in another occupation, become unemployed or exit the labour force (e.g. caring duties, retirement, death, emigration etc.)

• by the employer seeking to fill a new position.

The number of people who leave jobs in a particular occupation over the course of a year, excluding the occupational churn component, is called the Gross Outflow from the occupation. This data is available on an occupation basis but not an industry basis. DEEWR undertook analysis of 2008 ABS Labour Mobility Survey data on this issue which was used by NRSET in its review. Later ABS data for 2010 is now available, and updating this analysis will be a key focus for Skills Australia in 2011.

However, based on analysis of 2008 data, NRSET estimated a resources sector average gross replacement rate of around 10 per cent per annum, with lower rates for the professions.

Based on 2010 ABS employment data it appears around 19 000 job opportunities (compared to the earlier NRSET estimate of 16 000 job opportunities) are likely to arise each year in mining operations (including around 3 000 retirements) and 2 000 in oil and gas (including around 500 retirements) as workers leave the industry each year for other industries or to retire.

8.6 ConclusionsThe preceding analysis suggests that for new jobs:

• Based on ABARES projections of likely increases in production of mining commodities between 2010 and 2016, employment in mining operations will rise from 187 700 persons in November 2010 to 270 600 persons in 2016, a rise of 82 900 persons or 44 per cent.

• There will be continued strong growth in short term project construction jobs to 2016, with of new short term project construction jobs could range from around 154 500 new jobs (low scenario) to 191 300 new jobs (medium scenario) to 287 000 new jobs (high scenario). This is a very substantial increase on the estimates derived at the time the NRSET report was prepared.

• That following confirmation of key investment decisions in the Queensland coal seam gas industry, employment growth of up to 10 000 jobs in gas operations as envisaged by NRSET continues to seem likely.

In terms of replacement demand:

• Given that base year employment (2010 for modelling purposes) in mining operations is now greater than envisaged by NRSET, replacement demand for employees in mining operations seems likely to rise from 16 000 persons per year to 19 000 persons per year.

• Given the short term nature of project construction roles, NRSET did not estimate replacement demand for construction jobs, and Skills Australia has followed this approach, while noting the potential for substantial turnover between construction firms as firms compete for skills.

• Following NRSET, given the absence of major new projects, replacement demand for gas operations is estimated 2 000 persons per year in oil and gas (including around 500 retirements) as workers leave the industry each year for other industries or to retire.


9. The supply of skills available to meet the resources sector’s skill needs

9.1 IntroductionAs noted in the Technical Report prepared by the National Resources Sector Employment Taskforce (NRSET) (2010), skills for the resources sector can come from:

• the existing stock of skilled workers in the national labour market—including the unemployed and the employed

• new supplies of skilled workers or job seekers, including from vocational education and training, higher education, and temporary and permanent migration.

This section reviews the analysis of the supply of skills available to the resources sector presented in the final report of NRSET, outlines changes in apprenticeship commencement since NRSET’s report was published, and examines recent trends in supply from migration.

9.2 Analysis of the supply of skills presented in the NRSET reportNRSET report noted that as at June 2010:

• Over 600 000 people were then unemployed, including around 48 000 professionals and 60 000 tradespeople across all states and territories.

• Modelling undertaken by the National Centre for Vocational Education and Research (NCVER) on the trades suggested the supply of persons with trade qualifications workforce would increase from 1 593 000 in 2010 to 1 697 371 or 6.6 per cent nationally to 2015 according to NCVER’s average case scenario. NCVER suggested there would be strong growth in the supply of electricians (up 22 056 or 16.7 per cent), bricklayers, carpenters and joiners (up 22 671 or 16 per cent) and fabrication engineering tradespeople (up 5 870 or 7.1 per cent).

• The number of tradespeople employed in mining and oil and gas operations and related construction was 90 000 people or 5.6 per cent of the then total number of tradespeople in Australia. If the sector gains 5.6 per cent of the expected trade growth over the five years to 2015 this would provide only 1 213 additional electricians and 499 more fabrication engineering tradespeople (includes welders/boilermakers), which are highest in demand.

• The resources sector does not train its ‘fair share’ of apprentices (data compared to other sectors).

• The number of completions from university engineering courses is projected to grow by 11.2 per cent from 6 312 in 2008 to 7 020 in 2014, with a significant increase in mining, chemical and civil engineering completions. However, the number of geoscience graduates was seen as likely to fall over the same period.

• After taking likely retirement into account, supply of mining, chemical, civil and other engineers would increase at a faster rate of growth than in previous years but was still unlikely to meet demand.

• Migration would remain an important source of supply—despite the global recession, in the 12 months to 30 June 2009, resources and construction companies sponsored 9 840 people into Australia on temporary 457 visas.


9.3 National trends in apprenticeship commencementsReflecting the effects of the 2009 global economic recession, NCVER Apprentices and Trainees (NCVER 2010) data from 2009 show that the total number of apprentices and trainees in training in Australia as at 31 December 2009 was 414 900, a 0.6 per cent decrease from the preceding year.

This reflected a 6 per cent decrease in commencements to 271 400 over the 12 months to 31 December 2009, compared with the preceding year. Additionally, in the 12 months to 31 December 2009 compared with the preceding year, commencements in trade occupations decreased by 17.1 per cent for trade occupations to 71 500 and 1.2 per cent for non-trade occupations to 199 900.

As at December 2009, 3.8 per cent of Australian workers were employed as an apprentice or trainee, with 12.1 per cent of workers within trade occupations employed as an apprentice or trainee. In the 12 months to 31 December 2009, there were decreases across commencements in most qualification levels.

The majority of commencements (65 per cent) in the 12 months to 31 December 2009 were at the Certificate III level. However, Certificate III commencements decreased by 22 500 to 176 800 compared to the preceding year. In 2009, 13 per cent of commencements (36 200) were at the Certificate I or II level, a decrease of 6 300 from the preceding year. Commencements at the Certificate IV and Diploma/Advanced Diploma level represented 22 per cent of total commencements in the 12 months to 31 December 2009 and increased by 11 400 to 58 400 compared to the preceding year.

Figure 9.1 shows quarterly commencements, completions and withdrawals from 1999 to December 2009.

Figure 9.1: Quarterly commencements, completions and cancellations/withdrawals, seasonally adjusted, 1999 to 2009 (’000)

Commencements

Num

ber

(’000

)

Year

Dec 1999 Dec 2000 Dec 2001 Dec 2002 Dec 2003 Dec 2004 Dec 2005 Dec 2006 Dec 2007 Dec 2008 Dec 2009

Completions Cancellations/withdrawals

80.0

70.0

60.0

50.0

40.0

30.0

20.0

10.0

0.0

Source: National Centre for Vocational Education Research (2009), Apprentices and Trainees

Since 2009 the number of people in training across Australia has grown, in line with broader labour market recovery from the global recession. In the year to September 2010 (NCVER 2010) there were 305 377 commencements in apprenticeships and traineeships Australia wide, an increase of 14.2 per cent from the preceding year.

Table 9.1 shows the commencements by state or territory and the percentage change between the year to September 2010 and the year to September 2009. Numbers in training rebounded strongly in most states, particularly Queensland, Victoria and new South Wales with the Australian Capital Territory being the only state or territory where commencements were static.


Table 9.1: Apprentices and trainees, training commencements in all occupations by state and territory, 12 months to September, 2009 and 2010

State/Territory Year to Sep 2009 Year to Sep 2010 Annual per cent change

New South Wales 83 241 95 458 14.7

Victoria 71 784 82 539 15

Queensland 54 027 62 903 16.4

South Australia 20 562 22 639 10.1

Western Australia 23 082 26 086 13

Tasmania 7 247 8 006 10.5

Northern Territory 2 533 2 823 11.4

Australian Capital Territory 4 924 4 923 0

Total 267 400 305 377 14.2

Source: National Centre for Vocational Education Research (2010), Apprentices and Trainees, unpublished data

In the year to September 2010, 17 per cent of total national commencements were in occupations identified as major resources sector occupations in the NRSET Technical Paper (NRSET 2010:25). In these identified occupations at all qualification levels, commencements increased by 22 per cent to 28 690 in the year to September 2010 compared to the preceding year.

Over this period commencements in Certificate I and II level qualifications increased from 633 to 1 183, commencements in Certificate III level qualifications increased by 23 per cent to

26 781, but commencements in Certificate IV level qualifications and above decreased from 992 to 725.

At an occupation level, over the year to September 2010 compared to the preceding year, commencements at the Certificate I and II level for drillers, miners and shot firers decreased from 96 to 60. Commencements for earthmoving plant operators increased from 1 to 400 and other construction and mining labourers increased from 433 to 547.

Over the year to September 2010 compared to the preceding year, commencements at the Certificate III level for motor mechanics increased by 18 per cent to 7 582, sheetmetal trades workers increased by 25 per cent to 4 212 and precision metal workers increased from 183 to 198.

There was a 33 per cent increase in the number of commencements for electricians over the year to September 2010 compared to the preceding year, to 8 763 and a 24 per cent increase for airconditioning and refrigeration mechanics to 1 118. Electrical distribution trades workers commencements decreased from 692 to 590, electronics trades workers increased from 533 to 697 and drillers, miners and shot firers increased by 20 per cent to 2 257 over the same period.

Over the year to September 2010 compared to the preceding year, commencements at the Certificate IV and higher level for aircraft maintenance engineers decreased from 788 to 532, electronics trades workers increased from 31 to 53 and drillers, miners and shot firers decreased from 99 to 37.

While the rebound in commencements in 2010 in most occupations with strong relevance to resource sector skill needs is encouraging, recent data is not available concerning the share of national commencements in the resources sector. Earlier research by NCVER on behalf of NRSET concluded that the resources sector was not delivering training commensurate with its likely future skill needs.

This is important as a significant proportion of apprentices and trainees remain with their employer after completing their training. NCVER undertakes a biannual survey of apprentices and trainees who have recently completed their training. The 2010 Apprentice and Trainees Destination Survey (NCVER 2010b) was undertaken by apprentices and trainees who either completed, cancelled or withdrew from their training between April and June 2009.


The survey found that of those who completed, 68 per cent were employed by the same employer after their apprenticeship or traineeship. Some 82 per cent of those who completed an apprenticeship or traineeship in automotive and engineering trades were employed in the same occupation as their apprenticeship and traineeship, with 62 per cent employed by the same employer.

Of completers in construction trades, 82 per cent were employed in the same occupation as their apprenticeship and traineeship, with 47 per cent employed by the same employer, while 76 per cent of completers in machinery and operators and driver related occupations were employed in the same occupation as their apprenticeship and traineeship, with 80 per cent employed by the same employer.

Overall, the available data on apprentices and trainee commencements indicate that after decreasing in 2009, the number of apprentice and traineeship commencements rose significantly in 2010 as the Australian labour market rebounded from the global economic recession. This increase is reflected across most qualification levels in occupations related to the resources sector. Apprentice and Trainee Destinations data also suggest that apprentices and trainees mostly remain with the employer with whom they undertake their apprenticeship or traineeship, suggesting that investing in an apprentice or trainee is an effective way of for the resources sector to address immediate and forthcoming skill needs.

