Chapter 1. Recent labour market and skills trends at the regional level in Australia

This chapter provides an overview of recent labour market and skills trends in Australia. The Australian economy has experienced steady growth in overall productivity levels over the past ten years. The unemployment rate is lower than the OECD average. With a low unemployment rate, about 34% of Australian employers find it challenging to fill in vacancies, particularly for skilled trade positions. A similar pattern holds true for skill shortages across all states and territories. According to the Internet Vacancy Index, over the past five years, job advertisements have increased by 31% nationally (in trend terms).

    

Recent economic trends

The Australian economy experienced considerable growth in the last decade. As shown in Figure 1.1, gross domestic product (GDP) per capita levels have been steadily growing in Australia since the early 1990s. This growth rate in Australia is higher than the OECD average. In part, this solid growth is attributable to high commodity prices, prompt fiscal policy responses, and a resilient financial system (OECD, 2017[1]).

Figure 1.1. GDP per capita, Australia and the OECD average, 1990-2017
picture

Note: GDP per capita data are measured in US dollars at current prices and PPPs.

Source: OECD (2018), Gross domestic product (GDP) (indicator). doi: 10.1787/dc2f7aec-en.

 StatLink https://doi.org/10.1787/888933931656

Even though GDP per capita has been growing, Australia along with other developed countries faces the risk of a low growth trap. As reported in the most recent OECD economic survey, productivity growth in Australia has decelerated since the peak in the late 1990s similar to other OECD countries, but remains in line with the long term average (OECD, 2017[1]) (Figure 1.2).

Figure 1.2. Labour productivity growth¹ (per hour worked) has slowed in Australia
picture

Note: 1. Data smoothed by the Hodrick-Prescott filter

Source: The Conference Board (2016), The Conference Board Total Economy Database, May 2016. OECD, 2017.

 StatLink https://doi.org/10.1787/888933931675

Labour market trends

Unemployment rates

During the last two decades, Australia has had a relatively low unemployment rate compared to the OECD average even during the recent Global Financial Crisis (GFC). The seasonally adjusted unemployment rate among the working age population in Australia has been declining since 1999 except for the peak during the crisis. Also, a broad upward trend was recorded between 2011 and 2014, linked to the end of the mining boom, before trending downwards since 2015. In the last few years, the average unemployment rate has decreased to about 5.6% in Australia (see Figure 1.3), with women having a slightly higher unemployment rate than men (Figure 1.4).

Figure 1.3. Unemployment rate, Australia and the OECD, 1999-2017
Harmonised unemployment rate (%)
picture

Note: Harmonised unemployment rates define the unemployed as people of working age who are without work, are available for work, and have taken specific steps to find work. The uniform application of this definition results in estimates of unemployment rates that are more internationally comparable than estimates based on national definitions of unemployment. This indicator is measured in numbers of unemployed people as a percentage of the labour force and it is seasonally adjusted. The labour force is defined as the total number of unemployed people plus those in civilian employment.

Source: OECD (2018), Harmonised unemployment rate (HUR) (indicator). doi: 10.1787/52570002-en.

 StatLink https://doi.org/10.1787/888933931694

Figure 1.4. Unemployment rates by gender in Australia (2000-17)
picture

Source: OECD (2018), Unemployment rate (indicator). doi: 10.1787/997c8750-en.

 StatLink https://doi.org/10.1787/888933931713

Labour market conditions for youth (15-24 year olds) in Australia deteriorated at the onset of the GFC and continued to weaken in the following years until 2017. The youth unemployment rate increased substantially up from 8.7% in September 2008 to a post-GFC high of 14.4% in October 2014. Youth labour market conditions have improved since 2017, reflecting the particularly strong pace of employment growth more generally over the period. However, youth unemployment still remains above the levels recorded at the onset of the GFC in September 2008 and, despite having declined to 11.6% in May 2018, it remains more than double the rate for all persons (aged 15 years and over). While it is encouraging that more people are participating in full-time education (52.9% in May 2018, up from 47.2% in September 2008), there has been a concurrent weakening in employment outcomes for higher education graduates in recent years.

