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Transport Freight and Logistics – Sector Demographics

Transport for New South Wales

Final Report

January 2015

Transport for New South Wales Transport, Freight and Logistics Sector Demographics

January 2015

Disclaimer Inherent Limitations

This report has been prepared as outlined in the Scope Section. The services provided in connection with this engagement comprise an advisory engagement which is not subject to Australian Auditing Standards or Australian Standards on Review or Assurance Engagements, and consequently no opinions or conclusions intended to convey assurance have been expressed.

No warranty of completeness, accuracy or reliability is given in relation to the statements and representations made by, and the information and documentation provided by Transport for New South Wales personnel and stakeholders consulted as part of the process.

KPMG have indicated within this report the sources of the information provided. We have not sought to independently verify those sources unless otherwise noted within the report.

KPMG is under no obligation in any circumstance to update this report, in either oral or written form, for events occurring after the report has been issued in final form.

The findings in this report have been formed on the above basis.

Third Party Reliance

This report is solely for the purpose set out in the Scope Section and for Transport for New South Wales’s information, and is not to be used for any other purpose or distributed to any other party without KPMG’s prior written consent.

This report has been prepared at the request of Transport for New South Wales in accordance with the terms of the Prequalification Scheme: Performance and Services Standard Form of Agreement as agreed on 16 April 2014. Other than our responsibility to Transport for New South Wales, neither KPMG nor any member or employee of KPMG undertakes responsibility arising in any way from reliance placed by a third party on this report. Any reliance placed is that party’s sole responsibility.

© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity"

are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.


January 2015

Table of contents Executive summary ........................................................................................................................................................2

1. Introduction ..............................................................................................................................................................8

1.1. Project background.............................................................................................................................................8 1.2. Methodology .......................................................................................................................................................9 1.3. The NSW Freight and Ports Strategy...............................................................................................................10 1.4. Action 3D – Support the growth of the transport and logistics workforce.........................................................11 1.5. The importance of skilled workers ....................................................................................................................11 1.6. Definitional challenges......................................................................................................................................11 1.7. Structure of this report ......................................................................................................................................12

2. Economic and industry context ...........................................................................................................................13

2.1. Australian economy overview...........................................................................................................................13 2.2. NSW economy overview...................................................................................................................................14 2.3. Transport, Freight and Logistics industry overview ..........................................................................................15 2.4. Drivers of change..............................................................................................................................................16 2.5. Workforce challenges for the TFL industry.......................................................................................................17

3. Analysis and findings............................................................................................................................................18

3.1. What are skills shortages? ...............................................................................................................................18 3.2. Selecting occupations.......................................................................................................................................18 3.3. Historical trends in selected occupations .........................................................................................................19 3.4. Quantitative modelling of skills deficits .............................................................................................................25 3.5. Findings from stakeholder consultations ..........................................................................................................27 3.6. Conclusion ........................................................................................................................................................30

4. Responding to skills shortages ...........................................................................................................................32

4.1. Potential measures ...........................................................................................................................................32 4.2. Conclusion ........................................................................................................................................................36

5. Conclusion..............................................................................................................................................................37

5.1. Summary of findings.........................................................................................................................................37

A. TFL ANZSCO occupation categories ...............................................................................................................38

B. Demand-supply imbalance analysis for all TFL occupations........................................................................40

C. Detailed modelling methodology......................................................................................................................47

Modelling background .................................................................................................................................................47 Labour Demand...........................................................................................................................................................47 Labour Supply .............................................................................................................................................................48 Supply Demand Imbalance Index ...............................................................................................................................49

D. Consultation questions .....................................................................................................................................51

© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity"

are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.

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Executive summary KPMG was engaged by Transport for New South Wales (TfNSW) to provide an analysis of the transport, freight and logistics (TFL) industry sector demographics, with a focus on specific occupations and an understanding of the prevalence of skills shortages in each. Through this project TfNSW has sought to develop a more objective, evidence-based approach to understanding skills shortages. This project provides TfNSW with: • a unified framework for assessing skills gaps and shortages in key occupations for the TFL industry, reflecting

discussions regarding skills categories/occupations so that project outputs are appropriate • a better understanding of why particular skills shortages exist and where they are most acute • initial guidance on where government and industry might work together to alleviate the gaps and shortages.

This report provides TfNSW with a detailed analysis of current and forecast skills gaps and shortages within the TFL sector in NSW. KPMG’s findings, conclusions and recommendations within this report have been informed by a combination of quantitative and qualitative evidence (further information is provided in section 1.2). They also reflect KPMG’s experience in working at the interface between industry and government.

A plethora of information already exists on the size and importance of the TFL industry to the national and state economies. Bodies such as the Australian Bureau of Statistics (ABS), Transport & Logistics Industry Skills Council (TLISC) and Bureau of Infrastructure, Transport and Regional Economics (BITRE) all produce extensive reports and statistics on the composition of the industry, not to mention industry associations such as the Australian Logistics Council and others. What makes this project unique is the application of KPMG’s quantitative methodology on NSW specific information for a customised set of occupations considered as important to the industry.

NSW Freight and Ports Strategy Released in December 2013, the NSW Freight and Ports Strategy provides a framework for industry, all levels of government and other stakeholders to guide investment and other decisions to enhance freight and logistics in NSW. The Strategy is a core component of the NSW Government’s overall strategic planning framework and provides the State with a clear aim and achievable objectives.

The objectives of the strategy are to ensure the:

• delivery of a freight network that efficiently supports the projected growth of the NSW economy

• balancing of freight needs with those of the broader community and the environment.

Sustainable growth of the transport and logistics workforce is a key issue to ensure the TFL industry can meet the future requirements of the NSW economy. Skills shortages can constrain economic growth. Unaddressed, they may also compromise NSW’s ability to meet current and future demand and may eventually lead to increased costs and inefficiencies at the firm, industry and economy-wide level.

Addressing skills shortages must begin with a robust and comprehensive understanding of where skills shortages exist now and where they are likely to appear in future. To increase this understanding this project has been designed to quantify the scale of skill shortages in the industry and identify the occupations most in need of attention.

The transport industry in NSW NSW’s freight transport and logistics industry is estimated to account for up to 5.2 per cent of Gross State Product (GSP) (equivalent to $19.5 billion per annum).1 The breakdown of contribution to GSP by industry is outlined in the table on the following page. By far the largest element of the industry is transport, and it can be divided into two key means of delivery: by road and by rail. Almost half of all interstate freight in Australia is carried on roads, and NSW accounts for more than one third of the country’s total road freight. The rail transport sector is an important segment of the NSW freight transport sector, and is a crucial component of the coal chain.

1 ABS, 5220.0, Australian National Accounts, State Accounts, NSW, 2012-13 and KPMG projections

© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through

complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.

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Figure E.1: Contribution to NSW GSP by industry (2012-13) Industry Per cent of NSW GSP (2012 13)

Transport, Postal and Warehousing 5.7

Agriculture 1.7

Mining 3.7

Manufacturing 8.7

Construction 6.2

Retail and Wholesale Trade 10.3

Utilities 3.1

Other Services 60.6 Source: Australian Bureau of Statistics, and KPMG projections

Workforce challenges The Transport & Logistics Industry Skills Council (TLISC) estimates that the current national workforce across the industry consists of 797,000 employees across 165,000 businesses. 2 The Council expects the workforce to continue to grow significantly, predicting job openings of 151,100 for the period of 2013 to 2017, with the majority of these new jobs in logistics and warehousing, and road transport.3

Across the TFL industry in Australia, 47 per cent of the workforce is aged 45 years or older, compared with 38 per cent for the broader Australian workforce.4 In addition, female participation rates are exceptionally low, with some occupations, such as Truck Drivers, almost exclusively male.

A major component of the development of TLISC’s environmental scan is employer consultations. Through these consultations TLISC identified that only a small proportion of employers had sufficient capacity to lift the language, literacy and numeracy levels (LLN) of their workforce. Employers stated that low LLN levels affected both entry level positions and also frontline and middle-level managers, and were of particular concern with the technological and system advances requiring more advanced LLN skills than previously required.5 Generally low LLN levels can also result in reduced productivity through ineffective work practices, materials wastage and ineffective training. TLISC sees higher qualifications and educational attainment, through graduate pathways and up-skilling of existing workers, as critical for businesses in the TFL industry to remain competitive and profitable.

Moving on from the macroeconomic and industry level analysis presented in this chapter, the following chapter will focus the analysis on the occupations selected by TfNSW for modelling and investigation.

Selecting occupations The Australian and New Zealand Standard Classification of Occupations (ANZSCO) and Australian and New Zealand Standard Classification of Industry (ANZSIC) publications contained over 470 occupations at the 4-digit (Unit Group) level aligned with the Transport, Postal and Warehousing industry.6 After considering the size of the occupation and the critical importance of the occupation to the TFL industry, a final list of 37 occupations was identified for further analysis. The full list of selected occupations is provided in Appendix A.

Based on this list KPMG undertook a descriptive analysis of the historical trends in these occupations, followed by a specific analysis identifying occupations in the TFL industry where an expected skills shortage was identified through an analysis of labour market data and consultations with industry peak bodies.

2 Transport and Logistics Industry Skills Council, E-Scan, 2014, p. 6 3 Ibid. 4 Ibid, p. 8 5 Ibid, p. 9 6 The ANZSCO occupation classification ranges from broad categories at the 1-digit level, down to detailed occupations at the 6-digit level. The 4-digit level was selected as it provided the optimal balance between data reliability and granularity.



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Modelling of skills deficits Skills deficits result from labour demand outweighing labour supply. As such, to model skills deficits in the TFL industry KPMG had to first estimate the expected level of labour demand and labour supply for each of the 37 occupations identified for further analysis.

To model labour demand KPMG used in-house macroeconomic and computable general equilibrium (CGE) models to provide forecasts of employment at the state and industry level. This information was analysed to determine employment demand by occupation. A range of demographic and education factors were considered when modelling labour supply. This included estimates of population growth (comprised of natural growth and net migration); workforce participation; and educational attainment.

For each occupation labour demand was divided by labour supply to generate a Supply Demand Imbalance Index. The table below demonstrates how a Supply Demand Imbalance Index value corresponds to the skills pressure level seen in that particular occupation. Figure 1: Supply imbalance index levels Index range Skills presure level Indicator

< 0.9 Very Weak (strong skills excess) V Weak 0.9 - 0.95 Weak (moderate skills excess) Weak 0.95 - 0.98 Somewhat Weak (some skills excess) S Weak 0.98 - 1.02 Balanced (balanced skills demand/supply) Bal 1.02 - 1.05 Somewhat Tight (some skills shortage) S Tight 1.05 - 1.1 Tight (moderate skills shortage) Tight 1.1 > Very Tight (strong skills shortage) V Tight

The index is designed to be used in conjunction with the concentration and supply measures which provide an understanding of the relative importance of that occupation in the economy. The concentration indicator measures that occupation group’s share of total national labour demand. The supply measure provides the NSW share of total national employment in that occupation group.

Based on the approach above, KPMG’s modelling suggests that across the entire set of 37 occupations selected by TfNSW for detailed modelling and analysis, the vast majority of occupations were estimated to be either in balance or in surplus. There were however, skills deficits forecast in a number of occupations. The majority of the skills deficits that were identified fall within the ‘Labourers’ category with skills deficits have been forecast for four occupations. Skills deficits have also been forecast for the ‘Importers, Exporters and Wholesalers’ in the ‘Managers’ category. The forecast occupations where a skills shortage is expected are summarised in the figure below. Figure 2: Occupations showing forecast skill shortages in NSW

Demand Supply Imbalance Index Occupation Demand Concentration Indicator

State Supply Concentration Indicator Occupation HISTORY FORECAST

2011 12 2012 13 2013 14 2014 15 2015 16 2016 17 2017 18 2013 14 2013 14

Importers, Exporters and Wholesalers

Index 0.99 0.98 1.01 1.21 1.22 1.23 1.23 1.23 0.2% 33.5%

Indicator Bal S Weak Bal V Tight V Tight V Tight V Tight V Tight

Railway Track Workers

Index 0.92 0.91 0.89 1.05 1.20 1.22 1.23 1.24 0.1% 37.6%

Indicator Weak Weak V Weak Tight V Tight V Tight V Tight V Tight Forestry and Logging Workers

Index 0.56 1.04 1.02 1.09 1.09 1.09 1.09 1.08 0.0% 21.2%

Indicator V Weak S Tight S Tight Tight Tight Tight Tight Tight Freight and Furniture Handlers

Index 0.88 0.96 0.96 1.00 1.04 1.05 1.06 1.06 0.1% 32.4%

Indicator V Weak S Weak S Weak Bal S Tight S Tight S Tight S Tight Deck and Fishing Hands

Index 1.01 0.80 0.76 1.02 1.19 1.20 1.19 1.18 0.1% 19.7% Indicator Bal V Weak V Weak Bal V Tight V Tight V Tight V Tight

Source: ABS Cat No. 6291.0.55.003; ABS Cat No. 6227; and KPMG projections

KPMG’s modelling and analysis shows that skills shortages either exist or are forecast to develop in each of the five occupations identified in the table above:



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• Importers, Exporters and Wholesalers are forecast to experience a very tight labour market over the forward period. The potential impact of this is considered significant, given the relatively larger demand and supply concentration.

• Railway Track Workers are forecast to experience a very tight labour market over the forward period. The potential impact of this is also considered significant, given the size of the current and forecast deficit. The severity of impact is tempered by a slightly smaller demand concentration, however, NSW share of the supply of labour is more than a third of the national total.

• Forestry and Logging Workers are forecast to experience a tight labour market over the forward period. The potential impact of this is considered small, given the relatively smaller demand and supply concentrations.

• Freight and Furniture Handlers are forecast to experience a tight labour market over the forward period. The potential impact of this is considered small, given the relatively smaller demand concentration

• Deck and Fishing Hands are forecast to experience a very tight labour market over the forward period. The potential impact of this is considered small, given the relatively smaller demand and supply concentration.

Findings from stakeholder consultations Stakeholder consultations can add richness to the analysis beyond supply and demand comparisons. Stakeholder consultations can uncover differences in the types of skills in shortage and how these skills may be changing. Stakeholder consultations largely support the outcome of the modelling with stakeholders commenting that the TFL industry is not experiencing widespread workforce shortages, however, stakeholders identified shortages existing in the following specific skill areas.

Specific shortage – Truck drivers It was a recurring theme from stakeholders that there is a shortage of appropriately qualified and experienced truck drivers to service the transport and logistics sector. The shortage of qualified truck drivers became more acute as the skill requirements for qualified drivers increased, from light through to heavy rigid vehicles, through to single-combine vehicles and finally multi-combine vehicles where the skills shortage was most acute. Moreover, shortages were noted in the specific skills required to load and unload certain goods to complete a delivery, with a lack of livestock handling skills specifically noted.

Stakeholders noted a number of barriers to people entering the trucking industry. These include the qualification levels necessary, the compliance tasks that need to be completed to comply with regulation and the fact that driver experience levels employers demand are increasing. Furthermore, it was very difficult for inexperienced drivers to get the appropriate insurance to enable them to enter the trucking workforce.

Specific shortage - Engineers The second area of ongoing skills shortages identified was in engineering, where the shortage of skilled employees is causing a significant long-term challenge for the mining sector and for the rail industry. Stakeholders identified the cause of the shortage was driven purely by an insufficient number of qualified engineers being trained in Australia. KPMG understands that in some areas, the labour market for engineers is global, further exacerbating the problem. The NSW Minerals Council placed significant emphasis on the need for a greater focus on maths and science during primary and secondary schooling. The Australasian Railway Association stated that shortages existed in signalling system engineers.

Other skills shortages identified

A focus on soft skills

Stakeholders identified a number of other barriers inhibiting entry into the TFL workforce limiting productivity growth in the TFL industry, namely: • a lack of soft skills in areas such as communications, leadership and situational awareness • potential new employees lacking the necessary attitudes and values to be workforce ready



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• the lag between any increased demand for skills and the slow response from the training and education sector to meet industry needs and the time it takes for workers to be trained and job ready

• poor levels of knowledge and understanding of the broader supply chain and a worker’s role within it • a lack of formal logistics training offerings and animal handling training in NSW • a lack of appropriate training infrastructure and associated insurance and other requirements.

Responding to skills shortages KPMG utilised the insights gleaned through this project and through the completion of similar work in other jurisdictions and in other industries to propose a range of actions for to address skills shortages in the TFL industry. These proposed actions are summarised in the table below. Figure 3: Proposed actions to address and prevent TFL skill shortages in NSW

Classification Issue Proposed action Planning and coordination Working with a highly fragmented

industry TfNSW should work with transport, freight & logistics industry stakeholders to investigate the feasibility of industry establishing a NSW Transport Association to enhance the ability to seize opportunities and respond to issues in a coordinated fashion.

Information and ‘leading practice’ dissemination

To promote industry self-reliance, TfNSW should look at ways to improve the dissemination of information and leading practice examples to the transport, freight & logistics industry sectors and encourage the sharing of information across industry.

Education and training Rail training infrastructure TfNSW should liaise with relevant agencies including the Department of Education and Communities and TAFE NSW to identify gaps in rail skills training and to work with rail industry stakeholders to determine the potential value of a centralised Rail Skills Centre model.

Capitalising on reforms to VET TfNSW to explore the option of connecting with the NSW Skills Board and determine how best to link into its operating framework.