Recent trends in apprenticeships in the resources sectorThis section examines trends in apprenticeships in the resources sector from NCVER data. This data for the ‘Minerals’ industry is based on Australian New Zealand Standard Industry Classification (ANZSIC) 2006, including mining division (excluding oil and gas) plus basic ferrous and non-ferrous manufacturing, which is the definition used by NCVER in their studies.

Figure 9.2 and Table 9.2 provide information about all apprentices and trainees in training in the Resources sector. Figure 9.3 and Table 9.3 provide similar information for ‘traditional’ trades apprentices only. The data suggest sustained growth in the number of apprentices in training in the resources sector, including for ‘traditional’ apprenticeships, in the period from 2003 to 2008. The data is drawn from the NCVER VOCSTATS database as at September 2010 quarter (the latest available).

Figure 9.2: Minerals industry apprentices and trainees as at September quarter 2003 to 2010

0

2000

4000

6000

8000

10000

12000

2003 2004 2005 2006 2007 2008 2009 2010

CommencedYear

In training

Num

ber o

f app

rent

ices

Completed



Table 9.2: All apprentices in training, minerals sector, September quarter 2003 to 2010

Year Commenced In training Completed

2003 397 3184 142

2004 552 3757 208

2005 651 4204 320

2006 446 4921 266

2007 754 6049 360

2008 1153 7491 438

2009 1307 8225 588

2010 1093 9595 785


Figure 9.3: Traditional apprentices in the minerals industry September quarter 2003 to 2010

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2003 2004 2005 2006 2007 2008 2009 2010

Year

Num

ber

of a

ppre

ntic

es


Table 9.3: Traditional apprentices in training, minerals sector, September quarter 2003 to 2010

Year Number

2003 1630

2004 1878

2005 2347

2006 2698

2007 3190

2008 3519

2009 3369

2010 3198



9.4 Trends in higher education commencementsThe latest data available to Skills Australia about higher education commencements in skills most relevant to the resources sector at the time this report was prepared was for 2009.

In 2009 there were a total of 27 508 commencing students in engineering and related technologies courses in Australia (see Table 9.4). This represented a 14.5 per cent increase compared to 2008. Domestic students accounted for 62 per cent of total commencements and total domestic commencements in 2009 increased by 10 per cent compared to 2008. The majority (70 per cent) of total commencing students in 2009 were at the undergraduate level, a similar proportion to 2008.

However, the number of commencing postgraduate students increased more than the number of commencing undergraduate students for both domestic and overseas students between 2008 and 2009. In 2009, more domestic students (69 per cent) commenced at the undergraduate level than overseas students (31 per cent).

That said, the number of commencing domestic undergraduate students in engineering and related technologies courses rose by 7.3 per cent in 2009 while the number of commencing domestic post graduate students rose by 20.7 per cent.

There were more overseas students who commenced a postgraduate qualification than domestic students, with 43 per cent of total overseas students commencing a postgraduate qualification, compared to 21 per cent of domestic students. Table 9.4 shows how many students commenced engineering and related technologies courses in 2008 and 2009.

Table 9.4: Commencing students in Engineering and Related Technologies courses by citizenship and level of course, 2008-2009

Level of course

2008 2009

Domestic Students

Overseas Students TOTAL

Domestic Students


Enabling course 226 0 226 288 0 288

Postgraduate 2 893 3 616 6 509 3 491 4 477 7 968

Undergraduate 12 321 4 974 17 295 13 215 6 037 19 252

TOTAL 15 440 8 590 24 030 16 994 10 514 27 508

Source: Department of Education, Employment and Workplace Relations (2011), Selected Higher Education Statistics

The other area of key interest to the resources sector is in earth and geosciences. In 2009 there were a total of 706 commencing students in earth sciences and geosciences courses, a 17 per cent increase compared to 2008, with domestic undergraduate commencements increasing by 12.7 per cent (see Table 9.5). Domestic students accounted for 72 per cent of total commencements and total domestic commencements in 2009 increased by 16 per cent compared to 2008.

In 2009 commencing students were split almost equally between postgraduate and undergraduate qualifications. This was reflected among domestic students, although more overseas students commenced in postgraduate (65 per cent) rather than undergraduate (35 per cent) qualifications. Table 9.5 shows how many students commenced earth sciences and geosciences courses in 2008 and 2009.


Table 9.5: Commencing students in Earth Sciences and Geosciences courses by citizenship and level of course, 2008-2009.

Level of course

2008 2009

Domestic Students


Domestic Students


Postgraduate 210 106 316 250 129 379

Undergraduate 229 59 288 258 69 327

TOTAL 439 165 604 508 198 706

Source: Department of Education, Employment and Workplace Relations (2011), Selected Higher Education Statistics

The total number of overseas students commencing both subjects has increased more (22 per cent) than the number of domestic students (10 per cent) between 2008 and 2009.

The higher education commencement data suggest that commencing student numbers are increasing for both domestic and overseas students in engineering and related technologies and earth and geosciences. This will potentially add to the supply of persons with these qualifications in Australia over time, although it remains to be seen whether the 2009 increase in commencements is reflected in later years and the potential increase in supply is sustained over time. However, the number of postgraduate commencements is increasing at a greater rate than undergraduate commencements suggesting that an increasing number are upskilling to higher qualifications.

9.5 Recent trends in skills supply from migrationMigration provides an important supply of skilled and semi-skilled labour into the Australian labour market. There are two principle streams of skilled migration, temporary migration mostly through the use of the subclass 457 visa and permanent migration generally through the General Skilled Migration (GSM) program. Evidence suggests that migration supply is linked to domestic economic conditions, with increased migration during periods of increased labour demand (see Cully 2009 for a more detailed discussion). The recent global recession saw a decrease in the number of skilled migrants, and initial research suggests that as the economy continues to recover, the number of skilled migrants entering Australia is also increasing. This suggests that the Australian migration program is flexible and responsive to the needs of the domestic labour market.

As part of the 2011-12 Budget, the Government announced a range of new migration arrangements including the introduction of Enterprise Migration Agreements (EMAs) and Regional Migration Agreements (RMAs).

Following recommendations from the NRSET report, the Government will introduce EMAs, which are part of the temporary migration program and are an initiative to help halve the processing time of subclass 457 visas. EMAs allow major resource projects to gain access to overseas labour markets for genuine skill vacancies that cannot be filled from the Australian labour market (Bowen 2011). EMAs are custom designed and uniquely suited to the resources sector. They are project-wide and are available to projects with a capital expenditure of $2 billion or more and a peak workforce of at least 1 500 workers. To be eligible for an EMA, projects will be required to develop a comprehensive training plan, demonstrating a commitment to investing in the up-skilling of Australians to meet future skill needs.

RMAs are a new migration initiative which provide a coordinated approach to addressing regional labour needs by bringing together employers, local and state government and unions to help implement workforce strategies. RMAs will be custom designed geographically based migration arrangements that designate the occupations and number of overseas workers needed in the area. Concessional access to semi-skilled overseas workers may be negotiated where there is a demonstrable critical need (DIAC 2011b). Employers who sponsor workers under RMAs will be required to demonstrate investment in training local workers.

The new initiatives are designed to facilitate more streamlined access to overseas skilled workers in areas where employers cannot meet labour demand from the local labour force. These initiatives will increase labour supply to the resources sector from overseas and Skills Australia will monitor their use and include comment in future reports.


Subclass 457 visa trendsThe Temporary Business (Long Stay) visa (subclass 457 visa) is designed to enable employers to address labour shortages by bringing in genuinely skilled workers where they cannot find an appropriately skilled Australian. This is the most commonly used program for employers to sponsor overseas workers to work in Australia on a temporary basis. Visa holders can work in Australia for a period of between one day and four years. Total subclass 457 visa grants increased gradually up to 2007-08 and reduced with the onset of the global recession. As the economy recovers it is expected that use of the subclass 457 visa program will again increase (DIAC 2011). Although data are not yet available for the full 2010-11 program year, monthly updates from DIAC suggest that both applications and grants for subclass 457 visas are increasing in 2011 compared to 2010 (DIAC 2011c).

Figure 9.4 highlights that as domestic job advertisements increase, so do the number of subclass 457 visas lodged.

Figure 9.4: Correlation between ANZ job advertisements and subclass 457 visa applications lodged

50,000

100,000

150,000

200,000

250,000

300,000

1500

2500

3500

4500

5500

6500

7500

Jan-0

3

Apr-03

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Oct-03

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4

Apr-04

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4

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5

Apr-05

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5

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Oct-06

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7

Apr-07

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Oct-07

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8

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Oct-08

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Jul-0

9

Oct-09

Jan-1

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clas

s 45

7 vi

sa a

pplic

atio

ns

Subclass 457 visa applications

AN

Z Jo

b A

dver

tisem

ents

ANZ Job Advertisements

Source: Department of Immigration and Citizenship (2010), unpublished.

Figure 9.5 shows the correlation between the domestic unemployment rate and the number of subclass 457 visa applications lodged.

Figure 9.5: Correlation between Australian unemployment rate and subclass 457 visa applications lodged

1500

2500

3500

4500

5500

6500

7500

Sub

clas

s 45

7 vi

sa a

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Subclass 457 visa applications

Une

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Rat

e (%

)

Unemployment Rate

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

Jan-0

3

May

-03

Sep-03

Jan-0

4

May

-04

Sep-04

Jan-0

5

May

-05

Sep-05

Jan-0

6

May

-06

Sep-06

Jan-0

7

May

-07

Sep-07

Jan-0

8

May

-08

Sep-08

Jan-0

9

May

-09

Sep-09

Jan-1

0

May

-10

Source: Department of Immigration and Citizenship (2010), unpublished. Note: The spike in both Figure 9.4 and 9.5 in June 2007 was a result of the announcement in the last week of June of the introduction of the English language requirement for trade occupations from 1 July 2007. Modelling by the Department of Immigration and Citizenship (DIAC) suggests that over 1 800 additional applications were lodged in the last week of June as a result of the announcement, which then resulted in a lower application rate over the following two to three months.


Professionals and the subclass 457 visaFor most professional occupations, subclass 457 visa grants increased up to 2007-08 before decreasing over the two years to 2009-10. Significant numbers of subclass 457 visa grants have historically been made to civil engineering professionals, industrial, mechanical and production engineers, other engineering professionals, and geologists and geophysicists. Table 9.6 shows the number of subclass 457 visas granted to selected professional occupations related to the resources sector.

The 2009-10 outcomes are generally lower than for 2008-09, which is at odds with anticipated growth in skill needs for the resources sector over this time. However, this reflects economy wide outcomes, not just subclass 457 visas for resources sector employers, and may reflect broader economy wide labour market issues arising from the global recession.

Table 9.6: Subclass 457 visas granted to selected professional occupations 2005-06 to 2009-10

ANZSCO Occupation 2005-06 2006-07 2007-08 2008-09 2009-10

2321 Architects and Landscape Architects 140 150 220 140 80

2322 Surveyors and Spatial Scientists 120 140 180 150 50

2331 Chemical and Materials Engineers 150 200 290 240 170

2332 Civil Engineering Professionals 690 880 1 380 1 220 730

2333 Electrical Engineers 320 400 460 380 210

2334 Electronics Engineers 210 310 240 180 120

2335 Industrial, Mechanical and Production Engineers 790 780 1 080 860 530

2336 Mining Engineers 290 360 450 360 230

2339 Other Engineering Professionals 630 700 880 790 430

2343 Environmental Scientists 200 200 250 260 230

2344 Geologists and Geophysicists 270 360 730 660 380

2346 Medical Laboratory Scientists 220 180 210 250 210

2349 Other Natural and Physical Science Professionals 170 180 230 220 180


Tradespeople and the subclass 457 visaSubclass 457 visa grants for trade occupations peaked in 2007-08 and declined following the economic downturn. However, visa grants for civil engineering draftspersons and technicians, and mechanical engineering draftspersons and technicians, continued to trend upwards until 2008-09, at which point visa grant numbers declined.