The share of NEET (not in employment, education, or training) among Australian youth has been consistently below the OECD average. In Australia about 600 000 of 16-29 year olds are NEET in 2015 and females are more likely to be NEET than young males (OECD, 2017[2]). And yet, the average share of NEET for 20-to 24-year olds in Australia has been considerably lower than the average of other OECD countries since 2000 and has been declining until 2008. The average share of NEET among 15- to 19-year-olds followed a similar pattern up to 2008, when there was a 2 percentage point increase in the share of NEET, and since then the average share of NEET in Australia in this age range is very close to or higher than the OECD average. In 2017, about 12% of 20- to 24-year-olds and about 5.4% of 15- to 19-year-olds were NEET in Australia. Apprenticeship or traineeship opportunities can be particularly important for NEET and disengaged youth to re-connect to the labour market (OECD, 2017[2]).

Figure 1.5. Australian youth not in employment, education, or training (NEET): 2000-17
picture

Source: OECD (2018), Youth not in employment, education or training (NEET) (indicator). doi: 10.1787/72d1033a-en (accessed on 1 October 2018).

 StatLink https://doi.org/10.1787/888933931732

Regional differences

Over the last few decades, some states were consistently strong performers while others continued to face challenges in terms of high unemployment rates. The average unemployment rate varies across states with a few of them consistently having relatively higher or lower unemployment rates than others (Figure 1.6).

Figure 1.6. Unemployment rate (%, 15 and older) by state and territory, 2000-17
picture

Note: 2018 includes data from January to February only

Source: ABS Labour Force Survey.

 StatLink https://doi.org/10.1787/888933931751

As shown in Figure 1.6, Tasmania has been most frequently ranked as the state with the highest unemployment rate since 2000 followed by South Australia in the recent years after the mining boom has waned. In contrast, the Australian Capital Territory (ACT) consistently had the lowest unemployment rate in the early 2000s and after the crisis, the Northern Territory began to perform strongly. Given this consistent trend of certain states performing strongly or weakly due to either macro-level changes or local labour market conditions, it would be important to better understand the sources of regional variation.

Tasmania (6.2%) had the highest unemployment rate among Australian states and territories in 2017, followed by Victoria (6.1%), and Queensland (6%) (Figure 1.7). Given that Victoria and Queensland are one of the top ranked states with respect to projected employment growth in the next five years, policy makers should pay close attention to skill shortages and skill mismatches among these states that have projected growth but also high unemployment rates.

Figure 1.7. Unemployment rate (%, 15 and older) by state and territory, 2017
picture

Source: ABS Labour Force Survey.

 StatLink https://doi.org/10.1787/888933931770

While the variation of state and territory level unemployment rates or the gaps between states and territories have not changed significantly over the course of the last two decades, significant changes have shaped labour market conditions across states and territories over the same period. For instance, states such as Western Australia and Queensland, and the Northern Territory, which previously performed well, have been significantly affected by the end of the mining boom. Western Australia’s unemployment rate reached a pre-GFC low of 2.7% in August 2008 but has been on a broad upward trend since mid-2012, due to the end of the mining boom, reaching a post-GFC peak of 6.8% in March 2018. While there has been an improvement in Western Australia’s labour market more recently, the unemployment rate remains elevated, at 6.4% in May 2018.

South Australia and parts of Victoria have been affected by the closure of the car manufacturing industry in Australia in recent years. South Australia’s unemployment rate reached a pre-GFC trough of 4.4% in August 2008 but rose to a post-GFC high of 8.2% in June 2015. There has been some improvement in labour market conditions over the last year, with the state’s unemployment rate declining to 5.6% in May 2018.

The New South Wales and Victoria labour markets have strengthened over the last year due to construction and strong population growth.

Employment trends and projections by industry

Over the last two decades, employment in service industries in Australia has shown considerable growth (Figure 1.8) compared to employment trends in other industries.

Figure 1.8. Employment in services sector, Australia 1998-2017
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Note: This indicator is seasonally adjusted and it is measured in thousands of people.

Source: OECD (2018), Employment by activity (indicator). doi: 10.1787/a258bb52-en (Accessed on 1 October 2018).

 StatLink https://doi.org/10.1787/888933931789

The recent report Australian Jobs 2018, published by the Australian Government Department of Jobs and Small Business, highlights various employment characteristics in Australia by industry and region. Five industries in Australia offer over 1 million jobs each and together comprise almost half of Australian employees. According to the most recent Australian Jobs publication, the top five largest industries (in terms of number of employed persons) are Health Care and Social Assistance (1 663 900), Retail Trade (1 286 900), Construction (1 167 200), Professional, Scientific and Technical Services (1 033 000), and Education and Training (1 024 300) (Australian Government Department of Jobs and Small Business, 2018[3]).

