Saturday, 13 February 2010

the skills shortage: myth or fact?

the purpose of my small essay today is to address briefly something which has been a source of personal irritation for me for some years: the (so called) "Skills Shortage"

I graduated from a University something like 15 years ago, along with at least 70 other people in my year, and that's just the group who studied Information Technology. Now that's just one of the universities in my state and for one semester. I haven't heard of there being a massive downturn in graduations any time (and I worked in a University for a few years...) so there must be quite some number of graduates out there. Last I looked Australia has over 40 Universities nationally, for example I think this is most of them:
University of Adelaide
University of Ballarat
University of Canberra
University of Melbourne
University of New England
University of New South Wales
University of Newcastle
University of Notre Dame Australia
University of Queensland
University of South Australia
University of Southern Queensland
University of Sydney
University of Tasmania
University of Technology Sydney
University of the Sunshine Coast
University of Western Australia
University of Western Sydney
University of Wollongong
Bond University
Central Queensland University
Charles Darwin University
Charles Sturt University
Curtin University of Technology
Deakin University
Edith Cowan University
Flinders University
Griffith University
James Cook University
La Trobe University
Macquarie University
Monash University
Murdoch University
Queensland University of Technology
RMIT University
Southern Cross University
Swinburne University of Technology
Victoria University
Australian Catholic University
Australian Defence Force Academy
Australian Graduate School of Management
Australian National University
so, looking down that list and thinking that every year there are at least two graduation groups I wonder just how we can have any skills shortage in the labor market.

For example, according to ABS: Australian Social Trends, 2004 Education & Work; Higher Education Graduates in the Labour Market,


looks to be going up steadily doesn't it ... hard to imagine that the economy has grown at the same pace.


This seems to show that after 2001 a higher portion of the young people were getting degrees than ever before (notice how the degree proportion was stable in the group from their late 30's through to their 50's?)

Looking at this chart, below:


I can see why people would want to have degrees, as unemployment in a down turn (the recession of the early 90's) effected people without higher education more sharply than those with higher education.

All this evidence makes it pretty hard to comprehend that we have a skills shortage.

Until you start looking for a job ... then you hear "we only want people with experience"

I was lucky when I graduated, I got a job almost straight away and got experience, but not everyone does. So I'm quite sure that there are heaps of people who have skills who just can't get jobs.

The problem as I see it is that current business practice is to not invest in creating skills. Instead of getting staff and developing them the emphasis is on the short term. We have out sourced jobs left and right (taking advantage of cheaper labor markets overseas) while shedding staff and off shoring.

So perhaps they mean "we can't find any 23 year olds with 12 years experience who are willing to work in a job at the rates we're willing to pay".

This does not seem to be building a better Australia for Australians if you ask me.

But why would you invest your time and money in getting skills in the first place if you don't actually get any reward for that? I can say with personal experience that I know areas where relatively unskilled people are getting quite reasonable incomes. Know anyone driving trucks for a mine for instance?

For so long we in the Lucky Country have been either "living off the sheeps back" or digging it out of the ground. Our leadership has systematically destroyed manufacturing sectors (cheaper to get it from China ... say did you know Australia used to manufacture computers? Yep, right in Brisbane Cleveland Computers ... disappeared back in the 80's) to replace everything with "service sectors" and ... Tourism (oh, hang on that's service) ... ok Mining I guess?

I've mentioned this theme before, so I won't harp on it more.

Perhaps the area they mean is in skills like trades. I find something in that looking at the current roof insulation scandal I keep finding truly chilling things like this:

Master Electricians Australia chief executive Malcolm Richards said an electrician found a Brisbane home's ceiling to be live with 80 volts running through the foil insulation.

He said the foil had been stapled through electrical cables in a number of places.

Now I'm not even going to ask how someone who has gone through an Australian school system doesn't know not to put a stable through an electrical cable. Clearly the people who did this were inexperienced.

Reading this:
Three months after an electric shock killed Rueben in the roof cavity of the steel-framed house, his family -- along with the families of three other victims -- are demanding answers. Why have untrained workers been allowed to do such a potentially dangerous job?

its a fair question, but I'd ask this: "why are the roof spaces so dangerous?"

However having been in a few ceiling spaces over the years I can certainly report some horror stories myseslf, so perhaps the installers of the insulation were fighting against forces we can't speak of ... have you noticed that you can get any number of household electrical things from supermarkets?

