Engineering-related skills shortages in the UK s electricity transmission and distribution industry

Transcription

1 The Sector Skills Council for gas, power, waste management and water Engineering-related skills shortages in the UK s electricity transmission and distribution industry A submission by Energy & Utility Skills to the Migration Advisory Committee July 2009

2 Contents 1 Introduction The electricity transmission and distribution industry Executive summary Skilled Shortage UK and global demand for engineers Drivers of increased labour demand and skills shortages Specific signs of skills shortages in the transmission and distribution industry The Energy White Paper (2007) Energy & Utility Skills Workforce Planning Model Overall supply and demand for engineers Registered engineers Sensible Effects of the current economic climate The alternatives to employing immigrants The short-term benefits of recruiting skilled workers from outside of the EEA The implications of restricting the recruitment of skilled workers from outside of the EEA Working towards a sustainable workforce from the UK population Conclusion...36 Page 2 of 37

3 1 Introduction This paper provides evidence of the engineering-related skills shortages currently being experienced in the UK s electricity transmission and distribution industry. The primary purpose of the paper is to set out the rationale for inclusion of these skills shortage occupations on the UK Government s Shortage Occupation List as recommended by the Migration Advisory Committee. 1.1 The electricity transmission and distribution industry The electricity transmission and distribution industry covers the activities associated with the delivery of electricity from generation facilities to customers properties (up to the meter). Currently the electricity industry is structured very much as shown below in Figure 1. Electricity is generated by a small number of large power stations; the generated electricity is then transported around the UK on a high voltage transmission network, and then around the regions on a lower voltage distribution network and delivered to the customer. Figure 1: The current structure of the electricity industry However, the UK, as with many other countries around the world, is now moving towards a more distributed system. A distributed electricity system is one in which small and micro generators are connected directly to factories, offices, households and to distribution networks. Electricity not demanded by the directly connected customers is fed into the active distribution network to meet demand elsewhere. Electricity storage systems may be utilised to store any excess generation. Page 3 of 37

4 Large power stations and an increasing number of large-scale renewable energy plants (e.g. off-shore wind) remain connected to the high voltage transmission network providing national back-up and ensure quality of supply. Again, storage may be utilised to accommodate the variable output of some forms of generation. Such a distributed electricity system is represented in Figure 2 below. i Figure 2: A distributed electricity industry The resulting increase in (i) the number of generating plants (and therefore grid connections) and (ii) total generated output means that the current transmission and distribution needs major expansion and refurbishment work over the coming years to ensure that it is up to the task of delivering this new reality Transmission There are four transmission systems in the UK ii ; in England and Wales it is owned and operated by National Grid; in Scotland the network is owned by Scottish Power (in the south) and Scottish & Southern Energy (in the north), although the network is operated by National Grid. In Northern Ireland the network is owned and operated by Northern Ireland Electricity. All these companies operate under a transmission licence granted by Ofgem. Transmission networks play a central role in the electricity system. Maintaining the balance between supply and demand is a vital task which touches every aspect of electricity supply. The transmission companies are required to develop, maintain and operate an efficient and economical system and a duty not to restrict, prevent or distort competition in generation and supply. i UK Electricity Networks: The nature of UK electricity transmission and distribution networks in an intermittent renewable and embedded electricity generation future, Imperial College of Science, Technology and Medicine Centre for Environmental Technology, September ii Electricity Factsheet 03, Electricity Networks Association, January Page 4 of 37