Over the five years to May 2018, 17 of the 19 broad industries recorded growth in employment, with employment growth in these industries far offsetting declines in employment in the remaining two industries (Figure 1.9). Employment grew in a range of service industries over the period, with the largest recorded in Health Care and Social Assistance (up by 309 500), Construction (178 800), Professional, Scientific and Technical Services (139 500), Education and Training (113 200) and Accommodation and Food Services (105 400). By contrast, a decrease in employment was recorded in Wholesale Trade (down by 63 900) and Mining (30 000). The lower level of employment in the Mining industry reflects the passing of the Mining investment boom, with the transition eased by a favourable dollar and commodity prices.

Figure 1.9. Changes in employment by industry, Australia, five years to May 2018 (‘000)
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Source: ABS Labour Force Survey, trend.

 StatLink https://doi.org/10.1787/888933931808

Looking forward, the shift in the Australian labour market towards service industries is projected by the Australian Government Department of Jobs and Small Business to continue over the five years to May 2022 (Figure 1.10). Health Care and Social Assistance is projected to make the largest contribution to employment growth (increasing by 250 500 or 16.1%), followed by Professional, Scientific and Technical Services (126 400 or 12.5%), Construction (120 700 or 10.9%) and Education and Training (116 200 or 12.0%). Together, these four industries are projected to provide 61.5 per cent of total employment growth over the five years to May 2022. By contrast, declines in employment are projected for Manufacturing, Electricity, Gas, Water and Waste Services and Agriculture, Forestry and Fishing. For all states and the Northern Territory, the largest growth in employment is projected in the Health Care and Social Assistance industry. In the Australian Capital Territory, the Health Care and Social Assistance industry is projected to record the second largest increase in employment. As such, many skills associated with the industry are likely to face substantial increases in demand.

In line with current employment levels in the Health Care and Social Assistance industry, the largest increases in employment in the industry are projected in the more populous states of News South Wales, Victoria and Queensland (Table 1.1). By contrast, a decline in employment in Manufacturing is projected across most states and territories, with the largest falls expected in Victoria and New South Wales.

Figure 1.10. Projected employment growth by industry, Australia, five years to May 2022 (‘000)
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Source: Australian Government Department of Jobs and Small Business, employment projections, five years to May 2022.

 StatLink https://doi.org/10.1787/888933931827

Table 1.1. Projected employment growth by industry and by state and territory, five years to May 2022 (‘000)