Higher level skills TfNSW could encourage collaboration between the Logistics Association of Australia (LAA), Australian Logistics Council and the university sector to explore the development of a specialised TFL bachelor program. It may involve the development of a whole qualification and/or specific electives to allow a transport, freight and logistics specialisation. TfNSW could assess whether there is any additional support it could provide to assist relevant industry associations to determine whether shortages of engineers are disproportionately affecting the transport, freight & logistics industry. Such work could be done in conjunction with a body like Engineers Australia.

Workforce and participation Working with employment agencies TfNSW to support greater collaboration and engagement between various



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state and Commonwealth agencies to facilitate a greater flow of workers towards transport, freight & logistics occupations.

Workforce attraction and retention Expanding the role of women TfNSW to assist the relevant NSW Government agencies such as the Department of Education and Communities, including the State Training Board and NSW Skills Board and the NSW Board of Studies, to explore the potential of developing industry-themed options for Year 9 and 10 in the transport, freight & logistics industry, thereby influencing student choices at the senior secondary and post-secondary level.



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1. Introduction 1.1. Project background

An effective and efficient transport, freight and logistics (TFL) industry is essential for a market economy to thrive. The TFL industry in NSW is dynamic and ever-changing, and this must continue as the industry positions itself to respond to the evolving demands of the community. Over the next decade, the industry will not only need to contend with increases in volume – as populations grow, housing expands and employment increases – it will also need to respond to changes in the nature of what is transported and how. Volume will need to be balanced with environmental and safety considerations. There is a strong symbiosis between the TFL industry and government: the industry cannot function efficiently nor effectively without the right infrastructure – roads, rail and ports (sea and air). At the same time, the government will struggle to achieve its own policy objectives without an effectively functioning TFL industry, whether it be in public transport, economic development or social policy. Such an intimate connection often means that issues cannot be resolved without cooperation and collaboration. At times, it may also lead to significant disagreement when one party dismisses or does not pay sufficient attention to the interests of the other. Ultimately, the TFL industry must work closely with government to ensure that the right infrastructure is built and maintained so that the projected growth in the freight task can be accommodated in a sustainable way. Beyond infrastructure, in areas such as education, skills and workforce development, both government and industry have an interest in working together. A growing industry can only be supported by a growing workforce. Under Action 3D of the NSW Freight and Ports Strategy, the government and industry are committed to supporting the growth of the transport and logistics workforce.7 The first step in providing such support lies in an agreed and shared understanding of where current skills gaps and shortages exist and, as the industry evolves and where they are likely to be in the future. A shared understanding is also necessary on where industry and government need to focus their actions if skills gaps and shortages are to be alleviated.

The purpose of this project To assist in this endeavour, KPMG was engaged by the Freight and Regional Development Division of Transport for New South Wales (TfNSW) to provide an analysis of the transport, freight and logistics industry sector demographics, with a focus on specific occupations and an understanding of the prevalence of skills shortages in each. Early discussions with TfNSW pointed to the lack of a structured and robust approach to the understanding of skills shortages within the TFL industry in NSW. TfNSW highlighted the challenges associated with understanding and responding to largely anecdotal evidence presented by industry stakeholders around the existence and severity of skills shortages. Through this project, TfNSW has sought to develop a more objective, evidence-based approach to understanding skills shortages. Therefore, the purpose of this project (and detailed in this report) is to provide TfNSW with: • a unified framework for assessing skills gaps and shortages in key occupations for the TFL industry, reflecting

discussions regarding skills categories/occupations so that project outputs are appropriate • a better understanding of why particular skills shortages exist and where they are most acute • initial guidance on where government and industry might work together to alleviate the gaps and shortages.

This report provides TfNSW with a detailed analysis of current and forecast skills gaps and shortages within the TFL sector in NSW. KPMG’s findings, conclusions and recommendations within this report have been informed by a combination of quantitative and qualitative evidence (further information is provided in section 1.2). They also reflect KPMG’s experience in working at the interface between industry and government.

A plethora of information already exists on the size and importance of the TFL industry to the national state economies. Bodies such as the Australian Bureau of Statistics (ABS), Transport and Logistics Industry Skills Council (TLISC) and Bureau of Infrastructure, Transport and Regional Economics (BITRE) all produce extensive reports and statistics on the composition of the industry, not to mention industry associations such as the Australian Logistics Council and others. What makes this project unique is the application of KPMG’s quantitative methodology on NSW specific information for a customised set of occupations considered as important to the industry.

7 Transport for NSW, NSW Freight and Ports Strategy, November 2013, Sydney, p.150



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1.2. Methodology Skills shortages are often the product of the interaction of numerous forces. The labour market, like any other market, relies upon the availability of ‘perfect information’. Furthermore, market players must then avail themselves of that information to make efficient choices. Like other markets, information in the labour market is not perfect and not all market participants can access it nor make sense of it.

To identify, understand and respond to skills shortages requires an approach that combines data and information from numerous sources: official statistics; modelling and forecasting; and industry stakeholder intelligence. Each offers a unique perspective, however, each also comes with inherent limitations that must be understood.

Statistical collections by definition, are backward looking and quickly lose currency. Such data can tell you what has happened and it can help identify historical trends but is less instructive in telling stakeholders why certain things have happened or what may happen in the future.

Modelling and forecasting can shed some light on the future and, when combined with a solid grounding in historical data collections, can inform stakeholders’ perspectives on a plausible future scenario. Robust modelling depends upon good quality data inputs and a sound and tested methodology. The quality of data becomes an issue where small numbers are concerned. Importantly, the outputs of the modelling need to be sense-checked and validated to ensure they are logical, informative and acceptable.

Industry stakeholder intelligence provides very valuable and up-to-date intelligence about how the interaction of forces is manifesting at the industry, sub-sector or organisation level. It also provide a view as to why certain things are happening. However, stakeholder intelligence, depending on how it is collected, can only usually provide a partial picture. Evidence can be anecdotal which leads to concerns about the applicability of these observations to the broader industry.

KPMG’s approach for this project combined all three approaches for the collection of information and intelligence to inform our understanding of where the TFL industry is experiencing skills shortages. The process to collect and combine this information and intelligence reflects both the strengths and limitations described above.

By off-setting and balancing our approach, we have come up with findings that are stronger overall but most importantly at a standard that can feed into subsequent policy and action. As summarised in Figures 4 (a) and 4 (b) below, KPMG’s methodology enabled an understanding of what is happening, why things are happening, and how potential issues might be addressed. Figure 5 on the following page, provides further detail of the work undertaken under each phase.

Figure 4 (a): Conceptual model of KPMG methodology Figure 4 (b): Conceptual model of KPMG methodology

Transport, Freight and Logistics skills categories

Skills Demand Skills

Supply

Strategic Consults

Strategic Consults

Strategic Consults

Project 1

Project 2

Project 3

What...

...is happening?

Why...

...is it happening?

How...

...can we address it?

Skills Deficits

Phase 1 Project initiation

Phase 2 Demand and

Supply analysis

Phase 3 Targeted

Consultations

Phase 4 Addressing Skills

Deficits

Phase 5 Reporting



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Figure 5: Overview of project methodology Stage Details Project initiation andplanning

• KPMG developed a detailed project plan, which confirmed the objectives and scope of the project, and the deliverables and timeframes. This included identification of relevant stakeholders for consultation.

Demand and supplyanalysis

• Using ABS data and in-house forecasts of macroeconomic activity, KPMG’s Institute for Economic Modelling developed detailed projections of the demand for, and supply of, skills in the TFL industry. - The modelling considered 37 occupations identified as important to the sector (see 1.3

below) - The analysis provided a quantitative evidence base for the identification of skills shortages,

identifying where skills may be in deficit - This analysis was also combined with an analysis of employment across the 2006 and 2011

Census. Targetedconsultations

• KPMG consulted stakeholders to develop a deeper understanding of why deficits exist. The stakeholders consulted included: - Australasian Railway Association - Australian Trucking Association - Logistics Association of Australia - NSW Minerals Council - Livestock and Bulk Carriers Association - NSW Farmers.

• Shipping Australia declined the invitation to participate in these consultations. Addressing skills deficits • Based on the combined results of the demand and supply analysis (historical analysis,

forecasting and identification of deficits) and targeted consultations, KPMG looked at ways for TfNSW to work with stakeholders to respond to the skills deficits, paying particular consideration to: - The split of policy responsibility for specific areas of action across government agencies - Options to better coordinate responses across government - The opening up of the training system in NSW - Strategies to improve the collaboration among industry participants and between industry

and governments. Reporting

• KPMG provided regular progress updates to TfNSW throughout the project.

• Along with this final report, documenting the detailed evidence base generated, KPMG also developed a set of Power Point slides to summarise the key aspects of the project.

Source: KPMG

1.3. The NSW Freight and Ports Strategy The projected increase of freight movement has highlighted the need for a coordinated approach between government and industry to define the nature and scope of NSW’s freight task, and to understand the key issues affecting the network’s ability to allow the efficient flow of goods to market. The sector must respond to the demands of industry and the community as populations grow, housing expands and employment increases. Ultimately, industry must work closely with government to ensure that the right infrastructure is built and maintained and that the projected growth in freight movement can be accommodated in a sustainable way. Released in November 2013, the NSW Freight and Ports Strategy provides a framework for industry, all levels of government and other stakeholders to guide investment and other decisions to enhance freight logistics in NSW. The strategy is a core component of the NSW Government’s overall strategic planning framework and provides the state with a clear aim and achievable objectives. The objectives of the strategy are to ensure the: • Delivery of a freight network that efficiently supports the projected growth of the NSW economy • Balancing of freight needs with those of the broader community and the environment.



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The NSW Freight and Ports Strategy includes three ‘Strategic Action Programs’ that target specific challenges associated with the forecast doubling of the NSW freight task by 2031. • Strategic Action Program 1 – Network efficiency • Strategic Action Program 2 – Network capacity • Strategic Action Program 3 – Network sustainability

1.4. Action 3D – Support the growth of the transport and logistics workforce As part of Strategic Action Program 3, the NSW Government has identified sustainable growth of the transport and logistics workforce as a key issue affecting the industry. The TFL industry currently faces a range of challenges in attracting and retaining skilled labour, particularly in regional and rural areas. This has been exacerbated by increased competition from mining-related activities, both in NSW and interstate, and an ageing workforce. Skills shortages can constrain economic growth. Unaddressed, they may also compromise NSW’s ability to meet current and future demand and may eventually lead to increased costs and inefficiencies at the organisation, industry and economy-wide level. Addressing skills shortages must begin with a robust and comprehensive understanding of where skills shortages exist now and where they are likely to appear in future. Subsequently, TfNSW has committed to developing strategies to support the industry to attract and retain skilled workers. As part of these strategies, TfNSW has sought to quantify the scale of skill shortages in the industry and identify the occupations most in need of attention.

1.5. The importance of skilled workers The availability of skilled workers is central to economic decision making and prosperity. A lack of workers with the right skills can constrain economic growth and lead to inefficiency and waste (adding costs) at a firm, industry and economy-wide level. At the heart of Action 3D is a desire to pre-empt the development of a deficit of appropriately skilled workers to allow industry and government to plan around, and attempt to correct these gaps. In order to do this, government and industry must: • understand where skills shortages in TFL exist • identify the underlying causes of the shortages • work together to identify opportunities to address shortages and plan for the future.

The market for labour is a complex system driven by economic, social and demographic factors. Similarly, where and why skills shortages exist is a complex question. It is rare that the root cause can be attributed to a single factor. For example, shortages may be the result of poor wages and conditions, the image and perception of an industry, ineffective management and skill development of existing workers, new and emerging technologies and education and training programs that are no longer in line with industry standards.

The critical first step is to use the best available skills demand and supply data for TFL, organise it in a way that uncovers potential skills deficits and consult with the right stakeholders to better understand the factors contributing to the deficit, on the way to identifying opportunities to address them.

1.6. Definitional challenges Providing an accepted definition of the size and composition of the TFL industry is not straight forward. Reports on the TFL industry often present conflicting information about the size and significance of the industry. There is a view among some industry-specific organisations that official statistical collections by the ABS understate the significance of the industry in both its contribution to employment and economic output. For example, the NSW Freight and Ports Strategy notes that at the time of the strategy’s development (2012-13), according to ABS data 128,000 people were directly employed in the TFL industry equating to approximately 3.6 per cent of employment in NSW. However, the strategy also states that the true number of people working in TFL related activities and occupations in NSW closer to 500,000.8

Differences in employment estimates are also evident at the national level. The Transport & Logistics Industry Skills Council (TLISC) estimates that the current workforce across the industry consists of 797,000 employees across 165,000 businesses. 9 This is significantly larger than the comparable figures presented by the ABS.

8 NSW Freight and Ports Strategy, November 2013, p. 7 9 Transport and Logistics Industry Skills Council, E-Scan, 2014, p. 6



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January 2015

Furthermore, it is estimated that in 2011, the freight and logistics industry accounted for 13.8 per cent or $58 billion of the NSW economy.10 On the other hand, ABS data places that figure at $21.6 billion.11

The basis of the discrepancy is often the rules applied to national accounts and classifications. For example, a study conducted by ACIL Allen consulting for the Australian Logistics Council notes that, “by only recording transport services offered to third parties (called ‘Hire and Reward’ services) the national accounts miss a significant amount of freight transport that is carried out by companies on their own account (so called ‘ancillary transport’) and which is allocated in the national accounts to the primary industry of those companies.”12

A broadened view of the industry has been applied in the selection of occupations for the detailed analysis in subsequent chapters. The motivation for this selection has been to capture a broader cross-section of important occupations for the effective functioning of the industry in NSW. Notwithstanding definitional differences, government agencies and industry broadly agree that the TFL industry comprises a diverse range of occupations, across the following sectors: • Logistics and warehousing • Road transport • Rail transport • Maritime and ports • Aviation.

1.7. Structure of this report This report is structured as follows: • Chapter 2 provides background and overview information on the Australian and NSW macroeconomic

contexts. It provides information on key macroeconomic indicators and labour market conditions. It also provides an overview of the TFL industry in Australia and in NSW and includes an outline of the drivers of change that are creating challenges for the industry.

• Chapter 3 includes the analysis and findings of KPMG’s research. It includes historical trend data and analysis, outcomes of the detailed modelling of the demand for and supply of skills in TFL-related occupations, identifying where skills deficits exist. The chapter also provides the findings of the stakeholder consultations and broad conclusions.

• Chapter 4 builds on the findings and presents a set of options for TfNSW to consider, to respond to the identified skill deficits in Chapter 3. It considers the reasons behind the skills shortages, as identified by industry stakeholders and then takes into consideration the implications of the policy environment in NSW on the potential response measures.

• Chapter 5 presents the conclusions of KPMG’s analysis. It also presents ideas around potential areas of further work and investigation for TfNSW to consider.

• Appendices include detailed outputs of the skills shortage modelling undertaken by KPMG.

10 NSW Freight and Ports Strategy, loc cit 11 Australian Bureau of Statistics, 5220.0 Australian National Accounts: State Accounts, Canberra, ACT. 12 Australian Logistics Council, The Economic Significance of the Australian Logistics Industry, ACIL Allen, 2014, p.1



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January 2015

2. Economic and industry context Although the main focus of this project is the development of a quantitative method of identifying skills deficits in important occupations, grounding the analysis within a broader context will provide useful background information, including important economic and industry context.

Along with key industry statistics, this section sets out some of the major change drivers impacting the industry’s skills requirements, while the next chapter increases the specificity of the analysis by concentrating on the 37 selected occupations. The skills forecasts presented in Chapter 3 have been developed within the wider context of the economic outlook for Australia and NSW. The macroeconomic environment is a key determinant of the Transport, Freight and Logistics industry performance and associated skills requirements. As such, the following sections provide an overview of the current economic environment and the factors that are likely to influence growth.

Sections 2.1 and 2.2 provide a summary of the economic environment for Australia and NSW respectively. Section 2.3 briefly overviews NSW’s transport, freight and logistics industry. Section 2.4 identifies the key drivers of change in the TFL industry and section 2.5 provides a high-level overview of the workforce challenges the TFL industry is facing. The following sections in this chapter are drawn from Commonwealth Budget 2014-15 economic outlook and ABS National Accounts data.

2.1. Australian economy overview Mining-related investment, which accounted for almost half of GDP growth in the past couple of years, is now expected to drop sharply in the near term. The economy is moving to a production and export phase as mining investment peaks. In comparison, activity in non-mining sectors is gradually improving. With the drop off of mining investment and a steady transition to broad base growth, growth is expected to remain broadly stable in 2014, with a modest improvement occurring in 2015.13

National Accounts data for June 2014 showed the Australian economy recorded growth of 0.5 per cent in the June quarter (seasonally adjusted). This took the annual growth rate up to 3.1 per cent in the year to the June quarter, down from 3.5 percent for the year to the September 14 quarter.14

Figure 6: Key Macro indicators

Source: ABS and Australian 2014-15 Budget

Labour market conditions are expected to improve, albeit very gradually. Despite a small lift in labour force participation in August, the unemployment rate (seasonally adjusted) edged lower to 6.1 per cent in August 2014, down from 6.4 per cent for July 2014. In the year to August 2014, total employment has increased by 252,000 jobs or by 2.2 per cent.15 While this is broadly consistent with the other labour market indicators (various business surveys and consumer sentiment), further upward movements in the unemployment rate are expected to be

13 Commonwealth Government, Budget Paper 1, Budget Strategy and Outlook, 14 ABS, 5220.0, Australian National Accounts, State Accounts, Australia 2012-13 15 ABS, 6202.0, Labour Force Australia, August 2014



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January 2015

modest over the coming year as resources investment falls sharply.16 As indicated in the 2014-2015 Budget, the Treasury expects the unemployment rate to peak at 6.25 per cent in 2015, largely due to emerging spare labour capacity in the mining sector along with declining terms of trade.17

The March 2014 quarter’s price inflation edged higher with the headline inflation rising by 0.5 per cent and the underlying measure by 0.8 per cent. Despite this, the annual growth rate of these key measures remains inside the RBA’s 2-3 per cent per annum target band. The annual pace of growth of tradables and non-tradables inflation appeared to move closer together as did goods and services inflation. However, non-tradables inflation, a big influence on services prices, is still relatively high and sticky.