There were 300 visa grants for civil engineering draftspersons and technicians in 2007-08, 360 in 2008-09 and 130 in 2009-10. In 2007-08, there were 610 visa grants for mechanical engineering draftspersons and technicians, 760 in 2008-09, and 550 in 2009-10. Visa grants for electrical distribution trades workers have been decreasing since 2005-06. There were 440 visa grants for this occupation in 2005-06, and 70 in 2009-10. Table 9.7 shows subclass 457 visa grants to selected technical and trade occupations identified by NRSET as being significant for the resources sector.

As was the case with professional occupations, the 2009-10 outcomes are somewhat at odds with anticipated growth in skill needs for the resources sector over this time. However, it should again be noted that this reflects economy wide outcomes, not just subclass 457 visas for resources sector employers, and may reflect broader economy wide labour market issue arising from the global recession.

This issue was tested with resources sector employers, as discussed in more detail later in this report.


Table 9.7: Subclass 457 visas granted to selected technical and trade occupations 2005-06 to 2009-10


3121 Architectural, Building and Surveying Technicians 130 200 370 340 220

3122 Civil Engineering Draftspersons and Technicians 120 180 300 360 130

3123 Electrical Engineering Draftspersons and Technicians 150 290 410 380 220

3124 Electronic Engineering Draftspersons and Technicians 110 320 200 260 160

3125 Mechanical Engineering Draftspersons and Technicians

340 450 610 760 550

3126 Safety Inspectors 10 10 30 20 20

3129 Other Building and Engineering Technicians 190 280 320 310 180

3211 Automotive Electricians 40 80 90 70 20

3212 Motor Mechanics 560 680 1 050 850 250

3221 Metal Casting, Forging and Finishing Trades Workers 10 30 50 30 10

3222 Sheetmetal Trades Workers 40 90 120 70 20

3223 Structural Steel and Welding Trades Workers 1 590 1 870 2 180 1 560 310

3231 Aircraft Maintenance Engineers 100 140 220 180 60

3232 Metal Fitters and Machinists 840 1 040 1 220 1 040 250

3233 Precision Metal Trades Workers 10 10 10 20 10

3234 Toolmakers and Engineering Patternmakers 40 30 40 30 10

3411 Electricians 310 350 360 330 160

3421 Airconditioning and Refrigeration Mechanics 60 90 120 90 30

3422 Electrical Distribution Trades Workers 440 260 160 130 70

3423 Electronics Trades Workers 110 130 150 130 60

3424 Telecommunications Trades Workers 20 100 80 40 30


Preliminary research suggests that the number of subclass 457 visas grants is increasing, however this cannot be confirmed until further data are released by DIAC.

Other occupations and the subclass 457 visaThe subclass 457 visa is designed to allow skilled workers to be sponsored in Australia, however through the use of labour agreements employers may apply to sponsor lower skilled workers. There were fewer than ten active labour agreements relating to the resources sector in July 2010. Some research suggests that employers may be reluctant to use labour agreements due to the perception that they take too long to negotiate and process. The minimum amount of time needed to negotiate a labour agreement is three months, and the average processing time is between six and nine months, while some may take over 12 months. Table 9.8 shows the number of visa grants to selected occupations related to the resources sector.


Table 9.8: Subclass 457 visas granted to selected occupations 2005-06 to 2009-10


7119 Other Machine Operators < 5 10 < 5 0 < 5

7121 Crane, Hoist and Lift Operators 10 10 < 5 10 0

7122 Drillers, Miners and Shot Firers 270 490 400 340 120

7123 Engineering Production Workers < 5 < 5 0 < 5 0

7212 Earthmoving Plant Operators 20 30 40 30 0

7331 Truck Drivers 10 20 0 10 0

8217 Structural Steel Construction Workers 30 100 30 190 0

8219 Other Construction and Mining Labourers 0 < 5 0 0 0


Long term migration - skilled migrationDomestic supply of skilled and semi-skilled workers may need to be complemented through immigration to meet resource sector employer skill needs (for a more detailed discussion about the nature of Australia’s General Skilled Migration (GSM) program, see Appendix 2).

For instance, the Australian National Engineering Taskforce (ANET) (ANET 2010) has suggested that skilled migrant engineers currently account for around 60 per cent of the supply of newly qualified engineers (ANET 2010:27). It is difficult to gauge the impact of skilled migration on the resources sector as data is not readily available about the job destinations of skilled migrants by industry. High level data is available, however, by occupation and other selected characteristics for primary and secondary skilled migration grants.

Skilled Migration Primary GrantsIn 2009-10, 24 088 primary visa grants were made in the skilled permanent migration stream. Of these 58.7 per cent or 14 135 were to professionals. The next largest percentage of visa grants were to managers and administrators (9.8 per cent or 2 350 grants) and tradespersons (8.3 per cent or 2 003 grants). Table 10.9 shows the number of skilled migrant primary grants by broad Australian Standard Classification of Occupations (ASCO) occupational group.

Table 9.9: Primary grants to skilled migrants by major ASCO occupational group, 2007-08 to 2009-10.

Occupation 2007-08 per cent 2008-09 per cent 2009-10 per cent

Managers & Administrators 2395 9.2 2691 10.1 2350 9.8

Professionals 11204 43.3 12030 45.1 14135 58.7

Associate Professionals 2510 9.7 2538 9.5 1845 7.7

Tradespersons 4531 17.5 4497 16.9 2003 8.3

Advanced Clerical & Service 129 0.5 90 0.3 58 0.2

Intermediate Clerical, Sales & Service 836 3.2 803 3. 667 2.8

Intermediate Production & Transport 108 0.4 113 0.4 66 0.3

Elementary Clerical, Sales & Service 60 0.2 56 0.2 37 0.2

Labourers & Related Workers 26 0.1 47 0.2 28 0.1

Inadequately Described 1654 6.4 1990 7.5 1501 6.2

Sub-total Employed 23453 90.6 24855 93.3 22690 94.2

Not in Employment 68 0.3 40 0.2 36 0.1

Not in Labour Force 923 3.6 635 2.4 621 2.6

Source: Department of Immigration and Citizenship (2010), Immigration Update 2009-10


Table 9.9: Primary grants to skilled migrants by major ASCO occupational group, 2007-08 to 2009-10.


Not stated 1448 5.6 1122 4.2 741 3.1

Total persons 25892 100 26652 100 24088 100


The data on primary grants highlights a significant issue. After rising in 2008-09, the number of primary grants fell in 2009-10 by 2 564 grants. Moreover, looking at occupations in demand in the resources sector, the number of primary grants to tradespersons declined somewhat in 2008-09 and then fell sharply in 2009-10 (down 2 494 persons or a 55.5 per cent decrease compared to the previous year). This was at a time when the resources sector was expanding post the global recession. More positively, the number of primary grants for professionals rose by 2 105 or 14.9 per cent between 2008-09 and 2009-10.

Skilled Migration Secondary GrantsSkilled migration secondary grants are made to the spouse/partners and dependent children of persons who receive primary grants.

Most secondary visa grants in 2009-10 were to professionals (14.1 per cent or 5 307). Professionals also represented the largest percentage of visa grants in the previous two years, 11.8 per cent (5 060 and 4 644 grants for 2008-09 and 2007-08 respectively). Table 9.10 shows the number of skilled migrant secondary grants by broad ASCO occupational group.

Table 9.10: Secondary grants to skilled migrants by major ASCO occupational group, 2007-08 to 2009-10.


Managers & Administrators 1758 4.4 1803 4.2 1557 4.1

Professionals 4644 11.8 5060 11.8 5307 14.1

Associate Professionals 1441 3.6 1705 4 1497 4

Tradespersons 649 1.6 642 1.5 537 1.4

Advanced Clerical & Service 425 1.1 513 1.2 341 0.9

Intermediate Clerical, Sales & Service

1461 3.7 1465 3.4 1188 3.2

Intermediate Production & Transport 114 0.3 133 0.3 125 0.3

Elementary Clerical, Sales & Service 208 0.5 209 0.5 203 0.5

Labourers & Related Workers 66 0.2 66 0.2 52 0.1

Inadequately Described 1096 2.8 1299 6 1163 3.1

Sub-total Employed 11862 30 12895 30.1 11970 31.9

Not in Employment 127 0.3 151 0.4 138 0.4

Not in Labour Force 25451 64.4 27764 64.9 23834 63.5

Not stated 2071 5.2 1991 4.7 1592 4.2

Total persons 39511 100 42801 100 37534 100


Between 30 and 32 per cent of secondary visa grants in the skilled migration stream reported an occupation prior to arrival in Australia. In 2009-10 there were 37 534 secondary visa grants, down from 42 801 the previous year. In 2007-08 there were 39 511 secondary visa grants. Secondary grants represent between 60 and 62 per cent of total visa grants for skilled migration.

While secondary grants decreased by 5 267 grants between 2008-09 and 2009-10, the percentage of grants to people stating an occupation has been gradually increasing, from 30 per cent in 2007-08 to 31.9 per cent in 2009-10. Of relevance to the resources sector, the number of tradespersons


granted secondary visas has declined gradually over the last three years, with 105 fewer grants in 2009-10 than 2008-09. However, the number of grants to professionals has been increasing, with 247 more grants in 2009-10 than in 2008-09.

General Skilled Migration statistics by state/territory of intended residenceIn 2009-10, most people granted visas in the sponsored stream of the GSM program settled in South Australia (27.7 per cent). Western Australia was the next most commonly chosen destination, with 24.6 per cent of visa grants in this state. There were 21.9 per cent of sponsored visas granted to people nominating Victoria as their intended place of residence, and 13 per cent in New South Wales.

In the same year, most Independent category visa grants under the GSM program settled in New South Wales (34.1 per cent). There were 26.6 per cent of visas granted in this category to people settling in Victoria, 16.8 per cent settling in Western Australia and 14.7 per cent settling in Queensland.

Since there is a concentration of resource sector projects in Queensland and Western Australia, it is relevant to note that Western Australia was one of the most commonly chosen states of intended residence for both the sponsored and independent streams of the GSM. Of sponsored grants, 4 441 were for Western Australia (24.6 per cent). Of independent grants, 5 272 were for Western Australia (16.8 per cent).

However, Queensland received significantly fewer grants, with 9.4 per cent of sponsored grants, or 1 701 grants, and 14.7 per cent of Independent grants, or 4 603 grants.

Settlement OutcomesThe Continuous Survey of Australian Migrants (CSAM) (DIAC 2010) is designed to provide information on the labour market outcomes of recent migrants from the family and skilled streams. The first CSAM was conducted in 2009. Migrants are surveyed on two occasions six months apart.