Industry

NSW

VIC

QLD

SA

WA

TAS

NT

ACT

AUSTRALIA

Agriculture, Forestry and Fishing

-3.4

1.4

-1.4

0.4

0.7

0.0

0.0

0.0

-2.4

Mining

0.0

0.2

0.1

0.1

4.9

0.0

0.3

0.0

5.6

Manufacturing

-12.6

-15.6

-3.3

-3.9

-2.8

-0.2

0.0

0.0

-38.3

Electricity, Gas, Water and Waste Services

-2.8

-2.4

-2.3

0.2

-1.6

-0.2

0.2

-0.1

-9.0

Construction

45.9

33.4

20.2

5.6

12.8

1.4

0.5

1.0

120.7

Wholesale Trade

2.5

-0.2

0.8

-1.0

0.0

-0.2

0.1

0.0

1.9

Retail Trade

15.9

22.0

2.6

0.7

2.4

1.6

0.3

0.1

45.6

Accommodation and Food Services

21.4

29.4

25.6

1.4

15.6

1.5

1.4

1.4

97.6

Transport, Postal and Warehousing

8.9

12.7

12.0

1.4

4.4

0.5

0.2

0.2

40.3

Information Media and Telecommunications

5.4

-1.5

1.9

0.0

1.1

0.0

0.0

0.0

6.9

Financial and Insurance Services

11.7

6.7

3.5

0.5

1.9

0.2

0.0

0.0

24.6

Rental, Hiring and Real Estate Services

8.7

5.2

1.9

0.7

0.8

0.1

0.2

0.3

18.0

Professional, Scientific and Technical Services

55.6

37.8

18.3

2.8

7.1

0.9

0.4

3.4

126.4

Administrative and Support Services

11.0

12.8

2.9

3.0

4.1

0.6

0.3

0.2

34.9

Public Administration and Safety

22.3

18.4

18.3

4.6

8.1

0.4

0.1

2.8

75.0

Education and Training

39.8

34.9

21.8

5.8

9.3

1.4

1.2

2.0

116.2

Health Care and Social Assistance

82.8

71.9

48.7

14.9

21.8

5.3

2.0

3.2

250.5

Arts and Recreation Services

7.8

3.8

3.7

1.6

3.6

0.1

0.3

0.4

21.4

Other Services

-1.2

3.6

6.1

0.3

3.1

0.2

0.0

0.1

12.3

Note: The employment projections are derived from best practice time series models that summarise the information that is in a time series and convert it into a forecast. The projections are made by combining forecasts from autoregressive integrated moving average (ARIMA) and exponential smoothing with damped trend (ESWDT) models, with some adjustments made to take account of research undertaken by the Department of Jobs and Small Business and likely future regional developments. The projections are also made to be broadly consistent with the national ANZSIC Industry projections published in September 2017.

New national level industry projections have been released for the five years to May 2023, but not used here to retain comparability with state/territory projections.

Source: Australian Government Department of Jobs and Small Business, 2018 Employment Projections

Different factors contribute towards these employment trends and projections. A steady rise of the elderly population in Australia is linked to the rise of employment growth in the health care service sector. The share of people over the age of 65 has nearly doubled in Australia in the last four decades. The percentage of elderly population (relative to total working age population 15-64) in Australia increased from 8% in 1970 to 15% in 2014 and the growth is expected to continue. Such demographic changes in Australia in conjunction with increases in migrant flow will influence what kinds of skills are needed or in shortage as well as other labour market trends.

Brief overview of state labour market conditions

New South Wales (NSW)

According to the most recent available data, NSW is the largest employing state in Australia where nearly one in three Australian employees reside (Australian Government Department of Jobs and Small Business, 2018[5]). Most of the workforce is concentrated around Sydney. In line with employment at the national level, the largest employing industries in NSW in May 2018 were Health Care and Social Assistance, Retail Trade, Professional Scientific and Technical Services and Construction. It is projected that the largest growing states in terms of employment over the five years to May 2022 will be NSW, followed by Victoria and Queensland (see Figure 1.11).

Figure 1.11. Projected employment growth by state and territory (‘000)
Total (industry), by state/territory
picture

Source: Australian Government Department of Jobs and Small Business, employment projections, five years to May 2022.

 StatLink https://doi.org/10.1787/888933931846

Victoria (VIC)

Victoria, the second largest employing state in Australia, added the most new jobs over the past five years, and this employment growth is likely to continue in the next few years (see Figure 1.11 above). As in NSW, Health Care and Social Assistance was the largest employing industry in Victoria, followed by Retail Trade, Professional, Scientific and Technical Services and Construction. Most of the workforce is concentrated in the greater Melbourne area, which has the most educated workforce within the state (Australian Government Department of Jobs and Small Business, 2018[5]).

Queensland (QLD)

Queensland had about 2.5 million employees in November 2017 and it is the third largest employing state in Australia. Unlike New South Wales and Victoria, employment is more spread out across the region in Queensland. About one in two jobs are in Brisbane and 13% are located in the Gold Coast area. Health Care and Social Assistance is the largest employing industry in the state, followed by Retail Trade and Construction. Compared to the other states and the national average, workers in Queensland are less likely to have a bachelors' degree but more likely to have a Certificate III or higher VET qualification (Australian Government Department of Jobs and Small Business, 2018[5]).

South Australia (SA)

South Australia has a relatively small workforce compared to other Australian states. Nearly 80% of the jobs in South Australia are concentrated in the Greater Adelaide area. Workers in South Australia are slightly more likely to be working part-time than the national average, and less likely to have post-school qualifications (Australian Government Department of Jobs and Small Business, 2018[5]).

Western Australia (WA)

About 1.3 million employees work in Western Australia and about 80% of jobs are concentrated in the state capital, Perth. In May 2018, there were 100 000 people employed in the Mining industry in Western Australia, accounting for 7.4% of total employment in the state (compared with 1.9% of employment nationally). Notably, 43.4% of national Mining employment was in Western Australia. Labour market conditions in Western Australia strengthened in the year to May 2018, with rising employment and a falling unemployment rate (Australian Government Department of Jobs and Small Business, 2018[5]).