5 The transmission systems in the UK are fully interconnected. The transmission system in England and Wales is connected via overland links to that of Scottish Power, which in turn is interconnected with that of Scottish and Southern Energy. The Scottish Power system is also connected via an undersea cable to Northern Ireland s system. The link between England and Wales and Scotland is owned jointly by National Grid, Scottish Power and Scottish & Southern Energy. Also, the transmission system in England and Wales is connected to the grid belonging to Electricite de France through a cross-channel link Distribution There are 12 licensed Distribution Network Operators (DNOs) in England and Wales and two in Scotland. These companies hold a distribution licence granted by Ofgem for the provision of distribution network services. Each DNO owns and operates the local electricity distribution system within its own authorised area. Therefore, each DNO has specific obligations and responsibilities in relation to defined service areas of the network. All DNOs have statutory duties to develop and maintain an efficient, co-ordinated and economical system of distribution and facilitate competition in generation and supply. They have a duty to connect any customer who requires a supply. DNOs are obliged to meet minimum standards of performance related to distribution services, which are set by Ofgem. The distribution system of each DNO reflects the size of the region it serves as well as the density of the regional population and the terrain. In urban areas wires are generally buried underground and in rural areas they are carried overhead. Companies try to minimise the visual impact of potential routes when installing or upgrading the network, using when possible the natural contours of the landscape. It is estimated that across both the transmission and distribution aspects of the electricity industry there are around 37,000 people are employed in craft, technical or engineering roles at all levels Distribution Price Control Review periods The electricity distribution industry operates on the basis of regional monopolies controlled by an economic regulator (Ofgem) to ensure that no operator abuses this position. Ofgem sets the funding formula for the DNOs in five-year periods; the current period (DPCR4) runs from April 2005 to March The next period, DPCR5, runs from April 2010 to March The funding formula for DPCR5 will not be finalised until towards the end of This mechanism of setting investment levels for each five-year period restricts the ability of the DNOs to undertake long-term workforce planning activities as they only have short-term visibility of investment and workload plans. As demonstrated throughout this submission, the industry is undertaking a whole raft of activities designed to deliver a sustainable, skilled workforce from the resident UK population; however, it must be recognised that the DNOs do not operate in an open market but, in a sense, operate in an artificial environment which does not lend itself well to longterm, strategic workforce planning. Page 5 of 37

6 This situation also affects the supply chain, which contract with the network owners to deliver key activities, and employs around half as many workers again over-and-above the direct employees of the DNOs. However, the network owners are, in certain cases, reluctant to contract beyond the end of the current DPCR period. Therefore, even though the supply chain is not directly affected by economic regulation, they certainly feel the effects of it through their contracts with the network owners Transmission Price Control Review periods The electricity transmission industry operates on an almost identical basis, with the current TPCR period running from April 2007 to March Executive summary This submission presents evidence of skills shortages affecting the UK s electricity transmission and distribution industry. Interviews were held with representatives from the UK s electricity transmission and distribution industry: ABB, Balfour Beatty Utility Solutions, National Grid, E.ON (Central Networks), Scottish Power, Scottish and Southern Energy and Siemens. This research identified 13 job titles that are suffering from skills shortages in the UK electricity transmission and distribution industry: Table 1: SOC codes and job titles in shortage in the electricity transmission and distribution industry Standard Occupation Classification (2000 code) Job title SOC 1121 Production, Works and Project Manager Maintenance managers SOC 1123 Managers in Mining and Energy Site Manager SOC 2123 Electrical Engineers Power System Engineer Control Engineer Protection Engineer SOC 2126 Design and Development Engineers SOC 2128 Planning and Quality Control Engineers SOC 2129 Engineering Professional nec SOC 3113 Engineering Technicians SOC 5243 Lines Repairers and Cable Jointers SOC 5249 Electrical/electronic engineers nec Design Engineer Planning/ Development Engineer Quality, Health, Safety and Environment (QHSE) Engineer Project Engineer Proposals Engineer Commissioning Engineer Overhead Linesworker Site Supervisor The main factors causing these skills shortages are: An aging workforce in the industry and across the UK s engineering workforce in general Increased investment in the electricity network infrastructure to accommodate new generating capacity from conventional, nuclear and renewable sources (ensuring Page 6 of 37