The survey show a strong response from skilled stream migrants employed in occupational groups relevant to the resource sector, such as professionals and tradespersons. However, there was a less significant response from partners of skilled stream migrants who worked as tradespersons. Labourers and related workers, which are occupations in demand in the resources sector, represented only 5 per cent of skilled stream migrant respondents and 7 per cent of partners of skilled stream migrants.

Most of the skilled stream migrants included in the survey were employed as professionals (45 per cent). This was also the largest occupation group of partners of skilled stream migrants (27 per cent). The next largest occupation group was associate professionals, representing 13 per cent of skilled stream migrants, followed by tradespersons, representing 11 per cent.

For partners of skilled stream migrants, the second largest occupation group was intermediate clerical sales and service workers (23 per cent), followed by elementary clerical (13 per cent). Tradespersons represented only 5 per cent of partners of skilled stream migrants.

Skilled stream migrants have average levels of unemployment (5 per cent) according to respondents to the CSAM survey. Of those employed, 76 per cent of skilled stream migrants were in full time work and 15 per cent worked part time. However, levels of unemployment were much higher for partners of skilled stream migrants (12 per cent), and a further 26 per cent of partners of skilled stream migrants were not in the labour force.

Only 35 per cent of partners of skilled stream migrants were employed full time, with 27 per cent in part-time work. Despite this, partners of skilled stream migrants had a lower unemployment rate than family stream migrants, with 19 per cent of family stream migrants unemployed and only 28 per cent in full time work.

According to the CSAM data, skilled migrants are more likely to speak English well and have a higher level of educational attainment than migrants who entered Australia under the family migration stream. Most of the skilled migrants who responded to the CSAM survey spoke English


as their first or only language (38 per cent). This was a higher percentage than other migration streams, with 27 per cent of family stream migrants citing English as their best or only language. A further 30 per cent of skilled stream migrants spoke English ‘very well’ and 25 per cent spoke English ‘well’. Only one per cent of skilled migrants did not speak English at all, and five per cent spoke English ‘not well’. This means that 93 per cent of skilled migrants involved in the survey had an ability to speak English ‘well’ or better.

The majority of skilled stream migrants who responded to the survey had a Bachelor degree as their highest education qualification (39 per cent). A further 24 per cent had a Masters degree, and 3 per cent had a Doctorate. This compares to 28 per cent of family stream migrants with a Bachelor degree, 8 per cent with a Masters degree and 1 per cent with a Doctorate. Ten per cent of the skilled stream migrants had no post school qualifications, compared to 38 per cent of family stream migrants.

Migration data currently available suggests that the GSM program is effectively targeting migrants in highly skilled occupation groups, with the majority of primary visas granted to professionals and tradespersons. However, while the number of grants to professionals has been gradually increasing in recent years, the number of grants to tradespersons has been decreasing sharply for both primary and secondary grants. A significant percentage of all recent arrivals intend to settle in Western Australia, where there is a high degree of resources sector activity.

However, fewer grants are made to people intending to reside in Queensland, another state where there is a concentration of resource sector projects. Sponsored skilled migration also appears to be more effective in addressing specific skill needs, with independent migrants typically favouring New South Wales and Victoria as their intended destination. It is difficult however to obtain data on skilled migrant’s actual destination and employment outcomes.

The CSAM provides some indication of the employment and settlment outcomes of skilled migrants and whether they are engaged in their nominated occupation, although this survey does not identify, or quantify, the number of skilled migrants entering the resources sector. Further research is required to better identify the role of skilled migration in boosting labour supply to the resources sector.

9.6 ConclusionsIn its report NRSET (2010) reviewed the supply of skills available to the resources sector and suggested that, without growth in projected skills formation, the resources sector would be constrained by the extent of skills formation in some key trades and professions. In this report Skills Australia has examined recent trends in commencements in the trades and in higher education in skills relevant to the resources sector, as well as recent trends in migration.

The available data on apprentices and trainees indicate that despite a slight decrease in 2009, there has been a recent increase in the number of apprentice and traineeship commencements for most qualification levels in occupations related to the resources sector. However, given likely growth in demand for skills in the resources sector, the data highlight the need for further skills formation in the sector, especially as NCVER Apprentice and Trainee Destinations data also suggest that apprentices and trainees mostly remain with the employer with whom they undertake their apprenticeship or traineeship. Available data also suggest that apprenticeship numbers, both in total and in traditional trades, are increasing in the resources sector.

Higher education data for 2009, the latest data available at the time this report was prepared, also points to an increase in commencements in key disciplines relevant to the resources sector.

On the other hand, the most recent migration data available at the time this report was prepared suggest that the intake of skills relevant to the resources sector has declined in recent years, both in terms of temporary and permanent migration. However, this may reflect a lagged response to the effects of the global recession. Other analyses suggest migration intakes can ramp up quickly if labour market circumstances indicate a need for increased migrant labour.


10. Industry’s perspectives on future skill needs

10.1 IntroductionThis chapter reviews industry perspectives regarding the future skill needs of the resources sector. This review presents information about the potential labour demand, informed by available industry information. Most organisations identify skill shortages as an area of concern which may impact growth.

This section first explores the views of national organisations such as peak bodies and major industry companies. This is followed by examination of key states perspectives and other key industry stakeholders. For the purposes of this interim report, a limited number of industry perspectives have been considered.

10.2 National perspectives

Australian Mines and Metals AssociationThe Australian Mines and Metals Association (AMMA) represents the resources and energy sector before state and federal governments, tribunals and advisory bodies. AMMA undertakes research to inform industry advocacy and provides advice on current developments.

AMMA recognises the existence of a skill and labour shortage in the resources sector, which has the potential to adversely impact productivity. The greatest impact of this skill shortage is likely to be in Queensland and Western Australia (AMMA 2011c). AMMA welcomed the release of the Resourcing the Future report, seeing the initiative as an important step in addressing the industry’s critical skill shortage. However, Chief Executive Steve Knott emphasised that access to and improvement of the skilled migration visa schemes was vital to supplying skills to the industry in the short term (AMMA 2011b).

AMMA acknowledges that migration is a small but important element in supplying skills, and that the long-term intention of the resources sector is to up-skill and supplement the Australian workforce rather than replacing it with overseas workers (AMMA 2011a). This includes increasing the number of women working in the sector.

According to AMMA, employers in the resources industry have attempted to employ extra graduates, apprentices and trainees, as well as promoting careers in the resources sector. Despite these efforts, skills and labour shortages remain (AMMA 2011a).

Minerals Council of AustraliaThe Minerals Council of Australia (MCA) represents Australia’s exploration, mining and minerals processing industry. MCA advocates public policy positions and operational practice for the Mining industry. MCA’s focus is a fit for purpose labour market able to meet the skilled workforce needs of the Mining industry and to support its continued growth.

MCA notes that the Mining industry faces significant challenges accessing skilled labour for the development and operation of its growth projects (MCA 2011b). MCA commissioned a study in 2008 which revealed that an additional 8 952 site-based professionals will be required by 2020 to meet projected mineral commodity output. This is an increase of 68 per cent compared to a 2008 National Institute of Labour Studies report (13 219 to 22 1717 professionals).

More recently, the MCA highlights a range of Government data, including Australian Bureau of Statistics (ABS) and Department of Education, Employment and Workplace Relations (DEEWR) data, indicating that the Mining industry has experienced rapid growth over the last decade and that this growth is set to continue. MCA recognises the National Resources Sector Employment


Taskforce (NRSET) Resourcing the Future report, noting its employment forecasts and is committed to working with Government to address skill shortages.

MCA believes that skill shortages are having adverse effects on the Mining industry and the MCA suggests that education and training, developing a balanced approach between Fly-in Fly-out (FIFO) and local community development, and migration are important avenues to address resources sector skill needs. While employment in the Mining industry has doubled over the past decade, skilled vacancies are five times higher than levels recorded in 2003.

MCA argues that a significant rethink of the current higher education funding arrangements is necessary to meet the future skills and research demands of the Australian Mining industry. MCA believes that without such changes, Australia’s higher education sector will continue to struggle to supply the skills required to maintain Australia’s global competitiveness (MCA 2011a).

MCA highlights the Mining industry’s willingness to co-invest noting that the current investment in higher education has had a positive impact in growing students numbers in disciplines related to the resources sector. However, while undergraduate enrolments have recently begun to grow in minerals-related disciplines, the MCA feel that these gradual increases are inadequate to meet demand (MCA 2011a).

MCA reports that the industry has attempted to address skill gaps through such methods as relying on privately provided training, subsidising minerals related education programs at universities, and providing career awareness through national and state based initiatives.

Australian Petroleum Production and Exploration AssociationAPPEA is the peak national body representing the interests of Australia’s upstream oil and gas exploration and production industry.

APPEA reports unprecedented growth in liquefied natural gas projects across Australia, as well as an emergence of the coal seam gas sector, which are increasing the demand for skilled labour. Competition with mining and infrastructure projects is also increasing demand and competition for skilled labour.

APPEA note that there are skill shortages and capability gaps at highly technical and senior levels. There is also growing demand for technical personnel in oil and gas plant process operations and maintenance, and supervisors with appropriate levels of technical and safety experience as well as front-line management skills (APPEA 2011).

In the operations phase of projects, there are ongoing skill gaps and shortages of professionals, particularly in geosciences disciplines and various forms of engineering. There is also increasing competition for electrical and process technicians (APPEA 2011).

APPEA supports a range of solutions that allows for adaptability and movement between industry sectors, which may be supported as needed by skilled migration. APPEA supports industry and government working co-operatively to create sustainable training solutions to supply resources projects (APPEA 2011).

10.3 Western Australian perspectives

Department of Training and Workforce DevelopmentThe Western Australia Department of Training and Workforce Development (WADTWD) has a focus on workforce development in Western Australia which aims to build, attract and retain a skilled workforce to meet the economic needs of Western Australia, to minimise skill shortages and maximise the state’s ability to respond to new opportunities (WADTWD 2011).

WADTWD suggests that Western Australia is on the brink of a significant economic upturn driven by planned resources sector projects. Western Australia will not be able to meet industry demand for skilled and unskilled labour with a predicted increase of 350 000 new jobs created by 2019-20 across all industries (Access Economics 2009).

In 2009, WADTWD estimated that there were more than $100 billion worth of resources sector projects either committed to or under consideration in Western Australia and they anticipate that


these projects are likely to create more than 40 000 jobs in construction and 12 500 permanent jobs. Such strong growth in the resources sector raises concerns for other industries as they could be ‘crowded out’ of the labour market and therefore be unable to attract skilled workers.

Department of Mines and PetroleumThe Department of Mines and Petroleum (DMP) is Western Australia’s lead agency in attracting private investment in resources exploration and development through the provision of geoscientific information on minerals and energy resources, and management of equitable and secure titles systems for the mining, petroleum and geothermal industries.

DMP expects continued high levels of demand for Western Australia’s resources for the foreseeable future, leading to short to medium term skill shortages at the levels experienced during the height of activity in the sector in 2008. DMP is expecting increased pressure on the Department to attract and retain suitably qualified and experienced staff (DMP 2010).

Chamber of Commerce and Industry Western AustraliaThe Chamber of Commerce and Industry Western Australia (CCIWA) seeks to foster an economic environment that encourages the growth of responsible private enterprise.

CCIWA is Western Australia’s peak business organisation and provides a diverse range of products and services to help members and the broader business community do business better. With over 100 years of history, CCIWA has the knowledge and influence to support its members in all areas of their operations.