Tasmania (TAS)

Tasmania has about 245 000 workers and is more regionally diverse (jobs are most spread across the regions) than the other states. Hobart holds 45% of the jobs in Tasmania, followed by the Launceston and North East region (27%) and the West and Northwest region (21%). Tasmanian workers are more likely to have a Certificate III or higher VET qualification than a bachelor's degree (or higher). The share of older workers (55 or older) in Tasmania is 23%, which is higher than the national average of 19%. Over the year to January 2018, employment rose in Tasmania, although this was mostly due to a rise in part-time employment. Tasmanian youth workforce had a higher unemployment rate of 14% in January 2018 compared to the national average of 12% (Australian Government Department of Jobs and Small Business, 2018[5]).

Northern Territory (NT)

The Northern Territory has about 135 000 workers but recently employment growth has been subdued and employment fell over the year to May 2018. The largest employing industry in the Northern Territory in May 2018 was Health Care and Social Assistance, followed by Public Administration and Safety (Australian Government Department of Jobs and Small Business, 2018[5]).

Australian Capital Territory (ACT)

In May 2018, the largest employing industry in the Australian Capital Territory was Public Administration and Safety, accounting for 28.5% of total employment in the territory (compared with 6% of employment nationally). In addition, the Australian Capital Territory has the most educated workforce in Australia with nearly three quarters of employees holding a post-school qualification (Australian Government Department of Jobs and Small Business, 2018[5]).

Skill shortages and recruitment difficulties

International evidence

According to the 2018 Talent Shortage Survey conducted by ManpowerGroup across 43 countries and territories, surveying around 40 000 hiring managers, almost half the employers surveyed across the globe report talent shortages (ManpowerGroup, 2018[6]). As shown in Figure 1.12, there was a sharp rise before the Global Financial Crisis in the share of managers reporting talent shortages. This has been steadily decreasing for Australia since 2008, while the global average has gradually increased.

For the first time since 2006, compared to the average in this survey Australia today faces a lower share of managers reporting such difficulties as compared to the global average. About 34% of Australian employers reported that they have difficulties filling positions. One in four employers says filling skilled trade roles is harder this year than last. Among the reasons for talent shortages, Australian employers cite the lack of applicants (25%), the lack of required hard skills (21%) and the lack of experience (19%) as the main reasons for difficulty in filling vacancies in 2018. In order to tackle this challenge, over three quarters of employers are offering training and development to existing staff and about 60% of managers try to recruit from outside of the traditional talent pool (older/younger employees). Another 51% of managers in Australia reported exploring alternative sourcing strategies such as hiring temporary workers.

Similarly, ManpowerGroup surveyed a representative sample of 1 503 Australian employers for the ManpowerGroup Employment Outlook Survey (the first quarter of 2018). Looking at regional differences, employers in New South Wales reported the highest hiring intentions with a 21% increase in staffing levels in the first quarter of 2018 followed by Tasmania and Queensland. Except for Victoria, the overall employment outlook of employers strengthened compared to 2015 across all regions in Australia (ManpowerGroup, 2018[7]).

Figure 1.12. Percentage of employers facing difficulty filling jobs, Manpower Talent Survey 2018
picture

Source: ManpowerGroup Talent Shortage Survey 2018.

 StatLink https://doi.org/10.1787/888933931865

As shown in Figure 1.13, in 2018, Japan has the highest percentage of managers reporting skills shortages across 43 countries, followed by Romania (81%), Taiwan (78%), Hong Kong (76%) and Bulgaria (68%). Australia has 34% of hiring managers reporting skills shortages, which is slightly below the average across countries. Across all participating countries, skilled trades, including electricians, welders, mechanics and more, as well as sales representatives, engineers, drivers and technicians, have ranked among the top five hardest roles to fill for the past ten years. A similar pattern holds true for Australia. For the past ten consecutive years, hiring managers in Australia report skilled trade positions (electricians, carpenters, welders, bricklayers, plasters, plumbers and more) as the most difficult jobs to fill.

Figure 1.13. Cross-country comparison: Percentage of employers having difficulty filling jobs
picture

Source: ManpowerGroup Talent Shortage Survey 2018.

 StatLink https://doi.org/10.1787/888933931884

Evidence from OECD Skills for Jobs database

Looking at other sources, the OECD Skills for Jobs Database provides useful information about skill shortages and skill surpluses as well as information regarding the qualification and field-of-study mismatch. As shown in Figure 1.14, many of the skills, knowledge areas and abilities are in shortage. In Australia, knowledge in Education and Training has the highest need followed by Health services and Mathematics and Sciences. Some of the skills that tend to have shortages include verbal and reasoning abilities, basic process skills, systems skills and complex problem solving skills. However, despite the fact that so many skills, knowledge areas and abilities are in shortage, in reality the intensity of the shortages in Australia is low relative to other countries in the OECD Skills for Jobs Database.