7 new renewable energy sites can gain access to the grid will be crucial if the UK is to meet its EU 2020 renewable energy targets) Insufficient supply of STEM-related skills into the labour market from schools, colleges and universities Poor sector image amongst potential new entrants The industry is now taking significant steps to ensure that it will be able to meet its labour requirements going forward; the part-employer/part-government funded National Skills Academy for Power is working towards ensuring that the available training provision will meet employers demands both in terms of quality and quantity while the Power Sector Skills Strategy Group is developing a sector attractiveness strategy (including a sector brand ) that will hopefully increase the number of new entrants into the industry. While accepting that placing these occupations on the Shortage Occupation List will not in itself solve any skills shortages, it will undoubtedly aid employers in meeting their short-term labour demands. The industry genuinely feels that the recruitment of skilled workers from the global labour market is essential if it is to deliver its short-term objectives, but acknowledges that this policy must dovetail with its strategy to return the UK to selfsufficiency. The following sections set out evidence against each of the MAC s three headlines criteria: are the occupations skilled, are they in shortage and is it sensible to use immigrant labour from outside the EEA to fill these shortages? Page 7 of 37

8 3 Skilled This section lists the occupations that have been identified by the electricity transmission and distribution industry as suffering from skills shortages in the UK and presents evidence that they are skilled occupations as defined in the MAC s September 2008 report. Each occupation is listed under its relevant Standard Occupation Classification (SOC) code. Occupation Salary range Key roles and responsibilities SOC 1122 Production, Works and Maintenance Managers Qualifications required Experience required From the MAC s own analysis 25% of the current workforce in this SOC received training in the last 13 weeks, which is on a par with the all occupations median Project Manager SOC Job title: Manager, projects (building and contracting) 35,000-50,000 Ensure that all projects and designated duties are successfully carried out in accordance with safety, technical and legislative policies and procedures Manage financial performance of operations to meet agreed targets Ensure performance is measured correctly and issues are responded to in the most reasonable and economical way Ensure that all works is completed in accordance with the programme of works Ensure compliance with all statutory and company procedures across all the functions: H&S, QA and environmental HNC or Degree in a relevant engineering discipline Five years as a Project Manager or Project Engineer Page 8 of 37

9 Occupation Salary range Key roles and responsibilities SOC 1123 Managers in Mining and Energy Qualifications required Experience required From the MAC s own analysis 29% of the current workforce in this SOC received training in the last 13 weeks, which is on a par with the skilled occupations median Site Manager SOC Job title: Manager, site 30,000-40,000 SOC 2123 Electrical Engineers Takes overall ownership of projects; responsible for implementation including ensuring site staff deliver the project to time and cost, ensuring that all H&S and quality adhere to current legislation Ensuring delivered materials and work meets specification Supervise and monitor teams to consistently deliver value with the highest standard of workmanship Forward plan and programme the daily work to use all resources efficiently To ensure that all operations are carried out in a safe and cost effective manner and maintain the highest standard of quality and safety whilst working to the specifications ECITB Supervisory Management or IOSH Safety Management (or equivalent) Five years post-training experience on an electrical construction site From the MAC s own analysis 27% of the current workforce in this SOC received training in the last 13 weeks, which is on a par with the all occupations median Power System Engineer SOC Job title: Engineer, power 30,000-40,000 Co-ordinate the design, development, sanction, resanction and closure of assigned schemes (e.g. schemes, including asset replacement, requiring system topology changes with support from scheme design and development from other Programme Management teams) Establish system development strategies and ensure delivery of the portfolio of schemes in conjunction with construction teams Provide system design input to ensure that for all investment, the transmission system is developed to meet the needs of users and is licence compliant HNC or Degree in an engineering or science discipline Two years post-training experience with a high level of knowledge of power systems, system analysis, operation and design Page 9 of 37