CCIWA is responsible for running the Resource and Energy Projects Service (REPS) and publish the REPS Major Western Australia Projects List which is published twice a year in June and December. This list documents project details including capital expenditure, start of construction dates, end of construction dates, region and proponents. CCIWA also publishes Business Pulse (CCIWA 2011), an update of recent activity in the Western Australia economy. The May 2011 edition notes CCIWA research which estimates that the Western Australia unemployment rate will drop to 3.25 per cent by mid 2014, with a shortfall of 210 000 workers in Western Australia by 2020. CCIWA highlights that labour shortages present a real and present challenge for small business.

Western Australia Chamber of Minerals and EnergyThe Chamber of Minerals and Energy of Western Australia (CME) is the peak resources sector representative body in Western Australia. The role of CME is to champion the Western Australian resources sector and assist it in achieving its vision to lead the world in sustainable practice through innovation and to underpin Australia’s position in the global economy.

The CME identifies the challenge of attracting and retaining skilled labour remains as the essential element underpinning the industry’s sustainable development. Supporting the Mining industry’s growing demand for skilled labour is a core focus (CME 2011).

In 2008, CME commissioned PwCConsulting to complete a study to provide an integrated outlook of industry and government development plans in the minerals and energy sector, focused on the key growth enablers of people, energy and water to aid policy development.

The overall objectives of the 2008 study were to:

• develop a demand outlook for the three growth enablers: people; energy; and water and identify potential demand/supply gaps

• provide a basis for identifying potential implications arising from current growth plans

• provide valuable input into industry and government planning and to better position industry and government to capture opportunities from Western Australia’s growth.

The current study (CME 2011) seeks to update the outlook for the resources industry and refine their implications after what CME regard as 24 months of significant turmoil and change for the Western Australia, Australian and international economies. The report finds that based on current


growth plans in the minerals and energy sector, the required workforce is expected to peak at almost 119 500 people in 2012, an increase of about 43 800 on the previous report.

The report also notes that based on current ABS population projections and current participation rates in the sector, there is a forecasted deficit in workforce numbers. The report also suggests that current workforce demand cannot be met through current forecast migration and workforce participation rates.

10.4 Queensland perspectives

Construction Skills QueenslandConstruction Skills Queensland (CSQ) is an independent industry-funded body supporting career seekers, apprentices, workers and employers in the building and construction industry. The organisation provides the construction industry with support, information, advice and funding assistance.

CSQ has undertaken research into the coal seam gas (CSG) and liquefied natural gas (LNG) industries in Queensland, and have produced Construction Workforce Plan (CSQ 2010). This plan assesses the construction skill needs related to the construction phases of CSG and LNG projects in Queensland. The research distinguishes construction activity between Upstream: CSG field facilities (exclusive of drilling) and Downstream: LNG processing facilities (excluding shipping and port facilities). CSQ note that there is significant investment in the CSG/LNG industry, with minerals and energy sectors reporting infrastructure investment commitments likely to exceed $400 billion. CSQ note that this investment in new projects will drive demand for skilled labour and could easily lead to a tightening of regional skilled labour markets.

As part of downstream construction, CSQ research indicates that approximately 9 000 workers, primarily trades workers, will be required to build the initial four LNG trains projected to be commissioned in 2014. CSQ identify a number of occupations as priority downstream and upstream skill areas including carpenters, electricians, sheet metal workers, welders and diesel mechanics. However, quantifying labour requirements is complicated by the overlap between construction, upstream operations and CSG/LNG production activities. Accordingly, CSQ highlight the importance of programming and clear scheduling of project delivery timelines and suggest that some skill shortages could be addressed with effective communication and possibly ‘sharing’ of labour workforces.

CSQ make ten recommendations on the basis of their research, to assist meeting the skill requirements of the CSG/LNG sector. The recommendations encourage workforce development, particularly the training and retention of workers as well as the importance of effective workforce planning and research.

Energy Skills QueenslandEnergy Skills Queensland (ESQ) leads energy industry and government engagement on vocational education and training (VET), skill development and labour market issues. ESQ ensures that skill needs are identified at local, regional and state levels, and ascertain training priorities, suitable training products and ideal training delivery methods.

Despite some relief in skills demand brought by the global recession, ESQ identifies that skill shortages appear to be imminent. ESQ advises that employers need to undertake strategic workforce planning with longer term solutions in mind to address critical skill shortages (ESQ 2010).

ESQ also explores skill gaps in occupations related to the resources sector, concluding that the education and training of professionals in Queensland rests with both government and industry.

Queensland Major Contractors AssociationThe Queensland Major Contractors Association (QMCA) is dedicated to improving the efficiency and sustainability of the construction industry in Queensland. Its current membership includes


the 18 top-performing construction companies in Queensland, which together account for approximately 70-80 per cent of the construction and civil engineering work in the state.

The QMCA regularly reviews and analyses the major engineering construction projects planned and delivered in Queensland, for the public and private sectors. This review is concerned with major projects identified with a present value of greater than $100 million and does not consider building or residential construction. The 2010 report found that in 2011 ‘significant skilled labour shortages are anticipated in a number of key engineering construction trades, technical and professional roles associated with construction of Resources and Energy projects’ (QMCA 201). These shortages will be further exacerbated by demand in Western Australia, South Australia and overseas (such as Papua New Guinea).

Activity on identified major projects is expected to double between 2010-11 to 2012-13, with major project engineering construction activity forecast to peak at $12.9 billion in 2012-13. This growth will be driven by privately funded infrastructure projects in the resources sector.

Chamber of Commerce and Industry QueenslandThe Chamber of Commerce and Industry Queensland (CCIQ) provide advice and assistance in a broad range of business management areas. They engage with the business community, advocate policy positions to government and address business issues in the mainstream news media. CCIQ undertake research to support Queensland businesses.

Their flagship publication is Pulse which in conjunction with the Commonwealth Bank incorporates a survey of business conditions. The December 2010 publication (CCIQ 2010) discusses the effects of the recent Queensland floods on the economy. It notes that driven by recent experience with skill shortages, employers have attempted to retain staff where possible. However the Pulse Employment Index fell to 43.8 in December indicating that the ongoing depressed sales and profitability figures across all industries, are forcing employers to reassess their workforce needs. Some survey respondents noted that they believe that given the recent floods, the mining sector is the only sector driving the Queensland economy.

Queensland Resources CouncilThe Queensland Resources Council (QRC) is the peak representative body for the state’s minerals and energy sector. The QRC’s 91 full-member companies comprise explorers, miners, contractors, mineral processors, oil and gas producers and electricity generators. QRC has a broad skills policy capability in issues ranging across Careers attraction through social networking media (Web2.0/3.0), skilled migration, VET, tertiary and secondary education, target groups including women (targeting 20% women in non-traditional roles by 2020) and indigenous people, in addition to its practical leadership of the 30 state and private schools across the state in Queensland Minerals and Energy Academy.

As noted earlier in this report, the ongoing importance of skill supplies for the resources sector in Queensland is highlighted by comments in the QRC’s State of the Sector Report, March 2011. The QRC Chief Executive Officer (CEO) Sentiment Index is a survey of the QRC’s full member company chief executives. The QRC reported that for its CEOs the attraction and retention of skilled employees continues to rank as the highest order issue with a ‘very strong’ rating, as it has done over the past three quarters.

The QRC is looking to a number of solutions to skills shortages, including greater school student access to and takeup of science, technology, engineering and maths (STEM)subjects through the draft national curriculum; major reform of the vocational education and training system to a genuine industry lead, demand driven system, including modernisation of the structured training system; freeing universities from input-driven regulation and compliance regimes to enable them to operate and respond as dynamic learning organisations for the emerging economy’s opportunities; an effective and accessible skilled migration system; technology-driven changes to work and productivity; and attracting more under-represented target groups (women, indigenous people) to help address skill needs (QRC 2010).


QRC considers that the state’s skilled workforce should be a strategic asset, to be developed and sustained accordingly. Labour market and demographic factors accompanying structural changes in the economy require a more collective suite of government policy reforms, including around education, skilling, skilled migration, population policy, regional development, and provision of social infrastructure, to adequately address the catch-all of skills shortages.

10.5 New South Wales perspectives

New South Wales Minerals CouncilThe New South Wales Minerals Council (NSWMC) is a not for profit, peak industry association representing the $17 billion mining industry in New South Wales. NSWMC works with government, industry groups, key stakeholders and the community to foster a dynamic, efficient and sustainable Mining industry in New South Wales.

NSWMC notes that New South Wales mineral production for 2009-10 was an estimated $17 billion. NSWMC produces annual reports covering key statistics regarding the Mining industry in New South Wales. The 2010 report (NSWMC 2010) notes that the Mining industry is a significant employer in New South Wales employing 31 778 people in June 2010, an increase of 7.2 per cent from the previous year. Employment in coal mining accounted for 19 115 in June 2010 an increase of 13 per cent from the previous year. In June 2010, the average age of those employed in New South Wales coal mines was 41.5 years, suggesting that increasing retirements may affect labour supply in future years.

10.6 Northern Territory perspectives

Northern Territory Department of Business and EmploymentThe Northern Territory Department of Business and Employment lists several key occupations to the resources sector as being in state-wide shortage on the Northern Territory Occupation Shortage List 2011. Among these are construction project managers, engineering managers, mining engineers, petroleum engineers, geologists and earthmoving plant operators (Northern Territory Government 2011).

Chamber of Commerce (Northern Territory)The Northern Territory Chamber of Commerce is the Territory’s largest employer organisation. The Chamber is committed to supporting the needs of business by providing a range of commercial services and support through its regional and head office.

One of the key points in the Chamber’s strategic plan for 2010-15 is ‘have a series of strategies in place to develop the workforce in an era of sustained skill shortages’ (Northern Territory Chamber of Commerce 2010: 5).

The Chamber acknowledges that skill shortages are one of the three main issues affecting industry in all regions of the Northern Territory (Northern Territory Chamber of Commerce 2010: 7). Considering the Northern Territories low unemployment rate, the Chamber feel that for many businesses, particularly in remote areas, sponsoring overseas workers through the skilled migration programs is the only option for meeting skill shortages (Northern Territory Chamber of Commerce 2010: 9).

The Chamber feels that the removal of regional concessions to the skilled migration program have made the process of arranging skilled migration more expensive and time consuming, and may in consequence make it out of the reach of small employers. Therefore, the Chamber has been lobbying government with the message that a ‘one size fits all’ approach does not work in all regions (Northern Territory Chamber of Commerce 2010: 7).


Chris Young, head of the Chamber of Commerce, expects strong future job growth (Adlam 2010):

‘The$12billionInpexprojectalonewouldcreateupto3000constructionjobs...foreveryjobintheplant,therewillbefoursupportjobsoutside.’

Young emphasises that although areas of Australia may have unemployment, those currently without jobs in Australia rarely have skills to work on resources projects, and unemployed people from other states are often reluctant to move away from their family (Adlam 2010).

The Chamber encourages its members to participate in a number of programs to help young people experience different industries and trades. These include work experience, VET in schools, school based apprentices and trainees, career expos and industry sector promotion (Northern Territory Chamber of Commerce 2011).

The Chamber is committed to increasing the number of apprentices and trainees; employment of Indigenous people; the number of mature aged apprentices and trainees and the employment of people with disabilities in the Northern Territory (Northern Territory Chamber of Commerce 2011).