Private demand outside the mining sector, particularly the housing market, has picked up steadily amid the record low interest rate environment. Monetary policy has clearly played a role in facilitating the transition towards non-resource sectors by supporting domestic demand. The Reserve Bank of Australia has cut its policy rate by 225 basis points over the past two years and, at 2.5 per cent, the cash rate is currently lower than it was at the height of the Global Financial Crisis in 2008/09. As a result, the real policy rate and borrowing rates for households and businesses are well below average.

The transmission of monetary policy to the real economy is working much as the RBA expects, with interest-sensitive sectors of the economy responding to the accommodative policy stance. Most notably, activity in the housing market has picked up with turnover increasing and prices rising, led by capital cities such as Sydney and Brisbane. Recent house price developments are a generally expected consequence of this accommodative monetary policy, and are providing a boost to housing investment – which has been structurally weak for some time.

A key challenge to maintaining Australia’s high living standards continues to be that of boosting productivity. To this point, one downside risk is if the transition to broader-based growth is more difficult than expected. Further, if the terms of trade were to decline faster than anticipated, the associated impact on nominal output would pose further pressure on budget revenue. We note that Australia’s floating exchange rate should help buffer the impact of these types of shocks (depreciating when terms of trade fall, making tradable goods and export more competitive).

2.2. NSW economy overview As a diversified economy, NSW is likely to experience an easier transition from mining investment to non-mining investment. KPMG estimate that the NSW economy grew by around 3 per cent in 2014-15 following 2.4 per cent growth in 2012-13. Stronger investment on infrastructure and further recovery in dwelling investment should support a further pickup in growth in 2013-14. The low interest rate environment is particularly supportive given larger average mortgages in NSW.

Growth in State final demand for NSW was strong in the March quarter, growing above its long-term average in annual terms for the first time since the June quarter 2012.18 Private investment, including dwelling investment, infrastructure and commercial construction were key drivers of growth in the March quarter and this trend is expected to continue.

The strong growth in the NSW economy is being underpinned by low interest rates and the improvement in the State’s housing sector. Sydney house prices continued to rise and have outperformed the Australian capital city average. Residential construction activity has risen solidly – in line with the earlier increase in building approvals – and is expected to contribute solidly to economic growth over the next year or two. Low interest rates should continue to support a recovery in dwelling investment.

The strong pipeline of road and rail projects will be another positive for the NSW growth outlook and will assist in filling the gap when mining investment is softening. NSW was a major beneficiary of infrastructure spending in the Federal Budget. Projects in the pipeline in NSW include the WestConnex road project, the NorthConnex road, the North West Rail Link and the South West Rail Link. An estimated $61.5bn is expected to be spent on infrastructure over the coming four years.19

There remain a number of potential mining projects in the pipeline. The Bureau of Resources and Energy Economics has estimated that $3.0bn worth of projects were at the committed stage. These are projects which

16 ABS, 5220.0, Australian National Accounts, State Accounts, NSW, 2012-13 17 Commonwealth Government, Budget Paper 1 Budget Strategy and Outlook, s1-p5 18 ABS, 5220.0, Australian National Accounts, State Accounts, NSW, 2012-13 19 NSW Government, State Budget Paper 4, Infrastructure Statement, 2014-15, s1-p1



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January 2015

have received final investment approval and are very likely to go ahead. The majority of projects are within the coal industry including coal mine projects or infrastructure to support coal transportation. Associated with this, exports should continue to show solid growth on the back of stronger production capacity in thermal coal and a weaker Australian dollar.

The low interest rate, healthy dwelling investment and strong infrastructure pipeline are expected to help the State economy moving as the Australian economy continues to transition. Reported NSW business conditions have picked up modestly in July 2014, likely signalling an improvement in non-mining business investment going forward. Against this backdrop, we expect NSW GSP to pick up from growth of 2.4 per cent in 2012-13 to around 3.0 per cent in 2014-15. This is broadly in line with the NSW Government forecasts of 3.0 per cent GSP growth for 2014-15. The improving outlook for NSW would be a positive change from NSW’s previous slowing performance over the past decade as mining investment in the resource states drove economic growth.

Over the long-term, industries such as tourism, international education, wealth management, gas and agribusiness have been considered as areas of strong growth. Many of these sectors have a presence in the NSW economy and NSW has the potential to take advantage of these key growth areas. According to KPMG analysis, NSW should continue to benefit from shifting growth drivers in the economy and is expected to outperform the Australian average.

2.3. Transport, Freight and Logistics industry overview Building on the macroeconomic analysis of the previous sections, this section is not intended to be an exhaustive account of every statistic for the TFL industry – TfNSW already has a firm grasp of the key industry statistics – rather, the purpose of this section is to provide some further detail regarding the transport, freight and logistics industry in Australia and NSW, against which analysis of skills requirements can be undertaken. Despite the aforementioned definitional challenges, a point of agreement across industry analyses is the projected growth in the size of the freight task nationally, regardless of the measure adopted. Driven by population growth, globalisation and ongoing changes in demographic trends, transport and logistics in Australia continues to grow rapidly. As shown in the chart below, freight tasks are reportedly predicted to double by 2030 and triple by 2050. According to the BITRE, Australia’s freight task (estimated to be 600 billion tonne kilometres) is expected to increase by 80 per cent between 2010 and 2030, with this rate of growth seeing freight triple by 2050. Similar growth is expected for the NSW TFL industry. According to the NSW Freight and Ports Strategy, the volume of freight moved is forecast to grow to 794 million tonnes, from a base of 409 million tonnes in 2011.

NSW’s freight transport and logistics industry is estimated to account for up to 5.2 per cent of GSP (equivalent to $19.5 billion per annum). A number of occupational sub-sectors are included in the transport freight and logistics industry, including logistics management and planning, warehousing and distribution, maritime/sea freight, stevedoring, aviation, air freight, road transport, rail freight, intermodal operations, courier delivery services, and customs and forwarding agencies.



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January 2015

By far the largest element of the industry is transport, and it can be divided into two key means of delivery: by road and by rail. Almost half of all interstate freight in Australia is carried on roads, and NSW accounts for more than one third of the country’s total road freight. The rail transport sector is an important segment of the NSW freight transport sector, and is a crucial component of the coal chain.

The usages of road and rail are closely related to industry makeup of the State economy. Typically, the manufacturing sector favours road freight, mainly because of its ability to meet individual orders quickly and frequently. Agriculture and mining/resource transport is dominated by rail, due to the cost advantages of bulk loads. Retail and wholesale trade are also major customers of road based freight transportation since most deliveries include only short distance activities. As shown in the table below, retail and wholesale trade, manufacturing and mining accounts for a significant portion of the State economy, measured by the share of GSP in 2012-13. Figure 7: Contribution to NSW GSP by industry (2012-13) Industry Per cent of NSW GSP (2012 13)

Agriculture 1.7

Mining 3.7

Manufacturing 8.7

Construction 6.2

Retail and Wholesale Trade 10.3

Utilities 3.1

Transport, Postal and Warehousing 5.7

Other Services 60.6 Source: Australian Bureau of Statistics, and KPMG projections

Against the economic outlook of these major industries, internal KPMG projections indicated likely growth for the individual components of NSW’s transport freight and logistics industry.While road transport is a key sector of the supply chain for all components of our traditional economy, it is projected to become a smaller contributor to GsP as NSW progressively moves towards a service-based economy. Road transport in NSW is estimated to grow at around 0.7 per cent per year in the next 3 financial years. This of course is off a large base and represents significant additional capacity. On the other hand, NSW’s rail transport is predicted to experience an average growth rate of 2.5 per cent over the same period.

Figure 8 below presents information on relative share of transport modes used to transport goods. The information is broken down by Australia and NSW. Of particular note is the apparent difference between Australia and NSW in the composition of transport modes used. For example, in NSW, Road Transport accounted for almost 70 per cent of the quantum of goods transported in 2011-12, compared to 37 per cent for Australia in the same period. Rail transport on the other hand accounted for approximately 47 per cent of quantum of goods transported in Australia compared with just over 27 per cent in NSW. Coastal shipping was much more significant nationally. Figure 8: Summary statistics

Australia New South Wales NSW as a percentage of Australia

Quantum of goods transported (2011-12) #

567.0 billion tonne kilometres

103.6 billion tonne kilometres 18.3%

% rail # 45.6% 27.2%

% road # 36.6% 67.7%

% coastal shipping # 17.8% 5.1% # Bureau of Infrastructure, Transport and Regional Economics (BITRE), 2013, Yearbook 2013: Australian infrastructure statistics, Statistical Report, Canberra ACT

2.4. Drivers of change The implications of the growth estimates presented in section 2.3 are clear: in order to move such volumes, the industry will need to change in a number of ways. Along with growing their workforces, companies will need to



16


January 2015

invest in the skills of their workers, new technology and potentially develop process innovations. These changes are all likely to be in response to a number of key challenges and drivers of change that are shaping parts of the TFL industry. These changes are significant when changing skills requirements are considered. Some were also raised during stakeholder consultations. The change drivers considered most significant are detailed in the box below. Challenges and drivers of change • Emerging technologies and innovations will create opportunities for greater efficiencies and better

service delivery with the introduction of new equipment, processes, machinery and infrastructure.These technological developments include technology to auto-track, locate and collect goods fromshelves in vast warehouses, port automation technology and vehicle tracking and GPS locators to allow for more accurate freight tracking and modelling of efficient distribution routes.

• Changing economic conditions are expected to result in budget pressures as government revenuesfall relative to expenditure. These fiscal constraints, coupled with rapidly increasing expenses inareas such as health care, may impact on the ability for governments to deliver on their transportand freight infrastructure in line with demand.

• New consumer tastes and preferences and the growth of online shopping in Australia and worldwide has placed increased pressure on the TFL industry to service this growth, with onlineshopping expenditure predicted to reach $30 billion by 2016, almost double the expenditure in 2013.20

• Structural changes in the industry, such as the integration of various modes of transport atintermodal hubs to improve the efficiency of goods movement, may require training and up-skillingof the current workforce to ensure the industry keeps pace with additional skill requirements and remains flexible in navigating these changes.

• An ageing workforce profile presents challenges for the industry as a large proportion of the current workforce will retire over the next ten years. Ensuring the ageing workforce remains engaged, and encouraging young people to establish their careers in this industry are currentchallenges faced by TFL employers.

2.5. Workforce challenges for the TFL industry The Transport & Logistics Industry Skills Council (TLISC) estimates that the current national workforce across the industry consists of 797,000 employees across 165,000 businesses. 21 The Council expects the workforce to continue to grow significantly, predicting job openings of 151,100 for the period 2013-17, with the majority of these new jobs in logistics and warehousing, and road transport.22

Across the TFL industry in Australia, 47 per cent of the workforce is aged 45 years or older, compared with 38 per cent for the broader Australian workforce.23 In addition, female participation rates are exceptionally low, with some occupations, such as Truck Drivers, almost exclusively male.

A major component of the development of TLISC’s environmental scan is employer consultations. Through these consultations TLISC identified that only a small proportion of employers had sufficient capacity to lift the language, literacy and numeracy levels (LLN) of their workforce. Employers stated that low LLN levels affected both entry level positions and also frontline and middle-level managers, and were of particular concern with the technological and system advances requiring more advanced LLN skills than previously required.24 Generally low LLN levels can also result in reduced productivity through ineffective work practices, materials wastage and ineffective training. TLISC sees higher qualifications and educational attainment, through graduate pathways and up-skilling of existing workers, as critical for businesses in the TFL industry to remain competitive and profitable.

Moving on from the macroeconomic and industry level analysis presented in this chapter, the following chapter will focus the analysis on the occupations selected by TfNSW for modelling and investigation.

20 Transport and Logistics Industry Skills Council, E-Scan, 2014, p. 6 21 Ibid. 22 Ibid. 23 Ibid, p. 8 24 Ibid, p. 9



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January 2015

3. Analysis and findings Having set the economic and industry context in the preceding chapters, this section of the report will focus on the 37 skills categories (henceforth referred to as occupations) selected by TfNSW for modelling and further analysis. The analysis and findings is comprised of three sections. The first will look at historical movements within the selected occupations based on a number of characteristics. The second section will present the outputs of the detailed modelling completed by KPMG. The third section will present the main points raised by stakeholders during consultations in an attempt to validate and complement the projections.

3.1. What are skills shortages? According to the Commonwealth Department of Employment, skill shortages exist when employers are unable to fill or have considerable difficulty filling vacancies or significant specialised skill needs within that occupation, at prevailing levels of remuneration and conditions of employment, and in reasonably accessible locations. The Department distinguishes between skill shortages and ‘recruitment difficulties’, which occur when some employers have difficulty filling vacancies for an occupation, even though there may be an adequate supply of skilled workers. At times, employers are unable to attract and recruit sufficient suitable workers for reasons which include: specific experience or specialist skill requirements of the vacancy; differences in hours of work required by the employer and those sought by applicants; or transport issues.25

3.2. Selecting occupations To set the parameters for the identification of skills gaps and shortages, KPMG worked with TfNSW to identify those occupations considered the most important and critical to the industry. The analysis looked beyond traditional transport occupations to consider skills shortages across the supply chain in order to develop a broader view of how skills shortages will affect the industry as a whole. As demonstrated in the top box of Figure 4 (b) on page 4, the identification of occupations was a critical first step, after which subsequent analysis could occur.

To identify the occupations aligned with the TFL industry, KPMG constructed an industry by occupation matrix using the Australian Bureau of Statistics (ABS) Australian and New Zealand Standard Classification of Occupations (ANZSCO) and Australian and New Zealand Standard Classification of Industry (ANZSIC) publications respectively. This process yielded over 470 occupations at the 4-digit (Unit Group) level aligned with the Transport, Postal and Warehousing industry.26

To ensure the largest occupations were covered, KPMG provided guidance to TfNSW that identified the level of concentration of certain occupations within the industry and their prevalence across the NSW workforce generally. KPMG also provided information on the proportion of total employment in each occupation aligned with the industry.

In addition, TfNSW conducted internal and external consultation to identify those critical occupations, which may not necessarily employ large numbers of people, but are nevertheless important to the overall functioning of the industry. To fit within the overall parameters and scope of the project, the final list consisted of 37 occupations, including: Production Managers, Transport and Despatch Clerks, Truck Drivers and Logistics Clerks. The full list of selected occupations is provided in Appendix A. KPMG and TfNSW identified 37 Australian and New Zealand Standard Classification of Occupations (ANZSCO) occupation categories corresponding to occupations in the TFL industry. These occupations are outlined in Appendix A. It should be noted that among these occupation there are occupations that are ‘not further defined’ (nfd). These occupations include people who did not provide sufficient detail in the Census to allow for accurate classification. As such, numbers in these categories are typically small and, where appropriate have been excluded from parts of the analysis. This was discussed and agreed with TfNSW. Based on this list KPMG undertook a descriptive analysis of the historical trends in these occupations, followed by a specific analysis identifying occupations in the TFL industry where an expected skills shortage was identified through an analysis of labour market data and consultations with industry peak bodies.

25 Department of Employment, Skill Shortage List New South Wales, 8 August 2014, p.7: http://docs.employment.gov.au/system/files/doc/other/skillshortagelistnsw_1.pdf26 The ANZSCO occupation classification ranges from broad categories at the 1-digit level, down to detailed occupations at the 6-digit level. The 4-digit level was selected as it provided the optimal balance between data reliability and granularity.



18

http://docs.employment.gov.au/system/files/doc/other/skillshortagelistnsw_1.pdf


January 2015

3.3. Historical trends in selected occupations

Regional distribution Of the selected occupations, the majority of those employed in the TFL industry in NSW, 60 per cent have their usual place of residence in Sydney and more than 80 per cent of the workforce resides along the Eastern seaboard of NSW. Figure 9 below outlines the distribution of the workforce within NSW.

Figure 9: Distribution of selected occupation employment in the TFL sector by place of residence, 2011

North region

60%

West region

Sydney

21%

East region

South-West region

8%

5%

6%

Source: ABS Census data 2011; KPMG analysis

For the 37 selected occupations in NSW, total employment for 2011 was 254,696, a 3.5 per cent increase from 2006.

Figure 10 below outlines the change in employment figures from 2006 to 2011. Figures 13 and 14 present information on the average age and gender split of employees by occupation in 2011.