Figure 1.14. Skills shortages and surpluses, Australia, 2016
picture

Note: Positive values indicate shortages while negative values indicate surpluses. Basic Skills (Process) refer to those skills that contribute to the more rapid acquisition of knowledge and skill across a variety of domains (e.g. critical thinking, active learning, etc.). Basic Skills (Content) refer to foundational structures needed to work with and acquire more specific skills in a variety of domains (e.g. reading comprehension, listening, writing, speaking, basic math and science).

Source: OECD Skills for Jobs database 2017; OECD, Getting Skills Right: Australia, 2018

 StatLink https://doi.org/10.1787/888933931903

In addition to skill shortages and surpluses, it is important to consider skills mismatch and its trends to gauge and respond to the needs of employers. Skills mismatch can indicate different types of mismatch in the labour market. Mismatch of qualifications can occur when a worker has a higher or lower than necessary qualification (education attainment) for the job. Field-of-study mismatch occurs when a worker works in a different field than the one specialised in education. Skills mismatch can occur when a worker’s skills are greater or less than the level required to perform the job (OECD, 2018[8]).

The most recent Skills for Jobs database suggests that on average about 35% of workers across OECD countries were mismatched by qualification in 2017 (OECD, 2018[8]). According to OECD PIAAC data, about 40% of workers experience field-of-study mismatch and about 11% are overqualified within their field and 13% are overqualified outside of their field (Montt, 2017[9]). About 39% of Australian workers experience qualification mismatch, which is just above the OECD average (OECD, 2018[8])

Such mismatches can incur costs to individuals, firms, and the economy as a whole (OECD, 2018[8]). Field-of-study mismatch may lead to a lower wage (or wage penalty) if the workers are overqualified (Montt, 2017[9]). Workers with over-qualifications may suffer from lower job satisfaction and the extent is greater for those who are both over-skilled and overeducated (Sloane, 2014[10]).

Recent evidence indicates that variations of skills mismatch across countries are related to differences in public policies. While it is difficult to draw a causal conclusion, after controlling for individual's socio-demographic and job characteristics, having well-designed product and labour markets are correlated with lower skills mismatch (Mcgowan and Andrews, 2015[11]). Some of the factors that contribute to improving skills matching of individuals include greater participation in lifelong learning, better management quality and flexible wage negotiations (Mcgowan and Andrews, 2015[11]).

Evidence from the Programme for the International Assessment of Adult Competencies (PIAAC) data

The results from the Survey of Adult Skills (PIAAC) suggest that adults in Australia possess above-average proficiency in the literacy and problem solving in technology-rich environments components compared with adults in the other countries participating in the survey, and around average proficiency in numeracy skills (OECD, 2012[12]). However, the average performance masks the variation and distribution of skills among Australian adults. According to the most recent PIAAC data from Australia (2011-12), one in five Australian adults has low literacy and/or numeracy skills (low skills defined by not reaching the Level 2 proficiency out of a scale of 1 to 5). Furthermore, there is a considerably large gap between those who are most and least proficient in numeracy and literacy (OECD, 2017[2]).

There is also a gender gap in terms of field of study and performance in numeracy skills. Females are less likely to go in to fields of study that need mathematical and numeracy skills such as science, technology, engineering and mathematics (STEM) and perform poorly in numeracy compared to males (OECD, 2017[2]). Nonetheless, Australian adults perform strongly in problem solving skills in technology-driven environments as well as strong computer and ICT skills across all age groups (OECD, 2017[2]). This can be particularly important in the coming years as new technology and developments will continue to evolve and alter the nature of work and work environment.

Regional differences

Skills demand and labour market characteristics vary across different states and territories. The Department of Jobs and Small Business (DJSB) assesses and publishes skill shortages by state and occupation groups. Based on the definition from the DJSB, skill shortages occur when "employers are unable to or have considerable difficulty filling vacancies, or significant specialised skill needs within that occupation, at current levels of remuneration and conditions of employment and in reasonably accessible locations" (Australian Government Department of Jobs and Small Business, 2018[13]).