10.7 South Australian perspectives

South Australian Chamber of Mines and EnergyThe South Australian Chamber of Mines and Energy (SACOME) aims to support the achievement and promotion of the safe, enduring and profitable resources industry of South Australia. Recognising the need to forecast demand, the SACOME undertakes a Resources Industry Skills Survey which is designed to determine workforce demand requirements across the resources sector in South Australia.

The most recent survey undertaken in 2010 (SACOME 2010) found that the majority of respondents believed they would experience a skill shortage in the next 24 months, particularly for geologists, engineers (subsurface, specialist, and mining), technical trades, managerial, and experienced employees. Respondents also noted that salary expectations and competition for workers were impediments to attracting and retaining workers.

10.8 Perspectives from other stakeholders

Rio TintoRio Tinto is a leading international mining group. Rio Tinto report skill shortages including drillers, truck drivers and locomotive drivers. According to Rio Tinto’s iron ore chief executive, Sam Walsh, there are not enough people to perform these jobs and the company is working on automating these functions (Mathews 2011).

BHP BillitonBHP Billiton is the world’s largest diversified natural resources company. BHP Billiton report that skill shortages in Australia are occurring quicker than expected (La Canna 2010). BHP Billiton recently called for Australia’s skilled migration program to be weighted towards scientific and engineering skills. While the sector continues to be committed to working with universities to attract local graduates, Australia needs to attract more skilled labour from overseas (Lannin 2011).

Technical and Further Education New South WalesIn its submission to the Resourcing the Future discussion paper, Technical and Further Education New South Wales (TAFE NSW) noted that in addition to the future skill needs of the resources sector, there will also be a skill requirement impact for supporting industries.

TAFE NSW calls for enhanced awareness and understanding of industry planning processes and the further development of partnerships between TAFE NSW Institutes and resources sector enterprises. As companies are in the best position to identify their specific skill requirements, consultation and partnerships with all stakeholders is necessary to allow for the best match between skills and job opportunities (TAFE NSW 2010).


10.9 Consultations with stakeholdersSkills Australia held discussions with key stakeholders in May 2011 to outline the projections of supply and demand for skills in the resources sector presented earlier in this report and to get industry’s views on the projections.

Skills Australia undertook consultations with industry across the mining operations (in several industries), gas operations and project construction sectors and with State Government representatives concerning resource sector skill needs in preparing this report. However, given the short time available to prepare the report consultations were restricted to Western Australia and Queensland. Skills Australia will consult more broadly across the nation in preparing future annual reports.

Stakeholders were briefed about the key conclusions arising from modelling of skills demand and supply and stakeholders provided comments on the key data presented in the report. Broadly speaking, while noting the volatility of major resource projects data and the difficulties this causes in projecting future skills demand stakeholders supported the main thrust of the projections including that:

• Mining employment has grown markedly in the past 18 months and further, sustained and substantial growth in employment is seen as likely in mining operations in the next three to five years, based on likely growth in demand in key export markets for Australian resources. Stakeholders suggested this growth will also be facilitated by growth in resources production capacity arising from major resource construction projects over this time frame.

• The prospects for gas operations employment have firmed in line with NRSET projections with announcements of Final Investment Decisions for the Santos and BG developments in Queensland and the offshore Prelude project.

• The very substantial growth in the number and value of advanced projects in the last six months will add considerably to the major project construction sector’s demand for labour, both for highly skilled and less skilled labour. Some stakeholders expressed concern that rather than a more gradual (but pronounced) ramp up of demand for labour as was anticipated at the time NRSET reported, there are now prospects that labour demand will expand very rapidly in the short term (one stakeholder, for example suggested a vertical cliff of growth in labour demand). Several stakeholders also suggested that whereas NRSET (and other commentators) had suggested demand for project construction labour would taper off after 2012-13, the likelihood is that demand for project construction labour will remain at very high levels for an extended period.

With respect to labour supply, stakeholders commented that:

• Although supply from VET may be growing, the lead times involved in providing apprenticeship training meant that there would be delays in this new source of skills supply entering the market and that this growth in apprentice numbers would not add to skills supply early enough to address immediate resources skill needs especially in respect to major resource project construction.

• Similar concerns were presented in respect to emerging skills supply from higher education

• Industry acknowledged that domestic supply could be increased more rapidly for less skilled occupations, and suggested that the Critical Skills Investment Fund could play a critical role in this regard if the Fund is placed into operations quickly.

• Industry expressed concerned that while it acknowledges the desirability of increasing Indigenous employment within the resources sector to better meet industry skill needs there is a limited supply of job ready Indigenous labour, especially in Queensland.

• Industry acknowledged the scope for a greater role by women in the resources sector.

• Given domestic labour supply limitations, and the expected speed of growth in labour demand for resources construction projects as well as in mining and gas operations, access to migrant labour through temporary migration arrangements will be vital if projects are to proceed without undue delays.


10.10 ConclusionsCurrent industry perspectives on the skill needs of the resources sector highlight that the sector is concerned about the impact of skill shortages on the immediate and future growth prospects of the industry. Demand for skilled labour is expected to increase over the coming years, although some industry players suggest that the greatest difficulty in attracting skilled workers will be experienced by non-resources sector employers.

Industry stakeholders canvass a number of alternatives for addressing skill shortages including increased training and education of skilled workers, methods to help retain the current workforce, increasing migration, and increasing the proportion of under-represented groups in the resources sector.

Industry stakeholders also emphasise cooperation and collaboration between government and industry to address critical skill needs. There is evidence of this already occurring, with co-funding arrangements for the higher education of critical professional occupations in place.


11. Key Conclusions11.1 Key conclusionsThis report is the first report by Skills Australia in response to the Government’s request that, following on from the work of the National Resources Sector Employment Taskforce (NRSET), Skills Australia prepare annual reports on the resources sector skill needs.

International economic conditions appear likely to support continued growth in the Australian resources sector, with strong growth likely in Australia’s key Asian markets which will support international demand for Australian commodities. This will underpin growth in the Australian economy for the period ahead. One consequence is that the Reserve Bank anticipates further tightening in the Australian labour market in the period ahead. The likely fall in the unemployment rate may mean that the pool of skilled labour available to the resources sector may fall in the period ahead. This may also imply that wage pressures, while contained to date, may strengthen in the period ahead.

The available data highlights that:

• Further strong growth in mining output is likely over the next five years.

• The number and value of major resources projects has increased significantly since NRSET reported.

• Final investment decisions have been made about key Queensland gas projects which bring more certainty to the likely long term number of projects.

The strong growth outlook is not without risks. The growth projections reflect anticipated continued strong growth in China, but the Chinese authorities have recently been seeking to restrain inflationary pressures through interest rate increases and other measures. The outlook for Japan is also uncertain in the wake of the Great Eastern Japan Earthquake, the related tsunami and subsequent problems at the Fukushima Daiichi nuclear power plant. The projections also depend on Australia’s capacity to supply commodities in demand, which may prove difficult in the short term given the impact of the recent Queensland floods.

In terms of skill shortages, the Australian labour market tightened over 2010 and employers experienced greater difficulty recruiting the skilled workers they needed than they did in 2009. However, consistent with a range of labour market indicators such as vacancy levels and unemployment, the Department of Education, Employment and Workplace Relations (DEEWR) research indicates the labour market has not returned to the activity levels recorded in 2007 and 2008, and employers experience less difficulty recruiting skilled workers than they did immediately prior to the onset of the global recession.

Within the resources sector, the latest DEEWR research indicates that skill shortages exist in a number of key occupations for the resources sector, and that, in most instances, these labour markets tightened between 2009 and 2010. Skill shortages in these labour markets, however, generally remain less widespread than they were in 2007 and 2008.

Australian Bureau of Statistics (ABS) data also highlight that employment growth has been more rapid in mining operations between 2008 and 2010 than anticipated by NRSET.

Looking ahead, employment projections suggest that in terms of new jobs, further strong growth in mining operations employment is likely until 2016, that major resource project employment will be more significant than previously anticipated, and that there is more certainty about the employment outlook in gas operations than previously. Given the higher level of base employment in mining operations than previously estimated, and assuming that the rate of replacement demand follows historical patterns, numbers lost to replacement demand will also rise to higher levels than anticipated by NRSET.


To date strong growth in the resources sector has not been reflected in significant wage growth, suggesting that employers remain able to recruit without offering higher wages. Wage increases in collective agreements for resources sector for the period ahead are also in line with historic trends.

The increase in demand for skills will place further pressure on the education and training system and migration arrangements for an adequate supply of skilled labour to meet these emerging needs. While recent data indicates some growth in numbers in training in key skills, there will need to be a continued focus on these key skills. Recent Government initiatives, including the Critical Skills Investment Fund and the Cairns based Fly-In Fly-Out (FIFO) Coordinator and Enterprise Migration arrangements will play a key role in this response.


Appendix 1: Broad method of the NRSET to determine demand and supply for labour in the resource sector

The National Resources Sector Employment Taskforce (NRSET) reviewed the resources sector’s likely labour and skill needs and supply over the next five years. The projections were based on modelling of demand for skills and supply of skills. NRSET distinguished between demand for construction skills, demand for mining operations skills (excluding gas) and demand for gas operations skills.

Demand for construction skills was based on the value of construction projects. The Taskforce analysed a typical industry occupational profile for a given value of construction and found that around 958 employees were required per $1 billion expenditure on heavy engineering construction in 2008. This skill profile was then used as the basis to determine construction skill needs over three scenarios against likely project capital expenditure identified by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).

NRSET modelled the skill needs for mining operations following a similar approach to that used by the National Institute of Labour Studies (NILS) in preparing projections for the Chamber of Mines in Western Australia in 2006 and the Minerals Council of Australia (MCA) in 2008. NILS used projected growth in commodity output to model employment growth. Projections from ABARES, Access Economics and BIS Shrapnel were averaged to gain a ‘consensus’ view on likely growth paths. Potential employment growth was estimated based on projections of growth in output by commodity, with the results for individual commodities then aggregated to estimate potential overall industry employment growth to 2015. NRSET assumed that growth in output for a given commodity would entail a need for additional labour in line with output growth, with the occupational profile for the sector in the base period remaining unchanged over the estimation period.

Estimates of demand for skills for gas operations were based on modelling existing employment profiles in gas operations and then estimating additional demand for skills based on likely new gas plants. For likely new plants in Queensland, NRSET based its analysis on the approach employed in earlier work done by Energy Skills Queensland. In Western Australia NRSET developed forecasts in consultation with industry.

Projections of likely resources sector skill needs were disaggregate by occupation.

NRSET used data from the Australian Bureau of Statistics (ABS), the Department of Immigration and Citizenship (DIAC), the National Centre for Vocational Education Research (NCVER), and the Department of Education, Employment and Workplace Relations (DEEWR) higher education statistics to estimate labour supply for the resources sector. NRSET used ABS data to determine the current domestic labour supply and unemployment rates by occupation and state or territory. NRSET then engaged NCVER to develop projections for the future supply of tradespeople for 2010 to 2020 under three scenarios. The projections related to the national labour market within which the resources sector would have to compete for labour. The NCVER’s analysis examined trends in commencements, completions and attrition, by trade, to derive a net supply figure over the projected period.