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January 2015

Air Transport Professionals 3,156 3,530 374 10.6% 2.3%

Aircraft Maintenance Engineers 5,321 5,695 374 6.6% 1.4%

Automobile, Bus and Rail Drivers nfd* 83 88 5 5.7% 1.2%

Construction, Distribution and Production Managers nfd* 462 515 53 10.3% 2.2%

Couriers and Postal Deliverers 11,814 11,909 95 0.8% 0.2%

Crane, Hoist and Lift Operators 2,432 2,723 291 10.7% 2.3%

Crop Farm Workers 4,610 3,611 (999) (27.7%) (4.8%)

Deck and Fishing Hands 1,708 1,569 (139) (8.9%) (1.7%)

Delivery Drivers 10,546 10,780 234 2.2% 0.4%

Farmers and Farm Managers nfd* 1,308 1,306 (2) (0.2%) (0.0%)

Forestry and Logging Workers 776 599 (177) (29.5%) (5.0%)

Forklift Drivers 12,046 13,603 1,557 11.4% 2.5%

Freight and Furniture Handlers 3,415 3,492 77 2.2% 0.4%

Freight Handlers and Shelf Fillers nfd* 14 30 16 53.3% 16.5%

Importers, Exporters and Wholesalers 5,373 7,950 2,577 32.4% 8.2%

Industrial, Mechanical and Production Engineers 4,121 4,842 721 14.9% 3.3%

Livestock Farm Workers 7,746 7,362 (384) (5.2%) (1.0%)

Logistics Clerks nfd* 621 897 276 30.8% 7.6%

Machinery Operators and Drivers nfd* 3,126 3,387 261 7.7% 1.6%

Managers 18,889 12,168 (6,721) (55.2%) (8.4%)

Marine Transport Professionals 1,662 1,843 181 9.8% 2.1%

Miscellaneous Technicians and Trades Workers nfd* 26 33 7 21.2% 4.9%

Mobile Plant Operators nfd* 1,486 1,609 123 7.6% 1.6%

Other Mobile Plant Operators 2,339 2,605 266 10.2% 2.2%

Other Stationary Plant Operators 5,047 5,428 381 7.0% 1.5%

Production Managers 12,715 13,659 944 6.9% 1.4%

Purchasing and Supply Logistics Clerks 19,911 21,293 1,382 6.5% 1.4%

Railway Track Workers 1,197 1,397 200 14.3% 3.1%

Recycling and Rubbish Collectors 867 786 (81) (10.3%) (1.9%)

Road and Rail Drivers nfd* 3,807 3,764 (43) (1.1%) (0.2%)

Stationary Plant Operators nfd* 70 69 (1) (1.4%) (0.3%)

Store persons 31,278 32,597 1,319 4.0% 0.8%

Supply and Distribution Managers 7,708 8,941 1,233 13.8% 3.0%

Timber and Wood Process Workers 2,056 1,674 (382) (22.8%) (4.0%)

Train and Tram Drivers 3,025 3,504 479 13.7% 3.0%

Transport and Despatch Clerks 8,106 9,179 1,073 11.7% 2.5%

Transport Services Managers 4,095 4,206 111 2.6% 0.5%

Truck Drivers 40,570 43,831 3,261 7.4% 1.6% All 245,708 254,696 8,988 3.5% 0.7%

Source: ABS Census data 2006, 2011; KPMG analysis * Nfd (not further defined) categories include people who did not provide sufficient detail in the Census to allow for accurate classification. As such, these numbers in these categories are typically small.



20

Figure 10: Change in employment figures by selected occupation (2006, 2011)Occupation Growth 2006 11 (%)

2006 2011 Net change Total Average

annual rate

Agricultural, Forestry and Horticultural Plant Operators 2,170 2,219 49 2.2% 0.4%

Air and Marine Transport Professionals nfd* 6 3 (3) (100.0%) (12.9%)

0%

20%

40%

60%

80%

100%

Male Female

Australia TFL NSW TFL


January 2015

Between 2006 and 2011, significantly more people were employed as: • truck drivers • importers, exporters and wholesalers • forklift drivers • purchasing and supply logistics clerks • supply and distribution managers. Conversely, large declines were seen in the number of people employed as mangers and crop farm workers.

Gender distribution Consistent with the Australian TFL industry, 84 per cent of the NSW TFL workforce is male, as demonstrated in Figure 11 below. Figure 11: Gender distribution (all selected occupations), 2011

Source: ABS Census data 2011; KPMG analysis The proportion of males and females differs for each occupation, with greater female representation in occupations such as Purchasing and Supply Logistics Clerks (45 per cent), Managers (32 per cent) and Crop Farm Workers (35 per cent). Some occupations have an almost entirely male workforce, including Mobile Plant Operators (99 per cent), Railway Track Workers (98 per cent) and Truck Drivers (98 per cent).

Age distribution The TFL industry faces the challenge of an ageing workforce. In 2011, more than a third of the workforce in the selected occupations was over the age of 50, with 10 per cent of the workforce 60 years or older and approaching retirement within the next five years. The chart below demonstrates that the TFL workforce has an older demographic profile, compared with the NSW workforce overall.



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January 2015

Figure 12: Age distribution TFL workforce versus NSW workforce, 2011 16

14

12

10

8

6

4

2

0

Transport, freight and logistics workforce NSW workforce

Source: ABS Census data 2011; KPMG analysis On average, the TFL workforce profile continued to age in the five years between the 2006 and the 2011 Census. For the selected occupations, there was a 5 per cent increase in the total workforce above the age of 50, from 72,000 to almost 85,000 employees, between 2006 and 2011. Figure 14 outlines the average age by occupation in 2006 and 2011. The average age across the selected occupations rose from 42 in 2006 to 43 in 2011. Forestry and logging workers showed the most significant increase in the average age of the workforce (for occupations with greater than 400 employees) whilst construction, distribution and production managers showed the greatest decrease in the average age of the workforce.

Perc

ent

15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70+



22

0 5000 10000 15000 20000 25000 30000 35000 40000 45000

Air and Marine Transport Professionals Freight Handlers and Shelf Fillers

Miscellaneous Technicians and Trades Workers Stationary Plant Operators

Automobile, Bus and Rail Drivers Construction, Distribution and Production Managers

Forestry and Logging WorkersRecycling and Rubbish Collectors

Logistics Clerks Farmers and Farm Managers

Railway Track WorkersDeck and Fishing HandsMobile Plant Operators

Timber and Wood Process WorkersMarine Transport Professionals

Agricultural, Forestry and Horticultural Plant OperatorsOther Mobile Plant Operators

Crane, Hoist and Lift OperatorsMachinery Operators and Drivers

Freight and Furniture HandlersTrain and Tram Drivers

Air Transport ProfessionalsCrop Farm Workers

Road and Rail Drivers Transport Services Managers

Industrial, Mechanical and Production EngineersOther Stationary Plant Operators

Aircraft Maintenance EngineersLivestock Farm Workers

Importers, Exporters and WholesalersSupply and Distribution Managers

Transport and Despatch ClerksDelivery Drivers

Couriers and Postal DeliverersManagers

Forklift DriversProduction Managers

Purchasing and Supply Logistics ClerksStorepersonsTruck Drivers

Employment (jobs)

Female Male


January 2015

Figure 13: Distribution of employees by selected occupation and gender, 2011

Source: ABS Census data 2006, 2011; KPMG analysis

© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International").

Liability limited by a scheme approved under Professional Standards Legislation. 23

Figure 14: Average age by selected occupation, 2006 and 2011

55

50

45

40

35

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2006 2011 Average age 2006 = 42 Average age 2011 = 43

Source: ABS Census data 2006 and 2011; KPMG analysis

© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights

reserved. The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International Cooperative ("KPMG International"). Liability limited by a scheme approved under Professional Standards Legislation.

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3.4. Quantitative modelling of skills deficits This section outlines the approach taken by KPMG to identify the prevalence of skills deficits across the selected occupations. KPMG developed a Demand-Supply Imbalance index (the index) for the 37 identified TFL occupations, which shows the level of skills deficit or oversupply that exists for each occupation group across all industries. As with all market analyses, the identification of deficits or oversupply is based on the development of robust labour demand and supply estimates. The approach is explained briefly here with a more fulsome explanation provided in Appendix C.

To model labour demand KPMG used in-house macroeconomic and computable general equilibrium (CGE) models to provide forecasts of employment at the state and industry level. This information is then converted into employment demand by occupation. To complement this information, KPMG’s model includes vacancy data. This data provides an insight into unmet demand at any point in time. Employment growth and vacancy data provide a more appropriate base for demand projections.

Labour supply is driven by a range of demographic and education factors. These include estimates of population growth (comprised of natural growth and net migration); workforce participation; and educational attainment. Aggregate figures are adjusted by participation and education factors to generate labour supply estimates across the selected occupations.

Labour demand and supply is then combined to generate the Supply Demand Imbalance Index. By dividing demand by supply, it is possible to determine the degree of shortage or oversupply that is expected. For example, an index that is greater than 1.00 implies a shortage, an index that is close to 1.00 indicates the labour market is balanced, and an index less than 1.00 implies an oversupply of labour for a particular occupation group. Table 4.3 below shows the classifications or “indicators” for the index reading ranges presented throughout this section. Figure 15: Supply imbalance index levels Index range Skills presure level Indicator


The index is designed to be used in conjunction with the concentration and supply measures – each of which provides an understanding of the relative importance of that occupation in the economy. The concentration measure provides each occupation groups’ share of total national labour demand. For example, an indicator of 0.08 shows that 8 per cent of all labour demanded in Australia is for workers in the occupation group. The supply measure provides each NSW occupation groups share of that total national occupation group. For example, an indicator of 0.25 shows that 25 per cent of the national labour force in that occupation is located in NSW.

The Demand-Supply Imbalance index assessed the supply and demand for employees in selected TFL occupations and also considered the share of the occupation with regards to the total Australian and NSW workforces. The full details of this analysis is outlined in Appendix B.

Based on the approach above, KPMG’s modelling suggests that across the entire set of 37 occupations selected by TfNSW for detailed modelling and analysis, the vast majority of occupations were estimated to be either in balance or in surplus. This finding included occupations in which there is significant employment in NSW, including:

• ‘Professionals’ including in air and marine transport professionals

• ‘Technicians and Trade Workers’ including Aircraft Maintenance Engineers

• ‘Clerical and Administration’ including Purchasing and Supply Logistics Clerks and Transport and Despatch Clerks

• ‘Machinery and Operators and Drivers’ including Crane, Hoist and Lift Operators, Forklift Drivers, Train Tram and Truck Drivers.



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There were however, skills deficits forecast in a number of occupations. The majority of the skills deficits that were identified fall within the ‘Labourers’ category. Here, skills deficits have been forecast for four occupations. Skills deficits have also been forecast for the ‘Importers, Exporters and Wholesalers’ in the ‘Managers’ category (see below).

Where skills deficits have been forecast in the ‘nfd’ categories, these have not been extracted and analysed in detail. The rationale for this is that it is unclear exactly where the shortage is, given that these categories include workers classified under a number of different occupations. These occupations are also typically associated with smaller numbers and are therefore subject to measurement error.

In total, KPMG modelling indicates significant skills deficits in five TFL occupations. The forecast occupations where a skills shortage is expected are summarised in Figure 16 below. A larger index figure indicates a larger skills shortage, with the Occupation Concentration index reporting each occupation groups’ share of total national labour demand and the Occupation State Occupation Supply index summarising the proportion of employees in this occupation being employed in NSW. The table below outlines the skills deficits expected in each of the identified occupations. Figure 16: Occupations showing forecast skill shortages in NSW

Demand Supply Imbalance Index Occupation Demand Concentration Indicator

State Supply Concentration Indicator Occupation HISTORY FORECAST

2010 11 2011 12 2012 13 2013 14 2014 15 2015 16 2016 17 2017 18 2013 14 2013 14


Index 0.99 0.98 1.01 1.21 1.22 1.23 1.23 1.23 0.2% 33.5%

Indicator Bal S Weak Bal V Tight V Tight V Tight V Tight V Tight

Railway Track Workers

Index 0.92 0.91 0.89 1.05 1.20 1.22 1.23 1.24 0.1% 37.6%

Indicator Weak Weak V Weak Tight V Tight V Tight V Tight V Tight Forestry and Logging Workers

Index 0.56 1.04 1.02 1.09 1.09 1.09 1.09 1.08 0.0% 21.2%

Indicator V Weak S Tight S Tight Tight Tight Tight Tight Tight Freight and Furniture Handlers

Index 0.88 0.96 0.96 1.00 1.04 1.05 1.06 1.06 0.1% 32.4%

Indicator V Weak S Weak S Weak Bal S Tight S Tight S Tight S Tight Deck and Fishing Hands

Index 1.01 0.80 0.76 1.02 1.19 1.20 1.19 1.18 0.1% 19.7% Indicator Bal V Weak V Weak Bal V Tight V Tight V Tight V Tight


KPMG’s modelling and analysis shows that skills shortages either exist or are forecast to develop in each of the five occupations identified in the table above:

• Importers, Exporters and Wholesalers are forecast to experience a very tight labour market over the forward period. The potential impact of this is considered significant, given the relatively larger demand and supply concentration.

• Railway Track Workers are forecast to experience a very tight labour market over the forward period. The potential impact of this is also considered significant, given the size of the current and forecast deficit. The severity of impact is tempered by a slightly smaller demand concentration, however, NSW share of the supply of labour is more than a third of the national total.

• Forestry and Logging Workers are forecast to experience a tight labour market over the forward period. The potential impact of this is considered small, given the relatively smaller demand and supply concentrations.

• Freight and Furniture Handlers are forecast to experience a tight labour market over the forward period. The potential impact of this is considered small, given the relatively smaller demand concentration

• Deck and Fishing Hands are forecast to experience a very tight labour market over the forward period. The potential impact of this is considered small, given the relatively smaller demand and supply concentration.

KPMG’s method is robust and detailed. It has been used in other sectors for similar purposes and provides an excellent starting point for policy makers to engage in conversations with both internal and external stakeholders. However, quantitative methods do have inherent limitations especially where granular information is concerned, as noted earlier in section 1.2. Therefore, in identifying the five occupations above, KPMG has concentrated



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where deficits and concentration levels are sizeable and the robustness of the data can be verified. It should also be noted that the identification of shortages is focussed on 37 occupations. Deficits may exist in other occupations in the TFL industry, however this is outside the scope of this analysis.

The verification and moderation of findings motivated the inclusion of stakeholder consultations as part of the methodology. Furthermore, stakeholder consultations can add richness to the analysis beyond supply and demand comparisons. For example, despite balances in the number of workers, consultation can uncover differences in the types of skills and how these skills may be changing. These aspects are explored further in the next section.

Enrolments in aligned qualifications To complement the modelling and analysis, KPMG sourced information on training enrolments aligned with the occupations identified as suffering from skills deficits. The information was sourced from the National Centre for Vocational Education Research (NCVER), the body tasked with collecting and reporting on the performance of the Vocational Education and Training (VET) system nationally.

One potential cause of the skills deficits in the identified occupations may be as a result of declining enrolments in aligned courses. As demonstrated in Figure 17 below, the number of individuals participating in training has either remained relatively flat – Importers, Exporters and Wholesalers; Freight and Furniture Handlers – or has declined – Railway Track Workers; Forestry and Logging Workers; and Deck and Fishing Hands. Potential ways to address this are explored later in the report. Figure 17: Numbers of individuals in training for each of the priority areas.

2010 2011 2012 2013 Number Number Number Number Change 2010 to 2013

Importers, Exporters and Wholesalers 62 64 55 62 No change Railway Track Workers 41 30 8 2 -95.1% Forestry and Logging Workers 4357 4258 3461 2760 -36.7% Freight and Furniture Handlers 72 104 125 114 58.3% Deck and Fishing Hands 1987 1811 1642 1544 -22.3% Source: VOCSTATS <http://www.ncver.edu.au/wps/portal/vetdataportal/data/menu/vocstats/>, extracted on 21/08/14

3.5. Findings from stakeholder consultations The purpose of this section is to unpack the findings of the consultation with industry stakeholders and determine the extent to which the forecast deficits are supported by the qualitative evidence collected. The section also goes further: it identifies some of the changing skills requirements across the 37 occupations selected that cannot be identified nor understood from quantitative data alone. This analysis will enable TfNSW to place the recommended actions identified in chapter 4 within context and inform further work. Analysis in this section shows that stakeholder intelligence largely supports the outcome of the modelling: the TFL industry is not experiencing widespread shortages, however, the change drivers identified in section 2.4 above are changing the nature and type of skills required by employers. Stakeholder consultations were conducted with large industry associations across the TFL industry. Participants were identified in consultation with TfNSW and were asked questions to cover areas such as:

• industry context

• skills shortages and challenges

• proposed solutions. The full list of questions is included at Appendix D.

KPMG conducted consultations with the following organisations: • Australian Trucking Association • Logistics Association of Australia • Australasian Railway Association • Livestock and Bulk Carriers Association • NSW Minerals Council • NSW Farmers



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Identified themes

Stakeholders were acutely aware of the ageing workforce across the industry with many implementing a range of strategies to help the industry better connect with and appeal to a younger demographic. Many stakeholders identified the ongoing challenges posed by insufficient numbers of younger workers entering the transport and logistics industry. This has the potential to lead to critical skills shortages in the future, with the trucking and rail industries expected to be amongst the hardest hit. In 2012, 47 per cent of the transport and logistics industry workforce was aged over 45 years old, compared to 38 per cent across the Australian economy.27

Stakeholders also highlighted that across many sectors there were low barriers to entry into the industry in terms of previous training, experience and existing skills. Stakeholders identified that the industry was willing to work with a variety of people to enter the workforce, with those associations consulted agreeing that in most cases, employers are willing to offer the necessary training. However, it is important that potential employees are “job ready” in terms of attitude and values, which was not always the case.