Several occupation groups commonly face skill shortages across Australian states and territories, including occupations in the field of automotive and engineering trade workers, design, engineering, science and transport professionals, and health professionals. Occupation group that face skill shortages the most (in terms of the absolute number of occupation listed) are technicians and trade workers (Table 1.2), particularly in New South Wales, Victoria, and South Australia. This is in line with the ManpowerGroup Talent Shortage Survey, where managers in Australia ranked skilled trade positions as the most difficult positions to fill in vacancies for the past ten years.

Table 1.2. Occupation groups with skill shortages, 2017

 

Professionals

Technicians and trade workers

Community and personal service workers

New South Wales

Civil Engineering Professionals, Mechanical Engineer, Medical Diagnostic Radiographer, Sonographer, Physiotherapist

Motor mechanics, Structural steel and welding trades workers, fitter, metal machinist, panelbeater, vehicle painter, carpenters and joiners, painting trades worker, fibrous plasterer, plumbers, cabinetmaker, Electrician (general), Air conditioning and refrigeration mechanic, baker, chef

n/a

Victoria

Civil Engineering Professionals, Mechanical Engineer, Medical Diagnostic Radiographer, Sonographer, Physiotherapist

Motor mechanics, sheetmetal trades worker, structural steel and welding trades workers, metal mechanist, panelbeater, vehicle painter, bricklayer, carpenters and joiners, fibrous plasterer, plumbers, cabinetmaker, air conditioning and refrigeration mechanic, baker

n/a

Queensland

Civil Engineering Professionals, Sonographer, Physiotherapist

Motor mechanics, Sheetmetal trades worker, fitter, panelbeater, painting trades worker, cabinetmaker, air conditioning and refrigeration mechanic, baker

n/a

South Australia

Surveyor, Civil Engineering Professionals, Occupational Therapist, Physiotherapist

Architectural draftsperson, motor mechanics, diesel mechanic, metal fabricator, metal machinist, panelbeater, vehicle painter, bricklayer, painting trades worker, fibrous plasterer, cabinetmaker, air conditioning and refrigeration mechanics, baker

n/a

Western Australia

Medical Diagnostic Radiographer, Sonographer, Physiotherapist

Panelbeater, Vehicle Painter

n/a

Tasmania

n/a

Diesel mechanic, metal machinist, panelbeater, vehicle painter, bricklayer, plumbers

n/a

Northern Territory

Accountants, Medical Diagnostic Radiographer, Hospital/Retail Pharmacsit, Occupational Therapist, Physiotherapist, Midwife

Sheetmetal trades worker, structural steel and welding trades workers, vehicle painter, bricklayer, carpenters and joiners, electrician, baker

Enrolled nurse

Australian Capital Territory

Civil Engineering Professionals, Sonographer, Hospital/Retail Pharmacist

Motor mechanics, structural steel and welding trades workers, panelbeater, painting trades worker, fibrous plasterer, plumbers, cabinetmaker, air conditioning and refrigeration mechanic

Childcare worker (diploma)

Source: Australian Government Department of Jobs and Small Business, National, state and territory skill shortage information

However, the absence of skill shortages of particular occupation groups is not equivalent to a perfect skills match. Another interesting indicator on skills demand and supply is recruitment difficulty by different occupation groups. Recruitment difficulties occur when some employers have difficulty filling vacancies for an occupation. Unlike skill shortages, there may be an adequate supply of skilled workers but some employers are unable to attract and recruit sufficient suitable workers for reasons which include: the specific experience or specialist skill requirements of the vacancy; differences in hours of work required by the employer and those sought by applicants; or particular locational or transport issues (Australian Government Department of Jobs and Small Business, 2018[13]).

Table 1.3. Occupation groups facing recruitment difficulty, 2017

 

Professionals

Technicians and trade workers

Community and personal service workers

New South Wales

n/a

n/a

n/a

Victoria

Civil engineering professionals (for experienced professionals in specialised projects or specific industry settings), architect, mechanical engineer (extensive experience and a high degree of specialisation in a specific sector), registered nurses

Metal fitters and machinists

n/a

Queensland

n/a

Carpenters and joiners, plumbers, electrician (general)

n/a

South Australia

Accountants

Carpenters and joiners

n/a

Western Australia

Civil engineering professionals

Structural steel and welding trades workers

n/a

Tasmania

Architect, Medical Diagnostic Radiographer, Registered Nurses

Motor Mechanics, metal fitters and machinists, carpenters and joiners

n/a

Northern Territory

n/a

Plumbers (experienced maintenance plumbers), chef

Enrolled nurse

Australian Capital Territory

Early childhood (pre-primary school) teacher

n/a

n/a

Note: "Recruitment difficulty" occurs when there may be an adequate supply of skilled workers, but some employers have difficulty filling vacancies for an occupation for reasons including the specific experience or specialist skill requirements of the vacancy; differences in hours of work required by the employer and those sought by applicants; or particular locational or transport issues.