For occupations where skill supply arises from higher education, NRSET used recent DEEWR higher education (2008) statistics to estimate the future supply of domestic graduates. Completions in certain qualifications such as engineering were projected for 2009 to 2014 to calculate the number of graduates potentially available to enter the workforce.


NRSET also examined trends in migration, including applications for subclass 457 visas to estimate their impact on the labour market.

NRSET tested the research methodology and research results extensively with stakeholders through wide ranging consultations as well as through an industry survey. Feedback suggested modelling outcomes were broadly consistent with other sources of demand/supply estimates for the resources sector, including DEEWR analysis of skill shortages in relevant occupations and locations.

NRSET then developed estimates of supply gaps in occupations in demand in the resources sector, concluding that significant supply gaps existed for some occupations where expanding supply involves extended training periods, including for mining engineers and geoscientists as well as in the skilled trades in a number of areas.


Appendix 2: Australia’s General Skilled Migration program

The General Skilled Migration (GSM) program allows for the entry of highly skilled individuals without the sponsorship of an employer. However, there is a lack of recent data on the use of the GSM program.

In order to be eligible for the GSM, applicants must nominate a skilled occupation from the Skilled Occupation List (SOL) which is reviewed annually by Skills Australia. The purpose of the SOL is to identify occupations which are of high value to the Australian economy. To be included on the SOL,

an occupation must also be listed on the Specialised Occupations List (SpOL).

To be included on the SpOL, an occupation is assessed against four criteria:

• Long lead time. These are skills which are highly specialised and require extended learning and preparation time over several years.

• High use. These are skills which are deployed for the uses intended (that is, there is a good occupational ‘fit’).

• High risk. This is where the disruption caused by the skills being in short supply imposes a significant risk to the Australian economy and/or community.

• High information. Quality of information about the occupation is adequate to the task of assessing future demand and evaluating the first three criteria.

An occupation is considered ‘specialised’ if it meets at least two of the first three criteria, as well as the fourth criterion.

Use of the GSM program increased gradually to 2005-06. There was a slight decrease in visa grants in the following year, but numbers again increased in 2007-08. Following the economic downturn numbers have been decreasing, with fewer visa grants in both 2008-09 and 2009-10. There were 59 890 visas granted in the GSM category in 2009-10.

Figure 2: General Skilled Migration outcomes 1997-98 to 2009-10

Per

sons

Year1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-100

10000

20000

30000

40000

50000

60000

70000

80000

Source: Department of Immigration and Citizenship (2010), Annual Report 2009-10


Appendix 3: Case Studies – Recruitment experiences in regions heavily reliant on the resources sector

In 2010, the Department of Education, Employment and Workplace Relations (DEEWR) undertook Surveys of Employers’ Recruitment Experiences in two regions of Western Australia in which the resources sector has a significant impact on the local labour market. The Pilbara region was surveyed in August 2010 and the Goldfields/Esperance region (which includes Kalgoorlie) was surveyed in November 2010. Employers in both areas reported significant difficulty in filling positions across various industries and occupations. The key results are outlined below:

PilbaraThe Pilbara survey covered 200 employers in the region and key results of the survey indicated strong labour market conditions in the region. Table 3 highlights the significant differences in recruitment experience of employers in the Pilbara Employment Services Area compared with employers across all regions surveyed in the 12 months to June 2010.

Table 3: Recruitment experiences of employers in the 12 months preceding being surveyed

Pilbara Employment Service Area

(August 2010)per cent

All Regions (12 Months to

June 2010)per cent

Proportion of employers who recruited in past 12 months 81 65

Proportion of recruiting employers who experienced difficulty 71 51

Proportion of unfilled vacancies in last 12 months 21.2 4.8

Proportion of most recent vacancies remaining unfilled 11.7 5.2

Source: Department of Education, Employment and Workforce Relations (2011), unpublished data.

• Recruitment activity was high (81 per cent) and a large proportion of these employers reported difficulty recruiting (71 per cent). Most notably, the proportion of vacancies that remained unfilled was significantly higher than other regions surveyed to June 2010 (21.2 per cent compared with 4.8 per cent) and was almost double the unfilled rate for all regions surveyed in the 12 months to December 2008 when the labour market was tighter and characterised by skill shortages.

• Similarly, when looking at employers’ most recent recruitment round, a significantly larger proportion of vacancies remained unfilled in the Pilbara Employment Service Area (11.7 per cent) compared with all regions surveyed in the 12 months to June 2010 (5.2 per cent). The highest proportion of vacancies remained unfilled for machinery operators and drivers (particularly truck drivers) at 19.0 per cent and technicians and trade workers at 15.7 per cent. A high proportion of employers reported difficulty recruiting for these occupations (71 per cent and 60 per cent respectively).


• Difficulty was also reported filling occupations across a range of occupations and industries in the region, with employers most commonly citing motor mechanics and general sales assistants as the most difficult to fill occupations. Other occupations commonly reported as difficult to fill included child care workers and building and plumbing labourers.

• Employers had a limited choice of applicants for their most recent recruitment round with a very low average number of applicants per vacancy (4.9 applicants per vacancy compared with 8.4 for all regions surveyed in the 12 months to June 2010). In turn, there was a slightly lower average number of applicants considered suitable for the vacancy for which they had applied (2.3 suitable applicants per vacancy compared with 2.5 applicants for all regions surveyed in the 12 months to June 2010).

• Recruitment expectations for the 12 months following the survey were strong in the region, with more than two thirds of employers expecting to recruit, of whom two thirds expected recruitment to be difficult. These results were significantly higher when compared with all regions surveyed in the 12 months to June 2010 (around 40 per cent of employers expecting to recruit of whom two fifths expected recruitment to be difficult). This may indicate that, as the labour market continues to strengthen, employers in the Pilbara are likely to face increased recruitment challenges due to skill and labour shortages.

Goldfields/EsperanceThe Goldfields/Esperance survey covered 250 employers and found that the remoteness of the area, combined with strong levels of recruitment activity and low levels of unemployment in the region have resulted in significant recruitment difficulties for employers in the region. The survey results showed:

• Recruitment activity was high with 72 per cent of employers attempting to recruit in the 12 months prior to the survey and 67 per cent of these employers, reporting that recruitment was ‘difficult’ in the past 12 months compared with 51 per cent for all regions surveyed in the 12 months to June 2010.

• Just under 10 per cent of most recent vacancies remained unfilled at the time of the survey (compared with only 5.2 per cent for all regions surveyed).

• Employers had particular difficulty recruiting for technicians and trades workers, with more than 25 per cent of the most recent vacancies remaining unfilled.

• Fly-In Fly-Out (FIFO) workers are currently being used by local employers to meet their demand for lower skilled jobs such as cleaners and mining labourers as well as for more highly skilled and specialised mining positions.

• Underpinned by the anticipated strong employment growth in the Mining industry (59 per cent of employers in the Mining industry expected to increase staff numbers in the 12 months following the survey), labour market conditions are expected to tighten further in the Goldfields/Esperance Employment Service Area over the next 12 months.

• More than one third (35 per cent) of employers who expected to recruit anticipated that recruitment would be more difficult in the 12 months following the survey (compared with the all survey result of only 14 per cent).

• Strong competition for workers between employers and the anticipated further tightening of the local labour market suggests that the numerous employment opportunities expected in the Mining industry over the next 12 months will flow through the local economy and increase demand for skills and labour in other industry sectors.


Appendix 4: Occupational profile of the Mining industry

Table 4: Top ten employing occupations in the Mining industry

ANZSCO Code Occupation No.

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tal e

m

plo

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ing

7122 Drillers, Miners and Shot Firers 34 900 6 300 85 15 18

3232 Metal Fitters and Machinists 15 500 93 700 14 86 8

3129 Other Building and Engineering Technicians 10 700 8 900 55 45 6

7331 Truck Drivers 10 100 159 800 6 94 5

3411 Electricians 8 000 131 100 6 94 4

2336 Mining Engineers 7 400 3 600 67 33 4

1335 Production Managers 5 400 54 000 9 91 3

7212 Earthmoving Plant Operators 5 000 51 500 9 91 3

3223 Structural Steel and Welding Trades Workers 4 000 75 500 5 95 2

2344 Geologists and Geophysicists 3 900 4 300 48 52 2

Source: Australian Bureau of Statistics (2010), Labour Force, Australia, Detailed, Quarterly, average for 2010, (Cat no 6291.0.55.003)

Drillers, miners and shot firers (ANZSCO – 7122)Data from the Australian Bureau of Statistics (ABS) indicate the vast majority of drillers, miners and shot firers work in the Mining industry (85 per cent). This suggests competition from other sectors is limited.

Metal fitters and machinists (ANZSCO – 3232)In 2010, 14 per cent of metal fitters and machinists worked in the Mining industry. Accordingly, the Mining industry is competing with a range of other industries (Manufacturing in particular) for people with these skills. That said, a number of industry sectors that employ people in this occupation have experienced declining employment growth over recent years.

The largest competition for this occupation comes from employers in Manufacturing (which employs 36 per cent of all metal fitters and machinists) and Other Services (19 per cent).

Within Manufacturing, Motor Vehicle and Motor Vehicle Part Manufacturing is a key employer and employment in this sector has contracted by 30.6 per cent over the past five years. The major employing sectors in Other Services are Machinery and Equipment Repair and Maintenance and Automotive Repair and Maintenance. While employment growth in the Machinery and Equipment Repair and Maintenance sector has been strong over the past five years, employment in the Automotive Repair and Maintenance sector has contracted.


It is possible that the Machinery and Equipment Repair and Maintenance sector may include a number of companies that work directly for mining companies on a consulting or contract basis to maintain mining plant and equiptment. However, it is difficult to quantify the extent of this.

Other building and engineering technicians (ANZSCO – 3129)The Mining industry is the largest employer of other building and engineering technicians, although just under half of employment in this occupation is outside the Mining industry (particularly within the Professional, Scientific and Technical Services and Manufacturing).

• The greatest competition for these workers comes from Professional, Scientific and Technical Services (16 per cent of other building and engineering technicians) and Manufacturing (10 per cent).

The major employing sectors in Manufacturing are Basic Non-Ferrous Metal Manufacturing, Other Transport Equipment Manufacturing and Basic Ferrous Metal Manufacturing. Employment growth in Basic Non-Ferrous Metal Manufacturing and Other Transport Equipment Manufacturing sector was strong over the five years to February 2011, employment growth in the Basic Ferrous Metal Manufacturing was weak.

The major employing sector for other building and engineering technicians within the Professional, Scientific and Technical Services industry is the Architectural, Engineering and Technical Services. Over the five years to February 2011, employment growth in the Architectural, Engineering and Technical Services sector has been above average.

• Importantly, data for the Professional, Scientific and Technical Services will include a number of companies that work directly for mining companies on a consulting or contract basis. However, it is difficult to quantify the extent of this.

Truck drivers (ANZSCO – 7331)The Mining industry employs a very small fraction (around 6 per cent) of truck drivers employed in Australia and faces strong competition for people with the relevant skills from the Transport, Postal and Warehousing sector.

The largest competition for this occupation comes from employers in the Transport, Postal and Warehousing (58 per cent of truck drivers) and Wholesale Trade (8 per cent).