Discussions with stakeholders touched upon the broad skills shortages within their sectors. Stakeholders identified that whilst skills shortages have posed difficulties for industry over time, skills shortages at present have abated, due primarily to the impact of the global financial crisis. There has been a drop in the demand for certain skills across industries due to: • the reduction in demand for employees driven by a decrease in business activity post-GFC • older workers staying in the workforce for longer, driven by the impact of the GFC on retirement savings and

downturn in superannuation returns • employers being able to access workers with the necessary skills from those made redundant during the

GFC.

This finding supports the findings of the quantitative modelling, which suggests that the vast majority of the selected occupations are largely in balance.

Whilst shortages for some occupations may have abated, stakeholders identified a potential risk of skills shortages negatively impacting business productivity and prosperity in the medium-term. Most industries identified that they will again face skills shortages in the near future, either as a result of increased demand for skilled employees as businesses look to increase production, or as a result of the ageing workforce in specific sectors, as employees exit the workforce. In some sectors, replacing exiting workers may pose a challenge, given the licensing and regulatory requirements placed on parts of the industry.

Specific shortage – Truck drivers

It was a recurring theme from stakeholders that there is a shortage of appropriately qualified and experienced truck drivers to service the transport and logistics sector. The shortage of qualified truck drivers became more acute as the skill requirements for qualified drivers increased, from light through to heavy rigid vehicles, through to single-combine vehicles and finally multi-combine vehicles where the skills shortage was most acute.

Stakeholders noted a number of barriers to people entering the trucking industry. These include the qualification levels necessary, the compliance tasks that need to be completed to comply with regulation and the fact that driver experience levels employers demand are increasing. Furthermore, it was very difficult for inexperienced drivers to get the appropriate insurance to enable them to enter the trucking workforce.

The trucking industry has difficulty retaining more experienced workers to take on trainer and mentor roles for new drivers entering the industry. There is little incentive, in terms of wages, for experienced drivers to take on these type of roles in the industry. In general, employment conditions in the industry are rigid, with very few opportunities for part-time or flexible working arrangements.

Consultations also identified a number of other areas of potential shortages in the TFL industry. Many stakeholders identified a shortage in highly trained multi combination licenced truck drivers as limiting growth the TFL industry. Moreover, truck drivers require specific skills to load and unload certain goods to complete a delivery, and it was noted that these skills are often lacking. The example of livestock handling was specifically noted.

27 Australian Bureau of Statistics, Labour Force, Australia, June 2012, referenced in the Transport and Logistics Industry Skills Council, Forecasts of Labour and Skill requirements 2013-17, TLISC, Melbourne.



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This qualitative intelligence is useful in understanding the various demands being placed on the trucking workforce. Although the quantitative modelling suggests the occupation is broadly in balance, stakeholder consultations have revealed a more nuanced account of skills requirements. Where the modelling has been unable to do so, the qualitative information has identified the types of skills that are lacking.

Specific shortage - Engineers The second area of ongoing skills shortages identified was in engineering, where the shortage of skilled employees is causing a significant long-term challenge for the mining sector and for the rail industry. Stakeholders identified the cause of the shortage was driven purely by an insufficient number of qualified engineers being trained in Australia. KPMG understands that in some areas, the labour market for engineers is global, further exacerbating the problem. The NSW Minerals Council placed significant emphasis on the need for a greater focus on maths and science during primary and secondary schooling. The Australasian Railway Association stated that shortages existed in signalling system engineers.

Education and training

A focus on soft skills

According to stakeholders, skills shortages encompass more than just a lack of workers with formal qualifications. It was noted that, in a number of industries, there was a large number of graduates produced with formal qualifications, however these graduates lacked other “softer” skills not formally taught, such as communication skills, which can affect other aspects such as leadership and situational awareness.

Furthermore, the logistics industry employs people with little or no formal logistics skills and experience, however employers struggle to find appropriate candidates with the necessary attitudes and values to be workforce ready to fill labour shortages. These less formal skills shortages are affecting businesses’ ability to find the appropriate candidates to fill employment opportunities.

This lack of more ‘generic skills’ was also noted by the NSW Minerals Council as potentially limiting productivity in their sector. For example, the Council identified shortages in general skills such as communications, leadership and situational awareness – rather than a lack of formal qualifications – as the main challenge when looking to find appropriate employees.

Timely responses to change

Another challenge to addressing skills shortages is the lag between any increased demand for skills and the supply of workers qualified in the required sectors. Stakeholders put this down to a number of factors, including: • slow responses from the training and education sector to meet industry needs • fluctuations in demand from students • the time it takes for workers to be trained and job ready, especially in higher skilled occupations.

This presents implications for areas experiencing any sort of rapid change in skills requirements. For example, skills sets required in the logistics industry are changing, resulting in shortages in specific areas. In particular, the logistics area is seeing a shortage in staff with the appropriate IT skills as processes within the industry undergo increased automation. Logistics operations are employing increasingly sophisticated IT systems to manage their operations that demand a different type of skill. The need for more advance technological skills was also identified by the Transport and Logistics Industry Skills Council (TLISC) in its annual environmental scan (along with other capabilities).28 TLISC’s research into key workforce planning issues for the TFL sector in Australia identified the following emerging skill needs across the industry: • Supply chain managers with strong business management skills • Systems and technological skills to manage increasingly automated supply chains • Operational management skills to implement overhead reduction strategies and improve yields • Technology and systems expertise – network services, innovation of freight systems, communications

technology and safe working systems

28 Transport and Logistics Industry Skills Council, E-Scan, 2014, p. 9



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Understanding the supply chain

The Australian Trucking Association (ATA) observed that some workers in the TFL industry lack the knowledge and understanding of how their role fits into the broader supply chain. The ATA suggested the need for a more rigorous education and training curriculum, emphasising a much stronger connection between training and on-the-job requirements. By developing a stronger understanding of the supply chain, employees will be better placed to see how actions influence up-stream and down-stream activity.

Lack of training options

Stakeholders identified the need to develop specific training modules for both the logistics and livestock transportation sectors. Currently there is a gap in training offerings specific for these industry sectors, inhibiting industry growth and impeding the on-going sustainability of the workforce in these industries.

The Logistics Association of Australia (LAA) highlighted a lack of formal logistics training offerings in NSW. There is no specific logistics degree offered in NSW, with NSW logistics students having to travel interstate in order to complete training. The LAA offers scholarships to university courses interstate to encourage the development of further skills in the logistics industry by NSW employees.

The Livestock and Bulk Carriers Association identified livestock transporters as having specific skills to load, transport and unload livestock without damaging the animals. Formal training of animal handling skills are not offered, with stock handling skills learned from an upbringing on the land. This skillset, however, is declining as the drivers in the livestock carrying sub-sector get older.

Heavy Vehicle Regulation and training infrastructure

Industry representatives also highlighted a wide array of sector-specific issues regarding the delivery of formal education and training in the transport and logistics sector.

Within the trucking industry, the difficulty obtaining insurance was highlighted as a hurdle preventing existing truck drivers from deepening their qualifications. The ATA has been working with an insurer to enable trainee drivers to be appropriately insured whilst they receive the necessary mentoring and co-driving experience to qualify for a multi-combine licence.

In the rail industry, formal education and training seldom occurs in traditional training settings (such as a TAFE campus or Registered Training Organisation (RTO)) due to the significant infrastructure investments associated with commonly used equipment in these industries. As such, training in the rail industry is most commonly delivered by, or in conjunction with, rail operators and most commonly occurs on the company’s assets. The ARA has been working with employers nationally to help combat the challenges associated with this model by developing agreed standards in conjunction with training providers and operators.

3.6. Conclusion This section has presented a range of data and information related in some parts to the whole of the TFL industry but mostly focussed on the 37 occupations selected by TfNSW for more detailed analysis. The information has included historical data based on Census information, projections of skills deficits derived from detailed modelling and stakeholder intelligence collected during consultations with industry associations.

The Census data showed that across the selected occupations, there has been a net increase in employment in total. Some occupations experienced a decline however, most grew in size. The Census data also confirmed the ageing of the workforce as well as significant gender imbalance in some occupations that may be contributing to workforce pressures.

The modelling uncovered five occupations where significant skills deficits have been projected over the forward period. Part of the reason for the shortage may be due to an apparent drop in students enrolling in courses aligned to these occupations Conversely, the modelling did show that when looking at the supply of skills across the selected occupations, the majority of are either in balance or in surplus suggesting that skills deficits are not prevalent across the industry.

The outcome of the modelling is largely supported by the findings of the stakeholder consultations: due to factors stemming from the GFC and subsequent industry restructuring, the demand for labour, especially in logistics is not as strong. Similar views were expressed for other occupations. The exception to this are shortages noted for truck drivers and engineers. Most importantly however, consultations uncovered changes in the nature and type



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of skills needed in industry, impacting both new and existing workers. Stakeholders also offered valuable insight into some of the factors behind the change in required skills as well as potential solutions.

The next chapter discusses a range of potential measures to be considered by TfNSW for further action.



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4. Responding to skills shortages Taking the findings and analysis from the preceding chapter, this chapter will present a number of potential responses to the issues and challenges presented above. The chapter is not intended to provide an exhaustive account of all possible measures, nor will it provide fully developed options for consideration by industry and government. Instead, the purpose of this chapter is to recommend some logical measures that may provide a useful starting point on the way towards addressing the skills requirements of the TFL sector. KPMG has notionally identified where TfNSW could play a role (lead or support) in pursuing the potential measures. Prior to considering any of the measures proposed here, it is important for government to understand and be aware of current activity already under way. For example:

• The NSW Minerals Council identified that the mining industry directs around five per cent of its payroll budget toward training to up-skill the mining workforce. This, coupled with the ability to adjust wages accordingly, means that government action to respond to skills requirements may not be necessary for this sector.

• The Transport and Logistics Industry Skills Council (TLISC) is very active in promoting workforce development and skilling activity across the sector and demonstrating what’s possible. It also plays a role in reviewing and updating qualifications to make them more responsive to industry need.

• The Australasian Railway Association is very active in servicing the needs of its members (as evidenced by the initiatives discussed below). Duplicating this would not be in the interest of neither government nor industry.

• Other jurisdictions have also sought to improve training and skills development and TfNSW is encouraged to identify where such measures may be applicable to the NSW context, beyond what is possible within this report.

Any proposed measures should build on and complement what already exists. As a general principle, industry should be encouraged to play a leading role in addressing skills issues. Industry leadership increases the probability of measures being fit for purpose and sustainable, without the need for ongoing funding and other support by government. Government should focus on addressing barriers that may prohibit industry involvement and, wherever possible, play a facilitative role instead.

4.1. Potential measures In order to think about the range of potential measures to address skills shortages, KPMG developed a simple framework to classify options. In line with the classification below, stakeholders were also asked to identify potential measures. In addition, KPMG has utilised its own insights and experiences gleaned through the completion of similar work in other jurisdictions (for TFL) and in other industries. The consideration of potential measures below is presented under each classification. Figure 18: Classifying potential response measures

Planning and Coordination

Education and Training

Workforce Participation

Workforce Attraction and

Retention

Starting with planning and coordination at the top, the list of potential measures is designed to flow in a clockwise direction and may provide a suggested sequence of activity. The sequence does not need to be adhered to in a



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strict sense and of course things are rarely linear in reality; it points to a number of pre-conditions that may be necessary prior to the implementation of certain measures. For example, effective coordination mechanisms and governance arrangements may increase the likelihood of success in the design and implementation measures.

Planning and coordination

Effective planning and coordination between government agencies and between government and the private sector, is an important ingredient in effectively identifying opportunities, understanding problems and marshalling resources for a response. This holds true for skills and workforce development. As noted earlier in this report, the TFL industry and government have a particularly strong codependence, given the industry’s heavy reliance on critical infrastructure and government’s reliance on the TFL industry to boost productivity and keep the wheels of the economy turning. Done effectively, planning and coordination limit the potential for poor policy, ineffective action and wasting of resources.

Working with a highly fragmented industry

During consultations, the Logistics Association of Australia (LAA) commented on the highly fragmented nature of the sector. According to the LAA, there are over 100 organisations representing the sector, limiting the ability for the sector to work with government in a unified way. It also limits the potential for TFL employers to effectively work with each other.

In Victoria, the Victorian Transport Association (VTA) acts as a highly effective representative body for the TFL industry. It has over 750 members and is seen by government as the preeminent body representing an important cross-section of the industry. Workforce development and training are critical focus areas for the VTA with the association working strongly to refine training programs, engage with TAFE and RTOs and improve pathways. The VTA also plays an active role at a national level, ensuring Victorian views are represented in relevant forums. According to the LAA, NSW would greatly benefit from a similar organisation.

The establishment of a NSW Transport Association should be something led by industry. However, given the size and fragmented nature of TFL in NSW, there may not be the private sector impetus for this to occur, hence, there may be a role for government to work with the industry and facilitate the creation of such an organisation. TfNSW could play an active role in leading this work, given its strong relationships in the sector. The new organisation could play a significant coordination role in engaging with the VET and Higher Education sectors to ensure education and training organisations understand and respond to industry needs. This also has implications for how the TFL industry responds to changes in the NSW VET system with the introduction of a more demand driven system under the NSW skills reforms – Smart and Skilled.29

Proposed Action: TfNSW should work with transport, freight & logistics industry stakeholders to investigate the feasibility of industry establishing a NSW Transport Association to enhance the ability to seize opportunities and respond to issues in a coordinated fashion.

Information and ‘leading practice’ dissemination

In an industry as large and diverse as TFL, organisations, be they industry associations or individual employers, that exhibit leading practices, are bound to exist. This is true at both a state and national level. However, employer associations are established to pursue the interests of member organisations. Similarly, individual businesses must operate in a manner that ensures their survival and prosperity. In such an environment, the incentives for associations or employers to share examples of leading practice activities do not exist.

Government can play a role in identifying examples of leading practice, distilling the essence of such practices and then disseminating that across other parts of the industry. In the case of responding to the challenge of sourcing and retaining skilled labour, undoubtedly some organisations do this better than others, beyond simply offering higher wages.

A strong example of this is the work of the Australasian Railway Association (ARA). Operating in a national context, the ARA has developed strong capabilities in workforce planning activities, having established the Rail Workforce Development Committee (RWDC) and also led projects and initiatives regarding the development of skills and competencies. The ARA has pooled the resources of its member organisations to provide a coordinated approach to problem identification and solution development. Such an approach avoids piecemeal and potentially

29 A useful question and answer document can be found here: http://wsi.tafensw.edu.au/resource/file/9227/4-7-smart-and-skilled-q-a-.pdf



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inefficient responses to issues. Two examples of specific activity undertaken/coordinated by the ARA is the ‘Rail Industry Worker’ program and ‘One Track’:

• Rail Industry Worker – Recognising that the rail sector workforce is national in nature, the program aims to “establish a cohesive, national approach to competency management for contractors working in rail…”30

Currently, the competency management tools focusses on Rail Safety Workers with plans to extend the program to cover other occupations.

• One Track – Through One Track, the ARA is seeking to harmonise training and curriculum across the rail sector. Harmonisation facilitates greater labour mobility and also provide employers with some assurances that their staff meet nationally agreed requirements. Sitting under the One Track banner is the National Track Safety Induction. The induction is the culmination of collaboration and cooperation by Australian rail owners and operators to create common competency requirements for access the Australian rail network.

Proposed action: To promote industry self-reliance, TfNSW should look at ways to improve the dissemination of information and leading practice examples to the transport, freight & logistics industry sectors and encourage the sharing of information across industry.

Education and Training

Rail training infrastructure

One of the most significant challenges associated with training for the TFL industry is the heavy reliance on specialist equipment and infrastructure in some sectors, most notable in rail. As consultations with the ARA revealed, this reliance on significant infrastructure (track work and maintenance, signaling and other operations) essentially precludes TAFE and other providers from being able to deliver relevant qualifications and other short course designed to up-skill workers.

Rail operators also have a preference towards training employees on their own infrastructure and assets. Some are of the view that unless workers are trained in this way, significant training quality and safety risks emerge. In fact when training is conducted on premises, safety officers must be on site, adding costs. This was confirmed by the ARA.

Railway Track Workers were identified in the modelling as experiencing a skills deficit. Furthermore, the number of students enrolled in courses aligned to this have been in decline. Coupled with the infrastructure and safety challenges noted above, there may be value in TfNSW working with the industry to look at another model for training provision. This could complement the well-advanced moves led by the ARA for consistency in standards of training.

TfNSW and industry stakeholders should work together to determine the business case for a centralised Rail Training Centre similar to the model operating in Victoria.31 Things to consider in assessing the feasibility of such a centre would be the availability of a facility, potential business model, student and employer demand and governance arrangements. The facility would be developed through close industry input to ensure the right set up and safety standards. Through close employer involvement, the Centre would have the potential to gain industry buy-in, which could be maintained through employer involvement in the ongoing governance and operation of the facility. Commercial arrangements, including hiring of the facility to potential TAFEs and RTOs could also be considered to allow the Centre to generate its own income and be largely self-sustaining.

Proposed action: TfNSW should liaise with relevant agencies including the Department of Education and Communities and TAFE NSW to identify gaps in rail skills training and to work with rail industry stakeholders to determine the potential value of a centralised Rail Skills Centre model.