Source: Australian Government Department of Jobs and Small Business, National, state and territory skill shortage information.

The Internet Vacancy Index (produced by the Australian Government Department of Jobs and Small Business) provides another useful indicator of changes in demand for occupations. Over the year to August 2018, job advertisements rose in six of the eight occupational groups, with the strongest gains recorded for Professionals (up by 8.5%), Technician and Trade Workers (7.7%), and Clerical and Administrative Workers (6.2%) (Australian Government Department of Jobs and Small Business, 2018[14]).

Job advertisements rose in four states and the Australian Capital Territory. Tasmania recorded the strongest annual rise (up by 17.7%, albeit from a low base), followed by Western Australia (13.4%), and Victoria (8.2%).

Following a low point in October 2013, the Internet Vacancy Index in August 2018 was 43 300 job advertisements (or 31.0%) higher than October 2013.

Figure 1.15. Number of job advertisements by state and territory
August 2006 – August 2018
picture

Note: In thousands. Data is from August each year.

Source: Australian Government Department of Jobs and Small Business.

 StatLink https://doi.org/10.1787/888933931922

References

[5] Australian Government Department of Jobs and Small Business (2018), Australian Jobs 2018, https://www.jobs.gov.au/australian-job-publication (accessed on 15 July 2018).

[3] Australian Government Department of Jobs and Small Business (2018), Australian Jobs Infographics, https://www.jobs.gov.au/news/australian-jobs-2018-now-available (accessed on 15 July 2018).

[13] Australian Government Department of Jobs and Small Business (2018), National, state and territory skill shortage information, https://www.jobs.gov.au/national-state-and-territory-skill-shortage-information.

[15] Australian Government Department of Jobs and Small Business (2018), Ratings Summary - Labour Market Analysis of Skilled Occupations, https://www.jobs.gov.au/national-state-and-territory-skill-shortage-information.

[14] Australian Government Department of Jobs and Small Business (2018), Vacancy Report: August 2018, Australian Government, http://lmip.gov.au/default.aspx?LMIP/GainInsights/VacancyReport.

[4] Australian Government Department of Jobs and Small Business (2018), 2018 Employment Projections, http://lmip.gov.au/default.aspx?LMIP/GainInsights/EmploymentProjections.

[6] ManpowerGroup (2018), 2018 Talent Shortage Survey, https://go.manpowergroup.com/hubfs/TalentShortage%202018%20(Global)%20Assets/PDFs/MG_TalentShortage2018_lo%206_25_18_FINAL.pdf?t=1539038418916.

[7] ManpowerGroup (2018), ManpowerGroup Employment Outlook Survey Australia, ManpowerGroup, https://www.manpowergroup.com/wps/wcm/connect/0606dc20-a968-4c72-8fb8-0877ee528c3f/AU_MEOS_1Q18.pdf?MOD=AJPERES&CACHEID=0606dc20-a968-4c72-8fb8-0877ee528c3f (accessed on 26 February 2018).

[11] Mcgowan, M. and D. Andrews (2015), The Future of Productivity: Main Background Papers Skill Mismatch and Public Policy in OECD Countries, OECD, https://www.oecd.org/eco/growth/Skill-mismatch-and-public-policy-in-OECD-countries.pdf (accessed on 17 April 2018).

[9] Montt, G. (2017), “Field-of-study mismatch and overqualification: labour market correlates and their wage penalty”, IZA Journal of Labor Economics, Vol. 6/1, p. 2, http://dx.doi.org/10.1186/s40172-016-0052-x.

[8] OECD (2018), Getting Skills Right: Australia, OECD.

[2] OECD (2017), Building Skills for All in Australia: Policy Insights from the Survey of Adult Skills, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264281110-en.

[1] OECD (2017), OECD Economic Surveys: Australia, http://www.oecd.org/eco/surveys/economic-survey-australia.htm (accessed on 12 February 2018).

[12] OECD (2012), Survey of Adult Skills First Results: Australia.

[10] Sloane, P. (2014), “Overeducation, skill mismatches, and labor market outcomes for college graduates”, IZA, http://dx.doi.org/10.15185/izawol.88.

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