Strange that its illegal to install these things without an electrical license ... of course, must be just buying them to save the sparky time ... right?

Yet, having worked on construction sites myself, I can attest to witnessing some strange things (like a guy cutting through a 3 phase cable with an Arc welder. "I didn't see it" ... that was fun to watch, from 100 Meters away). Of course this sort of workplace accident is really attributable to training and experience.

I'm not sure if this is strictly a business and free economy issue or one that relates to society and our leadership. Tough question there ...

Interestingly in that same article is this:
He wanted to be a carpenter, and had snared an apprenticeship straight out of school -- but business slowed and the boss laid him off.
which relates directly to my above question of investing in our skill base in the country.

So perhaps what I'm really wondering is, if the real skills shortage is in senior areas of Corporate management and Government rather than anywhere else.

Lastly I spotted this on in the letters to the editor in the SMH:
Tony Abbott says that if Peter Garrett was a company director in NSW, "he would be charged with industrial manslaughter". As a former minister for health, Mr Abbott would therefore have no problem taking responsibility for all the hospital deaths caused by medical errors in that period.
just brilliant


Anonymous said...

Hey, you can keep your charts and graphs!
When you use the phrase "labor shortage" or "skills shortage" you're speaking in a sentence fragment. What you actually mean to say is: "There is a labor shortage at the salary level I'm willing to pay." That statement is the correct phrase; the complete sentence and the intellectually honest statement.

Some people speak about shortages as though they represent some absolute, readily identifiable lack of desirable services. Price is rarely accorded its proper importance in their discussion.

If you start raising wages and improving working conditions, and continue doing so, you'll solve your shortage and will have people lining up around the block to work for you even if you need to have huge piles of steaming manure hand-scooped on a blazing summer afternoon.

And if you think there's going to be a shortage caused by employees retiring out of the workforce: Guess again: With the majority of retirement accounts down about 50% or more, most people entering retirement age are working well into their sunset years. So, you won’t be getting a worker shortage anytime soon due to retirees exiting the workforce.

Some specialized jobs require training and/or certification, again, the solution is higher wages and improved benefits. People will self-fund their re-education so that they can enter the industry in a work-ready state. The attractive wages, working conditions and career prospects of technology during the 1980’s and 1990’s was a prime example of people’s willingness to self-fund their own career re-education.

There is never enough of any good or service to satisfy all wants or desires. A buyer, or employer, must give up something to get something. They must pay the market price and forego whatever else he could have for the same price. The forces of supply and demand determine these prices -- and the price of a skilled workman is no exception. The buyer can take it or leave it. However, those who choose to leave it (because of lack of funds or personal preference) must not cry shortage. The good is available at the market price. All goods and services are scarce, but scarcity and shortages are by no means synonymous. Scarcity is a regrettable and unavoidable fact.

Shortages are purely a function of price. The only way in which a shortage has existed, or ever will exist, is in cases where the "going price" has been held below the market-clearing price.

obakesan said...

well my blog post isn't actually intended as a journal article so much as an expression. So yes, it is a fragment.

I happen to agree with you point of not being able to keep raising levels of wages. It is what I was saying when I spoke about no incentive for becomming skilled. I've been a cleaner getting paid nearly what a skilled tradie gets paid.

so where's the incentive? I said nothing about raising wages, that's your own interpretation.

The market is actually quite imbalanced. I'm certainly no socialist or communist but at the same time we do need to think of the community as business as it is today is relative to human history a new thing.

but thanks for your comment, I'll consider it carefully

obakesan said...

ohh ... and I self funded my education to retrain from Science into Electronics. When that industry went down the toilet I self funded my training again and did IT.

Self funding in my case means I worked pubs to pay my rent and go to uni in the days.

So no, I'm not some upper class kiddy who relies on daddy for his Alfa Romeo

Noons said...

There hasn't been a skill shortage in Australia since the 90s.

The current problem is very simply this: "business" got used to offshoring manufacturing jobs at incredibly low salary rates.

There is a limit to how many jobs can be offshored. Silly but true example: milking a cow can't be sent to India. Replacing a fuse can't either.

Now, business want the remaining workforce - the one that can't be offshored - to work at the same rates as the offshore one.

Because it ain't happening and it won't happen any time soon, ergo:
"skills shortage".

There is no shortage.
We have plenty of folks in this country ready, qualified and willing to work.

For a fair wage. Not for half a dozen bananas/day, though.

Darn right, too. Call me a communist for this, see if I care?