Capitalising on reforms to VET

On 1 January 2015, NSW will move to a more contestable, demand-driven model for VET. The new arrangements follow similar reforms in other jurisdictions. The reforms will result in the opening up of a greater

31 The Rail Skills Centre – Victoria (RSCV) is a specialist training centre which provides facilities for both train and tram industry training. Along with classrooms, it includes 550m of double track and significant infrastructure for applied skills training. This enables trainees to get hands on experience in surroundings that replicate actual industry environment. For more information on the RSCV see: http://www.railskillscentre.com.au/



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proportion of funding to private RTOs and include an entitlement for training up to Certificate III level. The reforms are also designed to increase industry involvement in determining funding priorities and influencing the NSW skills list, which specifies which qualifications will be supported through a government subsidy.

TfNSW along with the Transport and Logistics Workforce Advisory Group should connect and engage with the NSW Skills Board Industry Reference Group (once established). The Reference Group will be a key advisory body to the government regarding the skills needs of the NSW economy and industry. Through close engagement with this body, TfNSW could ensure that the Reference Group is across the right data and information, including intelligence on up-coming infrastructure investment and projects that are likely to increase demand for certain skills.

Proposed action: TfNSW to explore the option of connecting with the NSW Skills Board and determine how best to link into its operating framework.

Higher level skills

The modelling and stakeholder consultation revealed the need for the development of higher level skills across TFL. The modelling identified a shortage in the ‘Managers’ group, specifically Importers, Exporters and Wholesalers. Stakeholder consultations also highlighted the level of automation and technological advancement in the sector, creating a demand for higher skills.

In consultations with the LAA, it was revealed that there are number of barriers preventing the development of higher level skills in the logistics sector. This included the lack of a bachelor level qualification in logistics management in NSW and the prevalence of workers with no post school qualifications as the main two.

Proposed action: TfNSW could encourage collaboration between the Logistics Association of Australia (LAA), Australian Logistics Council and the University sector to explore the development of a specialised TFL bachelor program. It may involve the development of a whole qualification and/or specific electives to allow a transport, freight and logistics specialisation.

The reported shortages of engineers is a widespread problem that goes beyond TFL. However, it is unclear whether the TFL industry is suffering any worse than other industries reliant upon engineers, such as construction and automotive. It may be beneficial for the TFL industry to work with an organisation such as Engineers Australia (EA) to gain a better understanding of the problem and work with EA to develop a solution.

Proposed action: TfNSW could assess whether there is any additional support it could provide to assist relevant industry associations to determine whether shortages of engineers are disproportionately affecting the transport, freight & logistics industry. Such work could be done in conjunction with a body like Engineers Australia.

Workforce participation

Working with employment agencies

Both the quantitative analysis and stakeholder intelligence touched upon the issue of the ageing TFL workforce. Although stakeholder consultations revealed that the issue of skills shortages is not as prominent as it was pre GFC, the ageing of the population and doubling of the freight task have the potential to create shortages in future. One potential way of addressing this increasing workforce participation is by allowing current workers to work for longer. Another strategy is to lift participation by others who are currently outside the industry.

As a result of industry restructuring, there is an opportunity for stronger engagement between various state and Commonwealth agencies. These agencies include the Department of Education and Communities, Job Services Australia Providers and the Commonwealth Departments of Industry and Employment. The purpose of the engagement would be to assess how unemployed workers, including adults and young people, could be supported to take-up roles within the TFL industry. TfNSW would play a supporting role in this work.

As the modelling suggests, most of the skills deficits appear to be in the ‘Labourers’ category, which includes occupations typically associated with lower level skills and qualification requirements. This understanding of where deficits exist could then be used to inform the training and development courses undertaken as part of any ‘back to work’ strategies. TAFE and RTOs could also be involved in discussions especially where workers could potentially utilise their training entitlement and where training in foundation skills (literacy, numeracy, work readiness) may also be required. Collaboration like this increases the chances of unemployed workers choosing TFL over other options.



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Proposed action: TfNSW to support greater collaboration and engagement between various state and Commonwealth agencies to facilitate a greater flow of workers towards transport, freight & logistics occupations.

Workforce attraction and retention

Stronger pathways from secondary schools Stakeholders within the transport and logistics industry accepted that there is a need to increase awareness of the industry and improve its image in order to attract a new generation of employees into the sector. Attracting young people into the industry was identified by stakeholders as a significant barrier to alleviating skills shortages. Encouraging young people to undergo training to enter transport and logistics industry will increase the supply of skilled workers to support the industry and improve the industry’s demographic profile to ensure a more sustainable workforce into the future.

KPMG has identified an opportunity for a number of NSW government agencies to work together to develop formal pathways for secondary school students. Formal pathways go beyond simple information days or tours of employer/industry facilities and work create a lasting interest and longer-term approach to attracting young people to an industry.

There is an opportunity for TfNSW to initiate the development of a TFL industry themed VET curriculum pathways for secondary students in the middle years that begins to embed an understanding of the diverse nature of the industry and potential career paths on offer. To do this, collaboration with the NSW Board of Studies, NSW Skills Board, Department of Education and Communities and State Training Services will be necessary, along with schools in areas with significant TFL employment opportunities.

Currently, there are 12 Stage 5 VET Board endorsed courses for pathways from years 9 and 10, including AgriFood Operations, Automotive, Construction and Creative Industries. Participants who successfully complete these programs may receive credit towards the completion of an accredited qualification. There are no endorsed courses in TFL. On the other hand, there are a number of TFL and related Stage 6 VET Board endorsed courses (Years 11 and 12) in areas such as Aviation, Logistics, Maritime Operations and Warehousing. Along with developing options for years 9 and 10 students, analysis of the take up of Stage 6 courses across regions with TFL employment opportunities could be undertaken.

Expanding the role of women

The industry statistics are compelling: sectors of the TFL industry male dominated. Virtually all stakeholders consulted mentioned that attracting and then retaining women is a good way to guard against the impact of skills shortages.

Early work within schools, as proposed by the measure above, could also play a role in identifying career opportunities and pathways for females. Various options could dispel some of the myths around a male dominated workforce across the board by highlighting the various careers on offer and the occupations where females prosper. There is also an opportunity for TfNSW to work together with the Department of Education and Communities to identify and promote positive stories and images of women in the TFL workforce.

Proposed action: TfNSW to assist the relevant NSW Government agencies such as the Department of Education and Communities, including the State Training Board and NSW Skills Board and the NSW Board of Studies, to explore the potential of developing industry-themed options for Year 9 and 10 in the transport, freight & logistics industry, thereby influencing student choices at the senior secondary and post-secondary level.

4.2. Conclusion The range of proposed measures outlined in this section provide TfNSW with options for further action. As per the project brief, the proposed measures are preliminary in nature and would require further consideration and discussions with internal and external stakeholders. The measures highlight the point that unilateral action by government or industry is unlikely to create the necessary conditions to meet the industry’s skills needs. They also point to the need for industry leadership in creating solutions that will last and make a difference. By combining high level and more detailed actions, and categorising and sequencing them, TfNSW and the TFL industry can think about a combination of actions that could be implemented across a similar timeframe to generate momentum and increase the potential for change. The set of actions are not exhaustive; there are many different things government and industry could do. Instead, the actions are based on stakeholder feedback, combined with KPMG’s insights and experience around what is feasible and palatable to industry.



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5. Conclusion The TFL industry is forecast to grow significantly over the coming decades. Industry estimates indicate a doubling of the freight task by 2030 which will continue to place pressure on both infrastructure and workforce requirements. The combination of growth as well as changes in the use of technology, the adoption of new processes and consumer tastes and preferences will not only increase demand in absolute terms but also increase the demand for certain types of skills, to the detriment of others. TfNSW, in commissioning this project, understands the importance of a skilled and capable workforce in ensuring the TFL industry is able to grow and effectively meet changing demands and pressures. It also understands that skills shortages may limit the potential of the TFL industry to respond to these demands; skills shortages may act to stifle growth place upward pressure on labour costs across the sector that ultimately flow through the economy.

5.1. Summary of findings The first step in understanding how to address skills shortages is to understand where they exist now and may exist in future. KPMG’s detailed modelling of skills deficits identified five key industry subsectors where skills deficits exist. The identified sectors were: • importers, exporters and wholesalers • railway track workers • forestry and logging workers • freight and furniture handlers • deck and fishing hands. Stakeholders also identified a number of specific skills within occupations where there was a shortage of skilled workers. This included truck drivers and engineers. Stakeholders noted that skills shortages can develop quickly in response to changes in the industry and the broader economy. Many industry representatives identified that skill shortages had been an ongoing concern in the industry prior to the global financial crisis, and could consequently again be a concern as economic conditions improve and business activity increase. Overall, the modelling and stakeholder consultations suggested that across the 37 selected occupations, skills shortages are not prevalent and that skills needs are largely being met. Most importantly however, consultations uncovered changes in the nature and type of skills needed in industry that may impact both new and existing workers. Stakeholders also offered valuable insight into some of the factors behind the change in required skills as well as potential solutions. Based on these findings, KPMG has suggested a number of actions for TfNSW to consider that are designed to create change at a higher level and also look to create solutions at a more detailed level for specific occupations and industries. The exact nature of TfNSW’s next steps should be determined in consultation with industry and other relevant stakeholders.



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A. TFL ANZSCO occupation categories The ANZSCO occupations identified as TFL occupations and examined in this report are outlined in the table below.

ANZSIC Code Occupation

Managers

1000 Managers nfd

1210 Farmers and Farm Managers nfd

1330 Construction, Distribution and Production Managers nfd

1333 Importers, Exporters and Wholesalers

Professionals

2310 Air and Marine Transport Professionals nfd

2311 Air Transport Professionals

2312 Marine Transport Professionals

2335 Industrial, Mechanical and Production Engineers

Technicians and Trades Workers

3231 Aircraft Maintenance Engineers

3990 Miscellaneous Technicians and Trades Workers nfd

Clerical and Administrative Workers

5612 Couriers and Postal Deliverers

5910 Logistics Clerks nfd

5911 Purchasing and Supply Logistics Clerks

5912 Transport and Despatch Clerks

Machinery operators and drivers

7000 Machinery Operators and Drivers nfd

7120 Stationary Plant Operators nfd

7121 Crane, Hoist and Lift Operators

7129 Other Stationary Plant Operators

7210 Mobile Plant Operators nfd

7211 Agricultural, Forestry and Horticultural Plant Operators

7213 Forklift Drivers

7219 Other Mobile Plant Operators

7300 Road and Rail Drivers nfd

7310 Automobile, Bus and Rail Drivers nfd

7313 Train and Tram Drivers

7321 Delivery Drivers

7331 Truck Drivers



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7411 Storepersons

Labourers

8216 Railway Track Workers

8394 Timber and Wood Process Workers

8412 Crop Farm Workers

8413 Forestry and Logging Workers

8415 Livestock Farm Workers

8910 Freight Handlers and Shelf Fillers nfd

8911 Freight and Furniture Handlers

8992 Deck and Fishing Hands

8996 Recycling and Rubbish Collectors



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B. Demand-supply imbalance analysis for all TFL occupations To analyse the TFL labour market for key occupations in NSW and Australia, a Demand-Supply Imbalance index (“index”); an Occupation Concentration index (“concentration”); and a State Occupation Supply index (“supply”) have been developed.

The index shows the level of labour shortage or oversupply that exists for each occupation group across all industries. For example, an index that is greater than 1.00 implies a shortage, an index that is close to 1.00 indicates the labour market is balanced, and an index less than 1.00 implies an oversupply of labour for a particular occupation group. Table 4.3 below shows the classifications or “indicators” for the index reading ranges presented throughout this section. Table B - 1: Supply imbalance index levels Index range Skills presure level Indicator


The index is designed to be used in conjunction with the concentration and supply measures – each of which provides an understanding of the relative importance of that occupation in the economy.

The concentration measure provides each occupation groups share of total national labour demand. For example, an indicator of 0.08 shows that 8 per cent of all labour demanded in Australia is for workers in the occupation group.

The supply measure provides each NSW occupation groups share of that total national occupation group. For example, an indicator of 0.25 shows that 25 per cent of the national labour force in that occupation is located in NSW.

An index and indicator have been developed for each of 37 key occupation groups falling under the following five broad classifications: managers; professionals; machinery operators and drivers; labourers; and technicians and trades workers. The index and concentration/supply measures for each of the occupation groups are analysed for Australia and NSW.

B.1 Managers Demand and supply in the broad manager category has been close to balance over recent history. This is expected to continue into the projection period, with some weakening in the overall group indicating modest levels of skills excess in the later years. There are differing results for the groups within this broader category, as shown in Table B - 2. Table B - 2: Demand-supply imbalance index for Managers, Australia

Occupation 2010 11 2011-12 2012 13 HISTORY

2013 14 FORECAST 2014 15 2015 16 2016 17 2017 18

Occupation Concentration Index 2013 14

Managers nfd Index 0.98 0.95 1.03 1.08 1.10 1.09 1.08 1.08 0.3% Indicator S Weak S Weak S Tight Tight Tight Tight Tight Tight

Index 1.00 0.99 1.01 1.05 1.05 1.04 1.02 1.01 0.1% Farmers and Farm Managers nfd Indicator Bal Bal Bal Tight Tight S Tight S Tight Bal

Construction, Distribution and Production Managers nfd

Index Indicator

0.28 V Weak

1.01 Bal

0.87 V Weak

1.01 Bal

1.16 V Tight

1.15 V Tight

1.15 V Tight

1.14 V Tight

0.0%


Index Indicator

0.99 Bal

0.97 S Weak

0.98 S Weak

1.02 S Tight

1.03 S Tight

1.03 S Tight

1.03 S Tight

1.03 S Tight

0.2%

Other Managers Index 1.00 1.00 0.99 1.00 1.01 1.00 0.99 0.99 12.2% Indicator Bal Bal Bal Bal Bal Bal Bal Bal


The key occupations that make up this broader manager occupation group are now discussed in turn.



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• The demand for each of these key occupations only represents a small proportion of the total category. The smaller the group in question, the more sensitive the results will be to fluctuations in supply and demand.

• The nation-wide labour market for managers nfd has experienced some tightening in the past few years. While the total supply of managers nfd is projected to grow at a faster rate than its demand, this will shrink the gap, rather than completely close it.

• The labour market for farmers and farm managers nfd also experienced some tightening last year. This is likely to continue for the next three years, after which supply will catch up with the weakening demand in the medium term.

• The demand and supply of construction, distribution and productions managers is forecast to remain at their current levels. The small sample size of this group means that slight variations in either supply or demand can easily swing the indicator from weak to tight each period. The tightness observed in the labour market for this group is likely to peak in 2014-15 and this labour shortage will persist in the projection period.

• Some skills shortage will persist in the labour market for importers, exporters and wholesalers as demand and supply of this occupation group remain relatively stable.

Table B - 3: Demand-supply imbalance index for Managers, NSW

Occupation Managers nfd Index

Indicator

2010 11 1.00 Bal

2011-12 0.83

V Weak

2012 13 0.97

S Weak

HISTORY2013 14

1.08 Tight

FORECAST 2014 15

1.17 V Tight

2015 16 1.18

V Tight

2016 17 1.17

V Tight

2017 18 1.17

V Tight

State Occupation Supply Index 2013 14 37.0%

Farmers and Farm Managers nfd Index Indicator

1.00 Bal

1.00 Bal

1.01 Bal

0.94 Weak

0.78 V Weak

0.78 V Weak

0.78 V Weak

0.77 V Weak

29.4%

Construction, Distribution and Production Managers nfd

Index Indicator

0.47 V Weak

1.01 Bal

1.06 Tight

0.90 Weak

0.90 Weak

0.91 Weak

0.91 Weak

36.4%


Index Indicator

0.99 Bal

0.98 S Weak

1.01 Bal

1.09 Tight

1.22 V Tight

1.23 V Tight

1.23 V Tight

1.23 V Tight

33.5%

Other Managers Index Indicator

1.01 Bal

0.99 Bal

1.00 Bal

1.01 Bal

1.02 S Tight

1.02 S Tight

1.02 S Tight

1.02 Bal

32.2%


Around one third of the labour force in each of these key occupations is located in NSW. As such, NSW has very similar labour market conditions for managers as discussed at the national level with two exceptions. A moderate level of skills excess is likely to be observed in the labour market for farmers and farm managers nfd due to a fall in demand in 2014-15. Similarly, construction, distribution and production managers nfd will also experience some skills excess. It is worth noting that the shortage of importers, exporters and wholesalers will be more severe in NSW compared to the National level, as supply contracts more than demand in 2014-15 and remains around this level over the projection period.

B.2 Professionals The professionals category of occupations covers a wide range of disciplines. Over the last decade, growth in the supply of professionals has been in line with the increase in demand, resulting in a balanced labour market with some occasional skills excess. Weaker growth in labour demand, however, is expected to result in a small surplus of labour in the projection period. The low occupation concentration index for each of the key occupations mentioned below indicates that demand for each only represents a small proportion of the total demand. As mentioned previously, the smaller the group in question, the more sensitive the results will be to fluctuations in supply and demand.

Air transport professionals and industrial, mechanical and production engineers experienced a slightly weakening skills index in the last year or two. This weakness is expected to continue in the future as the supply of these occupations continue to grow steadily while the level of demand is projected to flatten.

In contrast, marine transport professionals had a slightly tight skills index last year. This is likely to be short-lived as supply increases gradually alongside a weakening demand.