Not surprisingly, the dominant employer for truck drivers within the Transport, Postal and Warehousing industry is Road Freight Transport. This industry has experienced slightly below average employment growth over the five years to February 2011.

Electricians (ANZSCO – 3411)The Mining industry employs a very small fraction (6 per cent) of electricians and faces strong competition from the Construction industry (which employs more than half of all electricians) and to a lesser extent Manufacturing (9 per cent).

The major employing sectors for electricians within the Construction industry are Building Installation Services, Residential Building Construction and Heavy and Civil Engineering Construction. All of these sectors experienced strong employment growth over the five years to February 2011.

Mining engineers (ANZSCO – 2336)The Mining industry employs more than two in every three mining engineers. It is also likely that a significant proportion of mining engineers who are employed within the Professional, Scientific and Technical Services work indirectly for mining companies through contract or consultancy arrangements.


Production managers (ANZSCO – 1335)The Mining industry employs a small proportion of total production managers in Australia (9 per cent) and is likely to face strong competition from the Manufacturing industry (which employs well over two-thirds of all production managers) for people with these skills. That said, the Manufacturing industry has experienced weak growth across a range of sectors that employ relatively large numbers of production managers

• While only 9 per cent of production managers work in the Mining industry, mining production manager is a specialist occupation and it is unlikely that skills would be readily transferable between sectors such as Manufacturing and Mining.

Earthmoving plant operators (ANZSCO – 7212)The Mining industry employs a very small proportion (9 per cent) of earthmoving plant operators and is likely to face strong competition from the Construction industry (which employs well over two-thirds of all earthmoving plant operators) for people with these skills.

• Construction employs 70 per cent of all earthmoving plant operators.

Structural steel and welding trades workers (ANZSCO – 3223)The Mining industry employs a very small proportion (5 per cent) of Structural Steel and Welding Trades Workers and is likely to face strong competition from the Manufacturing industry (which employs almost two-thirds of all structural steel and welding trades worker) for people with these skills.

• Manufacturing employs 65 per cent of all structural steel and welding trades.

Geologists and geophysicists (ANZSCO – 2344)The Mining industry employs almost half of all geologists and geophysicists. It is also likely that most geologists and geophysicists who are employed within the Professional, Scientific and Technical Services work indirectly for Mining companies through contract or consultancy arrangements.


Appendix 5: History of skill shortages, selected key occupations to the resources sector

Table 5: History of skill shortages, selected key occupations to the resources sectorNumber of years in shortage in

the past 5 yearsNumber of years in shortage in

the past 10 years

Managers

Production Manager (Mining) 4* 4*

Professions

Accountant 3 7

Surveyor 5 5*

Civil Engineer 5 8

Electrical Engineer 5 6

Mechanical Engineer 4 4

Mining Engineer 5 7*

Petroleum Engineer 4* 5*

Geologist 4 6*

Trades

Metal Fabricator 3 7

Welder (First Class) 3 8

Fitter (General) 4 9

Metal Machinist 4 9

Carpenter 3 6

Plumber (General) 4 8

Electrician 3 7

Airconditioning and Refrigeration Mechanic 5 10

Motor Mechanic (includes Diesel Mechanic) 4 9

Automotive Electrician 5 10

Other occupations

Driller 1* 1*

* occupation has not been assessed continually over the period Source: Department of Education, Employment and Workforce Relations (2011), unpublished data.


Appendix 6: List of tablesTable 3.1: Annual capital expenditure in Mining and total industry between 2009 and

2012 8

Table 4.1: Australia, projected growth in oil, gas and mine output, by commodity, 2010 to 2016 12

Table 5.1: Number employed and unemployed for selected professional occupations 20

Table 5.2: Number employed and unemployed for selected technician and trades occupations 21

Table 6.1: Occupational employment in Mining, Top 20 occupations, 2010 23

Table 6.2: Skill shortages in occupations key to the resources sector, 2008 to 2010 24

Table 7.1: Change in Wage Price Index by industry: total hourly rates of pay excluding bonuses (original terms 33

Table 7.2: Change in Wage Price Index by state and territory: Total Hourly Rates of Pay Excluding Bonuses (original terms 34

Table 7.3: Trends in enterprise bargaining by industry – all current agreements, September 2007 to September 2010 35

Table 8.1: Modelling demand for new project construction jobs 39

Table 8.2: Projected short term construction jobs over the period 2011 to 2017 40

Table 9.1: Apprentices and trainees, training commencements in all occupations by state and territory, 12 months to September, 2009 and 2010 44

Table 9.2: All apprentices in training, minerals sector, September quarter 2003 to 2010 48

Table 9.3: Traditional apprentices in training, minerals sector, September quarter 2003 to 2010 48

Table 9.4: Commencing students in Engineering and Related Technologies courses by citizenship and level of course, 2008-2009 49

Table 9.5: Commencing students in Earth Sciences and Geosciences courses by citizenship and level of course, 2008-2009 50

Table 9.6: Subclass 457 visas granted to selected professional occupations 2005-06 to 2009-10 52

Table 9.7: Subclass 457 visas granted to selected technical and trade occupations 2005-06 to 2009-10 53

Table 9.8: Subclass 457 visas granted to selected occupations 2005-06 to 2009-10 54

Table 9.9: Primary grants to skilled migrants by major ASCO occupational group, 2007-08 to 2009-10 54

Table 9.10: Secondary grants to skilled migrants by major ASCO occupational group, 2007-08 to 2009-10 55

Table 3: Recruitment experiences of employers in the 12 months preceding being surveyed 71

Table 4: Top ten employing occupations in Mining industry 73

Table 5: History of skill shortages, selected key occupations to the resources sector 76


Appendix 7: List of figuresFigure 2.1: Growth in real GDP 6

Figure 3.1: Major resource projects, Australia, April 2011 9

Figure 5.1: Change in full-time, part-time and total employment (‘000s), April 2010 to April 2011 16

Figure 5.2: Unemployment rate and participation rate, April 2001 to April 2011 17

Figure 5.3: Unemployment rate by state and territory, April 2011 18

Figure 5.4: Change in employment (‘000s) by industry, February 2010 to February 2011 19

Figure 5.5: Change in employment (‘000s) by occupation, February 2010 to February 2011 19

Figure 6.1: Proportion of vacancies filled and number of suitable applicants per vacancy, engineering professions, 2007 to 2010 26

Figure 6.2: Proportion of vacancies filled and number of suitable applicants per vacancy, Resource sector professions and associates, 2007 to 2010 27

Figure 6.3: Proportion of vacancies filled, trade occupation groups, 2007 to 2010 28

Figure 6.4: Number of suitable applicants per vacancy, trade occupation groups, 2007 to 2010 28

Figure 9.1: Quarterly commencements, completions and cancellations/withdrawals, seasonally adjusted, 1999 to 2009 (‘000) 45

Figure 9.2: Minerals industry apprentices and trainees as at September quarter 2003 47

Figure 9.3: Traditional apprentices in the minerals industry September quarter 2003 to 2010 48

Figure 9.4: Correlation between ANZ job advertisements and subclass 457 visa applications lodged 51

Figure 9.5: Correlations between Australian unemployment rate and subclass 457 visa applications lodged 51

Figure 2: General Skilled Migration outcomes 1997-98 to 2009-10 70


Appendix 8: List of acronymsAAC Australian Apprenticeship Centre

AAWI Average Annualised Wage Increase

ABARES Australian Bureau of Agricultural and Resource Economics and Sciences

ABS Australian Bureau of Statistics

ACED Australian Council of Engineering Deans

ACT Australian Capital Territory

ACTU Australian Council of Trade Unions

AIG/ACA Australian Industry Group/ Australian Constructors Association

AMMA Australian Mines and Metals Association

AMWU Australian Manufacturing Workers Union

AMWU Australian Manufacturing Workers Union

ANET Australian National Engineering Taskforce

ANZSIC Australian and New Zealand Standard Industry Classification

APESMA Association of Professional Engineers, Scientists and Managers

APPEA Australian Petroleum Production & Exploration Association

APPEA Australian Petroleum Production and Exploration Association

AQF Australian Qualifications Framework

ASCO Australian Standard Classification of Occupations

ATN Australian Technology Network

AWU Australian Workers Union

BER Building the Education Revolution

BMA Billiton Mitsubishi Alliance

CAPEX Capital Expenditure and Expected Expenditure

CCIQ Chamber of Commerce and Industry Queensland

CDEP Community Development Employment Project

CEO Chief Executive Officer

CFMEU Construction, Forestry, Mining and Energy Union

CME Chamber Minerals and Energy of Western Australia

COAG Council of Australian Governments

CPSISC Construction and Property Services Industry Skills Council

CSAM Continuous Survey of Australian Migrants

CSG Goal Seam Gas

CSG-LNG Coal Seam Gas-Liquefied Natural Gas

CSM-LNG Coal Seam Methane-Liquefied Natural Gas

CSQ Construction Skills Queensland

DAE Deloitte Access Economics

DEEWR Department of Education, Employment and Workplace Relations

DIAC Department of Immigration and Citizenship

DIDO Drive-in Drive-out


DITRDLG Department of Infrastructure, Transport, Regional Development & Local Government

DMP Department of Mines and Petroleum

DRET Department of Resources, Energy & Tourism

EMA Enterprise Migration Agreement

ENS Employer Nomination Scheme

ENSOL Employer Nomination Scheme Occupations List

ESQ Energy Skills Queensland

FID Final Investment Decision

FIFO Fly-In Fly-Out

GAGAL Gladstone Area Group Apprentices Ltd

GDP Gross Domestic Product

GLNG Gladstone Liquefied Natural Gas

Gm Gigameter

GSM General Skills Migration

GTA Group Training Australia

GTO Group Training Organisation

IMF International Monetary Fund

kt Kilotonne

LNG Liquefied Natural Gas

LPG Liquefied Petroleum Gas

LPI Labour Price Index

MCA Minerals Council of Australia

MCE Ministerial Council on Energy

MCMPR Ministerial Council for Mineral and Petroleum Resources

MCTEE Ministerial Council for Tertiary Education and Employment

MEA Mining Education Australia

Ml Megalitre

MOU Memorandum of Understanding

Mt Megatonne

MTEC Minerals Tertiary Education Council

NCVER National Centre for Vocational Education Research

NESA National Employment Services Association

NILS National Institute of Labour Studies

NLS National Licensing System

NRSET National Resources Sector Employment Taskforce

NSW New South Wales

NSWMC New South Wales Minerals Council

OECD Organisation for Economic Cooperation and Development

QMCA Queensland Major Contractors Association

QMEA Queensland Minerals and Energy Academy

QRC Queensland Resources Council

RBA Reserve Bank of Australia

RCC Recognition of Current Competencies

REPS Resource and Energy Projects Service

RITC Resources Industry Training Council

RMA Regional Migration Agreement

RPL Recognition of Prior Learning

RSMS Regional Sponsored Migration Scheme

RTO Registered Training Organisation

SACOME South Australian Chamber of Mines and Energy

SOL Skilled Occupation List

SpOL Specialised Occupations List

SVI Skilled Vacancy Index

t Tonne

TAFE Technical and Further Education

VET Vocational Education and Training

WAACI Western Australian chamber of Commerce and Industry

WADTWD Western Australian Department of Training and Workforce Development

WELD Working on Employment, Learning and Development

WEO World Economic Outlook

WPI Wage Price Index


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