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Table B - 4: Demand-supply imbalance index for Professionals, Australia HISTORY FORECAST Occupation Concentration Index

Occupation 2010 11 2011-12 2012 13 2013 14 2014 15 2015 16 2016 17 2017 18 2013 14 Air and Marine Transport Index 0.0% Professionals nfd Indicator Air Transport Professionals Index 1.00 1.01 1.00 0.99 0.99 0.97 0.96 0.95 0.1%

Indicator Bal Bal Bal Bal Bal S Weak S Weak Weak Marine Transport Index 0.97 1.00 1.00 1.02 1.03 1.02 1.00 0.99 0.1% Professionals Indicator S Weak Bal Bal S Tight S Tight Bal Bal Bal

Industrial, Mechanical and Index 1.08 1.09 1.01 0.99 1.00 0.98 0.96 0.94 0.3% Production Engineers Indicator Tight Tight Bal Bal Bal Bal S Weak Weak

Other Professionals Index 1.01 1.00 0.99 1.00 1.02 1.00 0.99 0.98 21.8% Indicator Bal Bal Bal Bal S Tight Bal Bal S Weak

Source: ABS Cat No. 6291.0.55.003; ABS Cat No. 6227; and KPMG projections Historically, NSW had almost one quarter of the supply of air transport professionals, and one fifth the supply of industrial, mechanical and production engineers. Table 4-4 shows that some levels of skills excess exist for these professionals in NSW. Table B - 5: Demand-supply imbalance index for Professionals, NSW

HISTORY FORECAST State Occupation Supply Index Occupation 2010 11 2011-12 2012 13 2013-14 2014 15 2015 16 2016 17 2017 18 2013 14 Air and Marine Transport Index 0.0% Professionals nfd Indicator Air Transport Professionals Index 1.01 1.00 0.98 0.97 0.97 0.97 0.96 0.95 28.5%

Indicator Bal Bal Bal S Weak S Weak S Weak S Weak S Weak Marine Transport Index 0.95 1.00 1.01 0.91 0.87 0.87 0.87 0.86 11.3% Professionals Indicator S Weak Bal Bal Weak V Weak V Weak V Weak V Weak

Industrial, Mechanical and Index 1.05 1.05 1.00 0.93 0.85 0.83 0.82 0.81 22.2% Production Engineers Indicator Tight Tight Bal Weak V Weak V Weak V Weak V Weak

Other Professionals Index 1.01 0.99 1.00 1.02 1.06 1.06 1.05 1.04 33.2% Indicator Bal Bal Bal Bal Tight Tight S Tight S Tight


B.3 Technicians and Trades Workers The skills index for technicians and trades workers has been fairly stable for both Australia and NSW even though consistent discrepancies exist.

Aircraft maintenance engineers had moderate to strong levels of skills shortage recently. These conditions are expected to persist despite continued weak demand. Table B - 6: Demand-supply imbalance index for Technicians and Trades Workers, Australia

HISTORY FORECAST Occupation Concentration Index Occupation 2010 11 2011 12 2012 13 2013 14 2014 15 2015 16 2016 17 2017 18 2013 14 Aircraft Maintenance Engineers Index 1.11 1.23 1.09 1.06 1.13 1.11 1.09 1.08 0.1%

Indicator V Tight V Tight Tight Tight V Tight V Tight Tight Tight Miscellaneous Technicians and Index 0.0% Trades Workers nfd Indicator Other Technicians and Trades Index 0.98 0.97 0.97 0.97 0.96 0.97 0.97 0.98 14.5% Workers Indicator S Weak S Weak S Weak S Weak S Weak S Weak S Weak Bal


The situation is quite different in NSW. While it has more than one third of the supply of aircraft maintenance engineers in the country, it will not experience the skills shortage expected at the national level. Rather, the labour market for aircraft maintenance engineers in NSW will remain very weak in the midst of weak demand. Table B - 7: Demand-supply imbalance index for Technicians and Trades Workers, NSW

HISTORY FORECAST State Occupation Supply Index Occupation 2010 11 2011 12 2012 13 2013 14 2014 15 2015 16 2016 17 2017 18 2013 14 Aircraft Maintenance Engineers Index 0.98 0.97 0.88 0.84 0.87 0.87 0.86 0.86 36.9%

Indicator Bal S Weak V Weak V Weak V Weak V Weak V Weak V Weak Miscellaneous Technicians and Index 0.0% Trades Workers nfd Indicator Other Technicians and Trades Index 0.97 0.96 0.97 0.97 0.97 0.99 1.00 1.00 29.4% Workers Indicator S Weak S Weak S Weak S Weak S Weak Bal Bal Bal




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B.4 Community and Personal Service Workers Some skills excess has been observed in the labour market for community and personal service workers in the past for NSW and also Australia as a whole. Some improvement will be seen in NSW, as supply growths slows more than demand, while the nation-wide outlook remains weak. Table B - 8: Demand-supply imbalance index for Community and Personal Service Workers, Australia

HISTORY FORECAST Occupation Concentration Index Occupation 2010 11 2011 12 2012 13 2013 14 2014 15 2015 16 2016 17 2017 18 2013 14

Index Community and Personal 0.95 0.95 0.95 0.95 0.93 0.94 0.94 0.94 9.4% Indicator Service Workers Weak Weak S Weak Weak Weak Weak Weak Weak

Table B - 9: Demand-supply imbalance index for Community and Personal Service Workers, NSW HISTORY FORECAST State Occupation Supply Index

Occupation 2010 11 2011 12 2012 13 2013 14 2014 15 2015 16 2016 17 2017 18 2013 14

Index Community and Personal 0.97 0.95 0.97 0.97 0.98 0.99 0.99 0.99 31.0% Indicator Service Workers S Weak Weak S Weak S Weak Bal Bal Bal Bal

B.5 Clerical and Administrative Workers The labour market for the broad category of clerical and administrative workers has been quite stable and balanced albeit somewhat weak in 2013-14. The outlook for this labour market is weak for our forecast period. The low occupation concentration indices indicate that demand for each only represents a small proportion of the total demand, and this means that the results may be more sensitive to fluctuations in supply and demand.

A surplus of couriers and postal deliverers as well as logistics clerks nfd has been consistently observed and this is expected to continue into the future as a result of weak growth in demand. Likewise, the labour markets for purchasing and supply logistics clerks as well as transport and despatch clerks are expected to exhibit levels of skills excess. Table B - 10: Demand-supply imbalance index for Clerical and Administrative Workers, Australia

HISTORY FORECAST Occupation Concentration Index Occupation 2010 11 2011-12 2012 13 2013 14 2014 15 2015 16 2016 17 2017-18 2013 14 Couriers and Postal Index 0.97 0.98 0.95 0.94 0.93 0.93 0.93 0.93 0.3% Deliverers Indicator S Weak Bal S Weak Weak Weak Weak Weak Weak

Logistics Clerks nfd Index 0.25 1.01 0.92 0.70 0.68 0.68 0.67 0.67 0.0% Indicator V Weak Bal Weak V Weak V Weak V Weak V Weak V Weak

Purchasing and Supply Index 0.99 0.98 0.98 0.98 0.96 0.96 0.95 0.95 0.7% Logistics Clerks Indicator Bal Bal Bal S Weak S Weak S Weak S Weak Weak Transport and Despatch Index 0.99 0.98 0.98 0.97 0.95 0.95 0.94 0.94 0.3% Clerks Indicator Bal Bal Bal S Weak S Weak S Weak Weak Weak Other Clerical and Index 0.99 0.99 0.98 0.97 0.97 0.97 0.97 0.97 13.1% Administrative Workers Indicator Bal Bal S Weak S Weak S Weak S Weak S Weak S Weak Source: ABS Cat No. 6291.0.55.003; ABS Cat No. 6227; and KPMG projections

NSW has around one third of the supply of each of these occupations (excluding logistics Clerks nfd). Similar labour market conditions can be observed for each of the occupations at this state level as at the national level.

Table B - 11: Demand-supply imbalance index for Clerical and Administrative Workers, NSW HISTORY FORECAST State Occupation Supply Index

Occupation 2010 11 2011-12 2012 13 2013 14 2014 15 2015 16 2016 17 2017-18 2013 14 Couriers and Postal Index 0.98 0.99 0.99 0.98 0.93 0.94 0.94 0.94 33.0% Deliverers Indicator Bal Bal Bal S Weak Weak Weak Weak Weak

Logistics Clerks nfd Index 0.24 1.00 1.01 0.00 0.62 0.62 0.62 0.62 12.6% Indicator V Weak Bal Bal V Weak V Weak V Weak V Weak V Weak

Purchasing and Supply Index 1.00 0.98 1.00 1.01 1.02 1.02 1.02 1.01 30.9% Logistics Clerks Indicator Bal Bal Bal Bal Bal Bal Bal Bal Transport and Despatch Index 1.01 1.02 0.96 0.92 0.84 0.84 0.84 0.84 32.6% Clerks Indicator Bal S Tight S Weak Weak V Weak V Weak V Weak V Weak Other Clerical and Index 0.99 0.98 0.97 0.99 0.99 1.00 1.00 1.00 31.4% Administrative Workers Indicator Bal Bal S Weak Bal Bal Bal Bal Bal Source: ABS Cat No. 6291.0.55.003; ABS Cat No. 6227; and KPMG projections

B.6 Sales Workers The outlook remains weak for sales workers in both Australia and NSW due to weak growth in demand as a result of subdued growth expected in the retail and wholesale industries.



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HISTORY FORECAST Occupation Concentration Index Occupation 2010 11 2011 12 2012 13 2013 14 2014 15 2015 16 2016 17 2017 18 2013 14

Index Sales Workers 0.95 0.95 0.95 0.95 0.93 0.94 0.94 0.94 9.4% Indicator Weak Weak S Weak Weak Weak Weak Weak Weak

Table B - 13: Demand-supply imbalance index for Sales Workers, NSW HISTORY FORECAST State Occupation Supply Index

Occupation 2010 11 2011 12 2012 13 2013 14 2014 15 2015 16 2016 17 2017 18 2013 14

Index Sales Workers 0.94 0.95 0.96 0.96 0.98 0.95 0.94 0.94 9.2% Indicator Weak Weak S Weak S Weak Bal Weak Weak Weak

B.7 Machinery Operators and Drivers Historically, occupations under this broad category have generally observed weak labour markets in Australia. The relatively low occupation concentration indices indicate highly sensitive labour markets for respective occupations.

The weak recovery in demand for machinery operators and drivers nfd, stationary plant operators nfd, mobile plant operators nfd, forklift drivers, other mobile plant operators, delivery drivers and truck drivers will result in labour surpluses. Similarly, as demand continues to fall for agricultural, forestry and horticultural plant operators and storepersons, supply is expected to outpace demand for these occupations in the near future. Other stationary plant operators and road and rail drivers nfd will continue to have slightly weak labour markets. In contrast, skill shortages are expected to exist for crane, hoist and lift operators and train and tram drivers, as demand continues to grow and exceed supply. Automobile, bus and rail drivers nfd will continue to have strong levels of skills shortage due to the fall in supply in recent years. While mobile plant operators nfd will continue to have a weak labour market in the next few years, this occupation will experience some skills shortage as demand will outstrip supply in the medium term.

Table B - 14: Demand-supply imbalance index for Machinery Operators and Drivers, Australia

Occupation

Mobile Plant Operators nfd

Forklift Drivers

Road and Rail Drivers nfd

Train and Tram Drivers

Delivery Drivers

Truck Drivers

Storepersons

Other Machinery Operators And Drivers

Agricultural, Forestry and Horticultural Plant Operators

Other Mobile Plant Operators

Machinery Operators and Drivers nfd

Stationary Plant Operators nfd

Crane, Hoist and Lift Operators

Other Stationary Plant Operators

Automobile, Bus and Rail Drivers nfd

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

2010 11 1.01 Bal

0.00 V Weak

1.04 S Tight

0.97 S Weak

0.94 Weak

0.98 S Weak

0.94 Weak

0.98 S Weak

0.93 Weak

0.00 V Weak

1.00 Bal

0.98 S Weak

0.97 S Weak

0.92 Weak

0.97 S Weak

2011 12 0.95

S Weak

1.01 Bal

1.01 Bal

0.96 S Weak

0.82 V Weak

1.01 Bal

0.92 Weak

0.96 S Weak

0.88 V Weak

1.07 Tight

0.96 S Weak

0.95 Weak

0.91 Weak

0.96 S Weak

2012 13 1.00 Bal

0.91 Weak

0.98 Bal

0.96 S Weak

1.00 Bal

0.98 Bal

0.89 V Weak

0.98 Bal

0.81 V Weak

0.00 V Weak

1.00 Bal

0.96 S Weak

0.95 S Weak

0.91 Weak

0.97 S Weak

HISTORY2013 14

0.80 V Weak

0.50 V Weak

0.98 S Weak

0.96 S Weak

1.01 Bal

0.95 Weak

0.84 V Weak

0.94 Weak

0.91 Weak

0.97 S Weak

1.04 S Tight

0.95 Weak

0.94 Weak

0.91 Weak

0.98 S Weak

FORECAST 2014 15

0.71 V Weak

0.51 V Weak

0.99 Bal

0.97 S Weak

0.88 V Weak

0.97 S Weak

0.82 V Weak

0.88 V Weak

0.96 S Weak

1.76 V Tight

1.11 V Tight

0.94 Weak

0.92 Weak

0.88 V Weak

0.99 Bal

2015 16 0.71

V Weak

0.52 V Weak

1.00 Bal

0.98 S Weak

0.91 Weak

0.96 S Weak

0.82 V Weak

0.89 V Weak

0.96 S Weak

1.76 V Tight

1.10 V Tight

0.94 Weak

0.92 Weak

0.88 V Weak

0.99 Bal

2016 17 0.72

V Weak

0.52 V Weak

1.02 S Tight

0.98 S Weak

0.94 Weak

0.95 Weak

0.81 V Weak

0.90 V Weak

0.96 S Weak

1.76 V Tight

1.10 Tight

0.93 Weak

0.93 Weak

0.88 V Weak

0.99 Bal

2017 18 0.72

V Weak

0.52 V Weak

1.04 S Tight

0.98 Bal

0.97 S Weak

0.94 Weak

0.80 V Weak

0.90 Weak

0.96 S Weak

1.76 V Tight

1.09 Tight

0.94 Weak

0.93 Weak

0.88 V Weak

1.00 Bal


0.0%

0.0%

0.1%

0.2%

0.0%

0.1%

0.5%

0.1%

0.0%

0.0%

0.1%

0.4%

1.5%

1.1%

2.4%




44

Table B - 12: Demand-supply imbalance index for Sales Workers, Australia

-11 2011 - - - - - - -

- - - - - - --

-

-

- - - - - - - - -

- - - - - - - - -


January 2015

Similar market conditions are expected for NSW in most of these occupations. However, it will not experience the same level of tightness expected at the national level for several occupations mentioned earlier. The outlook for most of these occupations in NSW remain weak to balanced.

Table B - 15: Demand-supply imbalance index for Machinery Operators and Drivers, NSW

Occupation

Mobile Plant Operators nfd

Forklift Drivers

Road and Rail Drivers nfd

Train and Tram Drivers

Delivery Drivers

Truck Drivers

Storepersons

Agricultural, Forestry and Horticultural Plant Operators

Other Machinery Operators And Drivers

Machinery Operators and Drivers nfd

Automobile, Bus and Rail Drivers nfd

Stationary Plant Operators nfd

Crane, Hoist and Lift Operators

Other Stationary Plant Operators

Other Mobile Plant Operators

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

2010 11 1.00 Bal

0.00 V Weak

1.00 Bal

0.96 S Weak

1.00 Bal

0.97 S Weak

0.95 S Weak

1.03 S Tight

1.00 Bal

0.00 V Weak

1.01 Bal

0.96 S Weak

0.97 S Weak

0.90 Weak

0.98 S Weak

2011 12 1.00 Bal

0.98 Bal

0.99 Bal

1.00 Bal

0.98 S Weak

0.93 Weak

0.95 S Weak

1.00 Bal

1.00 Bal

0.95 Weak

0.94 Weak

0.90 Weak

0.95 S Weak

2012 13 1.01 Bal

1.01 Bal

0.90 Weak

0.95 S Weak

1.01 Bal

0.92 Weak

0.89 V Weak

0.96 S Weak

0.84 V Weak

1.01 Bal

0.95 Weak

0.96 S Weak

0.89 V Weak

0.98 S Weak

HISTORY2013 14

0.75 V Weak

0.00 V Weak

0.85 V Weak

0.92 Weak

0.91 Weak

0.90 V Weak

0.81 V Weak

0.92 Weak

0.90 Weak

1.00 Bal

0.95 Weak

0.94 Weak

0.89 V Weak

1.00 Bal

FORECAST 2014 15

0.65 V Weak

0.41 V Weak

0.96 S Weak

0.89 V Weak

0.82 V Weak

0.98 Bal

0.82 V Weak

0.93 Weak

0.98 Bal

0.99 Bal

0.98 S Weak

0.92 Weak

0.88 V Weak

1.01 Bal

2015 16 0.66

V Weak

0.42 V Weak

0.99 Bal

0.89 V Weak

0.85 V Weak

0.98 Bal

0.82 V Weak

0.95 Weak

0.99 Bal

1.00 Bal

0.99 Bal

0.93 Weak

0.89 V Weak

1.02 Bal

2016 17 0.67

V Weak

0.43 V Weak

1.01 Bal

0.90 V Weak

0.87 V Weak

0.98 S Weak

0.83 V Weak

0.96 S Weak

1.00 Bal

1.00 Bal

0.99 Bal

0.94 Weak

0.89 V Weak

1.03 S Tight

2017 18 0.67

V Weak

0.44 V Weak

1.03 S Tight

0.90 Weak

0.90 V Weak

0.97 S Weak

0.83 V Weak

0.96 S Weak

1.00 Bal

0.99 Bal

0.99 Bal

0.94 Weak

0.89 V Weak

1.03 S Tight


40.5%

23.1%

27.2%

22.8%

28.8%

26.5%

32.6%

42.2%

0.0%

21.4%

33.4%

28.4%

33.0%

28.7%


B.8 Labourers In Australia, the labour market conditions for most of the occupations in this category have been weak historically. They are also highly sensitive to changes in labour demand and supply as indicated by the low occupation concentration indices.

The outlook remains weak for both freight handlers and shelf fillers nfd and freight and furniture handlers due to weak demand. Timber and wood process workers, crop farm workers, forestry and logging workers and livestock farm workers are also expected to have weak labour market outlooks as demand continues to fall. A similar outlook is estimated for deck and fishing hands: supply will continue to grow while demand levels off after 2014-15. On the other hand, the labour markets for railway track workers and recycling and rubbish collectors will be tight as weak demand growth still outpaces supply.



45

- - - - - -- - -

- - - - - - -

- - - - - - -


January 2015

Table B - 16: Demand-supply imbalance index for Labours, Australia

Occupation Railway Track Workers

Crop Farm Workers

Livestock Farm Workers

Deck and Fishing Hands

Other Labourers

Forestry and Logging Workers

Freight and Furniture Handlers

Timber and Wood Process Workers

Freight Handlers and Shelf Fillers nfd

Recycling and Rubbish Collectors

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

2010 11 0.98 Bal

0.87 V Weak

0.86 V Weak

0.56 V Weak

0.96 S Weak

0.00 V Weak

0.89 V Weak

0.92 Weak

0.97 S Weak

0.92 Weak

2011-12 1.00 Bal

0.95 S Weak

0.86 V Weak

0.89 V Weak

0.89 V Weak

0.91 Weak

0.85 V Weak

0.97 S Weak

0.92 Weak

2012 13 0.93

Weak

0.91 Weak

0.76 V Weak

0.86 V Weak

0.90 V Weak

0.73 V Weak

0.91 Weak

0.81 V Weak

0.94 Weak

0.91 Weak

HISTORY2013 14

1.03 S Tight

0.92 Weak

0.80 V Weak

0.94 Weak

0.90 Weak

0.74 V Weak

0.94 Weak

0.73 V Weak

1.04 S Tight

0.90 Weak

FORECAST 2014 15

1.15 V Tight

0.94 Weak

0.82 V Weak

1.01 Bal

0.91 Weak

0.59 V Weak

0.93 Weak

0.71 V Weak

1.21 V Tight

0.88 V Weak

2015 16 1.16

V Tight

0.92 Weak

0.81 V Weak

1.00 Bal

0.90 Weak

0.60 V Weak

0.93 Weak

0.71 V Weak

1.22 V Tight

0.88 V Weak

2016 17 1.16

V Tight

0.90 Weak

0.80 V Weak

0.98 Bal

0.89 V Weak

0.60 V Weak

0.92 Weak

0.70 V Weak

1.22 V Tight

0.88 V Weak

2017-18 1.17

V Tight

0.88 V Weak

0.78 V Weak

0.97 S Weak

0.87 V Weak

0.60 V Weak

0.92 Weak

0.69 V Weak

1.24 V Tight

0.89 V Weak


0.1%

0.1%

0.2%

0.0%

0.2%

0.0%

0.1%

0.1%

0.0%

9.0%


Similar market conditions are forecast for NSW for many of these occupations, with a few exceptions. Forestry and logging workers, livestock farm workers, freight and furniture handlers and deck and fishing handswill have tight labour markets despite weak demand due to a decrease in skills supply in recent years. The skills shortage observed at the national level for recycling and rubbish collectors is expected to be less pronounced in NSW.

Table B - 17: Demand-supply imbalance index for Labours, NSW

Occupation Railway Track Workers

Crop Farm Workers

Livestock Farm Workers

Deck and Fishing Hands

Other Labourers

Recycling and Rubbish Collectors

Forestry and Logging Workers

Freight and Furniture Handlers

Timber and Wood Process Workers

Freight Handlers and Shelf Fillers nfd

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

Index Indicator

2010 11 0.92

Weak

0.82 V Weak

0.95 S Weak

0.56 V Weak

0.94 Weak

0.00 V Weak

0.88 V Weak

1.01 Bal

1.01 Bal

0.93 Weak

2011-12 0.91

Weak

0.82 V Weak

0.93 Weak

1.04 S Tight

0.76 V Weak

0.96 S Weak

0.80 V Weak

1.01 Bal

0.93 Weak

2012 13 0.89

V Weak

0.80 V Weak

0.60 V Weak

1.02 S Tight

0.83 V Weak

0.96 S Weak

0.76 V Weak

1.01 Bal

0.91 Weak

HISTORY2013 14

1.05 Tight

0.75 V Weak

0.70 V Weak

1.09 Tight

0.95 S Weak

1.00 Bal

1.02 Bal

1.05 Tight

0.91 Weak

FORECAST 2014 15

1.20 V Tight

0.73 V Weak

0.77 V Weak

1.09 Tight

1.04 S Tight

1.04 S Tight

1.19 V Tight

0.98 Bal

0.88 V Weak

2015 16 1.22

V Tight

0.72 V Weak

0.78 V Weak

1.09 Tight

1.04 S Tight

1.05 Tight

1.20 V Tight

0.99 Bal

0.89 V Weak

2016 17 1.23

V Tight

0.73 V Weak

0.77 V Weak

1.09 Tight

1.03 S Tight

1.06 Tight

1.19 V Tight

0.99 Bal

0.90 V Weak

2017-18 1.24

V Tight

0.72 V Weak

0.76 V Weak

1.08 Tight

1.02 S Tight

1.06 Tight

1.18 V Tight

1.00 Bal

0.91 Weak


35.6%

18.0%

21.2%

27.5%

0.0%

32.4%

19.7%

29.2%

28.8%




46

- - - - - - - - -

- - - - - - - - -


January 2015

C. Detailed modelling methodology This section outlines the modelling approach used to estimate labour demand and labour supply in the key occupations identified by NSW Transport and details how these estimates are used to develop an innovative Supply Demand Imbalance Index (“index”) and the Industry Share Indicator (“share indicator”).

Modelling background Labour shortages can be a significant issue for industry. By estimating the demand and supply of labour in key occupations, an assessment can be made as to the extent of shortage (or oversupply) that might be expected in the future if market forces do not work to bring the labour market back into balance. To estimate these gaps at the occupational level, labour demand and supply is forecast. This section explains the modelling approach used to estimate labour demand and supply for TFL-related occupations.

The modelling system is divided broadly into two sides, one side dealing with labour demand and the other side dealing with labour supply as shown in Figure C --1. The subsections below separately describe how labour demand and supply are modelled. Figure C --1: Modelling System

1. Labour demand

projections by industry

2. Labour demand by occupation

(occupational demand

d l )

4. Demographic projections

(age and gender)

5. Labour force participation by

education (labour supply)

3. Labour demand by education

(educational demand

d l )

Balance of skills supply & demand

(skills gaps)

Demand Model

Supply Model

Labour Demand Demand for key occupations is driven by activity across industries.

KPMG’s macroeconomic and CGE models are used to provide forecasts of employment at the state level and the industry level. Employment by industry provides valuable information about demand for labour across industries. An industry by occupation matrix is used to convert employment by industry to employment by occupation. This captures the unique occupation mix used by each industry. The broad state and national occupational profile is shown at a high level in Figure C - 2 below. It shows that NSW’s occupation pattern is similar to the national pattern. Almost one-quarter of those employed at both the state and national level are professionals. The majority of the remaining employed people are spread across managers, technicians and trades workers, and clerical and administrative workers.



47


January 2015

Figure C - 2: Percentage of People Employed in TFL Industry, NSW and Australia, May 2014

NSW Australia Managers 13% 13% Professionals 24% 22% Technicians and Trades Workers 14% 14% Community and Personal Service Workers 10% 10% Clerical and Administrative Workers 15% 14% Sales Workers 9% 9% Machinery Operators And Drivers 6% 6% Labourers 10% 10% Total 100% 100%

Source: Australian Bureau of Statistics, Labour Force Survey, catalogue no. 6202.0

Demand for particular occupations is driven by activity across the different industries. The KPMG Macro model, teamed up with a regional CGE model, has been used for these projections. The resulting projections are used as a key input to estimate industry demand for occupations.

These activity-driven employment forecasts are then used to calculate shares for each occupation. The shares are applied to total industry employment to estimate the final number of people employed in each industry, across the 37 key occupation groups. This approach is applied separately for Australia and NSW.

An important feature of this modelling technique is the inclusion of vacancies in the measure of labour demand. Vacancies indicate the portion of labour demand that is unmet at any point in time. The inclusion of vacancies data in the history allow us to observe the total labour demand including those jobs that were unfilled, providing a more appropriate base from which to project future demand.

Labour Supply The supply of labour for TFL-related occupations is driven by a range of demographic and education factors. Separate labour supply forecasts are generated for NSW and Australia as a whole.

On the demographic side, population growth is a key factor in determining the labour supply for NSW and Australia’s TFL-related occupation groups. Population growth depends on net interstate and overseas migration into states and territories, as well as natural population changes (i.e. births and deaths). These forecasts of population levels of working-age persons for NSW and Australia are taken from ABS demographic projections and are shown in the modelling process in item 3 of Figure C --1.

Participation rates and people’s educational attainment also impact on the future supply of labour. The relationship between educational attainment and labour force participation is analysed and used in the modelling. The analysis finds that people with higher levels of education are more likely to participate in the labour force. The analysis of educational attainment is conducted for levels of education (six categories) and fields of study (11 fields of study). The demographic projections (population by education) are multiplied by forecasts of participation (by education level and field) to forecast participation by 6 levels of educational attainment for each field of study (item 4 in Figure C --1). The next step is to estimate the occupational composition of those employed based on their education level.



48


January 2015

Figure C - 3: Educational Attainment (sum all fields) by Occupation, NSW and Australia, May 2011

Post- graduate degree

Graduate diploma and graduate certificate

Bachelor degree

Advanced diploma and diploma

Certificate I-IV

Year 12 or low er

Queensland Managers Professionals

Technicians and Trades Workers

Community and Personal Service Workers

Clerical and Administrative Workers

Sales Workers

Machinery Operators and Drivers

Labourers

Australia

16% 66%

1%

2%

10%

2%

1%

2%

13% 65%

4%

4%

7%

1%

1%

5%

13% 59%

4%

6%

10%

5%

2%

2%

15% 21%

8%

18%

20%

7%

3%

7%

10% 5%

36%

11%

13%

7%

8%

9%

11% 5%

12%

10%

18%

16%

11%

18%

Managers

Professionals Technicians and Trades Workers Community and Personal Service Workers Clerical and Administrative Workers Sales Workers Machinery Operators and Drivers Labourers

18%

63% 2% 3%

10% 2% 1% 2%

14%

63% 3% 5%

10% 2% 1% 3%

14%

57% 4% 5%

11% 5% 1% 2%

15%

24% 11% 16% 18% 7% 3% 5%

11%

6% 34% 12% 14% 7% 7% 9%

11%

6% 12% 10% 17% 15% 11% 18%

Source: Australian Bureau of Statistics, Census, 2011

As summarised in Table 3-2, the pattern of education by employment provides information about the occupational profile we might expect for the participating labour force. The number of people participating in each education category is estimated across (4-digit) occupations using information from the ABS’ Census. Occupational shares of labour force participants by education are estimated and projected forward. Table 3-2 above clearly shows that those with higher educational attainment (postgraduate degrees, graduate diplomas and bachelor degrees) are mostly employed in high skilled occupations such as managers and professionals. These shares are then applied to the number of people participating in the by education, to create a matrix where the number of labour force participants in each level and field of education is spread across the 4-digit occupations.

The Labour force is then aggregated across the education levels and fields, to get labour force by 4-digit occupation. The total labour force by occupation is estimated separately for Australia and NSW.

Supply Demand Imbalance Index The labour demand and supply can be used together to estimate the degree of shortage or oversupply that is expected for the key occupation groups. Specifically, labour demand is divided by supply to calculate an index which estimates the shortage or oversupply of labour compared to demand for each occupation group. Figure C - 4 below shows the classifications for the index reading ranges presented throughout this report.

Figure C - 4: Supply imbalance index levels Index range Skills pressure level Indicator

< 0.9

0.9 - 0.95

0.95 - 0.98

0.98 - 1.02

1.02 - 1.05

1.05 - 1.1

1.1 >

Very Weak (strong skills excess)

Weak (moderate skills excess)

Somew hat Weak (some skills excess)

Balanced (balanced skills demand/supply)

Somew hat tight (some skills shortage)

Tight (moderate skills shortage)

Very tight (strong skills shortage)

V Weak

Weak

S w eak

Bal

S tight

Tight

V tight

When the labour market is in balance (relative to the base year which is the last historical data point), the index is equal to 1.00. This means that labour demand is generally met by supply.



49


January 2015

During times of labour market tightness, employers experience difficulty finding appropriate employees. This tightness is represented by index readings that are greater than 1.00. This indicates that there are more job positions available than appropriately skilled people to fill them. This means that potential employees can be more selective about the positions to which they apply, and are in a better position to negotiate employment conditions such as wages, because of the small supply of job candidates. From an employers’ perspective, there is more competition to present job positions as attractively as possible.

Conversely, at times when employees are easier to find, the index is less than 1.00. In this situation, there are a greater number of job seekers than vacant job positions. Therefore, candidates must be more competitive in their approach to seeking employment. From an employer’s perspective, it is less important to provide attractive working conditions to potential employees, because the large supply of candidates means that employers can be selective.



50


January 2015

D. Consultation questions TRANSPORT FOR NEW SOUTH WALES – TRANSPORT FREIGHT AND LOGISTICS SECTOR DEMOGRAPHICS

KEY DOMAINS 1. Industry Context

2. Skills Shortages/ Challenges

3. Proposed Solutions

ENGAGEMENT Transport for New South Wales has engaged KPMG to provide an analysis of the transport, freight and logistics industry sector demographics.

The objectives of this project are to provide TfNSW with:

• a unified framework for assessing skills gaps and shortages in key occupations for the TFL industry;

• a better understanding of why particular skills shortages exist; and

• Initial guidance as to how government and industry can work together to alleviate the gaps and shortages.

1. Industry Context

PURPOSE: To understand the predominant issues facing the peak body members and the relativity of skills shortages in this mix.

Can you please provide a brief overview of the background of your industry association?

Can you please provide a brief overview of the top issues facing your operators in delivering their business?

What is the relative significance of skills shortages in this list of key issues?



51


January 2015

2. Skills Shortages/ Challenges

PURPOSE: To ground-truth the findings of the quantitative analysis. To understand the root-cause of the shortages/ skills challenges identified.

What are the skill/ occupation shortages (by occupation) that your members have identified as influencing their capacity to deliver their business?

What are the skill/ workforce shortages (by occupation) that your members have identified as influencing the efficiency of their up-stream and down-stream supply chains?

What is the impact of the identified skills shortages?

Have these shortages been a persistent challenge for your industry, or are they a recent occurrence?

To what extent does regulation influence the identified shortages?

To what extent do industrial relations influence the identified shortages?

To what extent do education bottle-necks influence the identified shortages?

To what extent is a lack of market information influencing workforce supply in these occupations?

What other factors are currently influencing these occupational shortages?



52


January 2015

3. Proposed Solutions

PURPOSE: To seek input on potential solutions to address skill shortages/ to test previously identified solutions from other stakeholders.

What steps are currently being taken by your industry to address the identified skills shortages?

To what extent do your members rely on the provision of ongoing training for their employees to address identified skills gaps, as opposed to seeking these skills in the market?

To what extent do you believe that increasing participation in the workforce (from currently disengaged workforce participants) could assist in addressing the identified occupational shortages? Are you aware of any programs that are currently (/ soon to commence) being implemented to facilitate this increase? Are there programs/ initiatives that you believe should be implemented to facilitate this increase?

To what extent do you believe that improved workforce attraction and retention could assist in addressing the identified occupational shortages? Are you aware of any programs that are currently (/ soon to commence) being implemented to improve attraction and retention? Are there programs/ initiatives that you believe should be implemented to improve attraction and retention??

To what extent do you believe that increasing targeted migration(international) could assist in addressing the identified occupational shortages? Are you aware of any programs that are currently (/ soon to commence) being implemented to facilitate this targeted increase? Are there programs/ initiatives that you believe should be implemented to facilitate this targeted increase?

To what extent do you believe that improved education and training could assist in addressing the identified occupational shortages? What education/ training programs are you aware of that are currently (/ soon to commence) being implemented to facilitate this increase? Are there programs/ initiatives that you believe should be implemented to improve education outcomes to address these shortages?



53


January 2015

To what extent do you believe that improved planning and coordination by TfNSW, peak bodies and other government entities could assist in addressing the identified occupational shortages? What policy initiatives are you aware of that are currently (/ soon to commence) being implemented to facilitate this increase? Are there policy initiatives that you believe should be implemented to improve education outcomes to address these shortages?

Are there any inter-state/ international case studies that you believe NSW could learn from to address the identified occupation shortages in NSW?

To what extent do you believe that technology solutions can address skills shortages/ constraints in the immediate term? In the longer term?



54

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