10 Occupation Control Engineer SOC Job title: Engineer, control (electricity supplier) Salary range 31,000-44,000 Key roles and responsibilities Controlling, in real time, the operation and performance of the high voltage distribution system Provision of technical expertise to the other teams as required Preparation of outages, checking and co-ordinating of switching schedules to enable safe and effective system operation Controlling, in real time, the operational interface with all external customers Qualifications required HNC or Degree in electrical or electronic engineering If recruiting at Principal level Chartered Electrical Engineer is required Experience required Two years post-training experience in control engineering Eight years post-training experience in control engineering Ensuring the compliance of operational standards and company policies and procedures for all ongoing work By personal example, contributing to an environment which promotes continuous improvement and realises the full potential of staff Protection Engineer 30,000-40,000 Manage the safe and timely delivery of the department work programme including construction, maintenance, fault investigation/ repair and defect management HNC or Degree in electrical or electronic engineering Two years post-training experience in electrical protection SOC Job title: Engineer, distribution (electricity supplier) Identify personal resource requirements and feedback into the resource capacity plan To be an effective member of a team to maximise productivity, quality and effectiveness Continually maximise productivity through monitoring of work processes and output If recruiting at Principal level Chartered Electrical Engineer is required Five years post-training experience in electrical protection Page 10 of 37

11 Occupation Salary range Key roles and responsibilities SOC 2126 Design and Development Engineers Qualifications required Experience required From the MAC s own analysis 30% of the current workforce in this SOC received training in the last 13 weeks, which is slightly higher than the skilled occupations median Design Engineer SOC Job title: Engineer, design 25,000-35,000 Effective design and delivery of agreed outputs for network reinforcement and modernisation activities Responsible as Design Authority for network reinforcement and modernisation activities Develop close liaison and interface with other businesses thereby ensuring optimum network security and integrity and effective long-term network planning Proactively manage design priorities and resource capacity planning Provide technical guidance and leadership support to the engineering team Pro-actively manage voltage complaints and develop optimum network solutions balanced with commercial awareness Liaise with external parties to ensure future demand growth understood (including Core for licensed activities) HNC or Degree in electrical or mechanical engineering If recruiting at Principal level Chartered Electrical or Mechanical Engineer is required Two years post-training experience in HV S/S or plant design Eight years post-training experience in HV S/S or plant design Page 11 of 37

12 Occupation Salary range Key roles and responsibilities SOC 2128 Planning and Quality Control Engineers Qualifications required Experience required From the MAC s own analysis 24% of the current workforce in this SOC received training in the last 13 weeks, which is on a par with the all occupations median Planning/ Development Engineer SOC Job title: Engineer, planning Quality, Health, Safety and Environment (QHSE) Engineer SOC Job title: Engineer, quality 30,000-35,000 28,000-40,000 Responsible for the co-ordination of all engineering support and resource allocation to facilitate the delivery of major project and maintenance programmes associated with the network, from three years ahead to sixteen weeks ahead Responsible for co-ordinating, logging and representing the Operations Department at design and planning meetings of any planned project Responsible for the development and timely delivery of a production plan, with due consideration to system access, resource availability and plant spares Responsible for identifying and reporting any risks that may affect the efficient and effective operation of the department Ensure compliance with the company s quality and health and safety policy and procedures Manage the co-ordination of all quality, health, safety and environmental matters relating to all operations on-site Ensure the maintenance and compliance of all operations with the appropriate HSE regulations, ensuring employees on-site are aware of and work within the guidelines of the Health & Safety policies HND or Degree in a relevant engineering discipline MSc. Electrical Engineering If recruiting at Principal level MSc in Electrical Engineering (PhD preferably) is required Recognised QHSE qualification Two years post-training experience Five years post-training experience Three years post-training QHSE experience Page 12 of 37

13 Salary Occupation range SOC 2129 Engineering Professional nec Key roles and responsibilities Qualifications required Experience required From the MAC s own analysis 28% of the current workforce in this SOC received training in the last 13 weeks, which is slightly lower than the skilled occupations median Project Engineer SOC Job title: Engineer, project Proposals Engineer SOC Job title: Engineer (professional) 26,000-35,000 35,000-45,000 Effective design and delivery of agreed outputs for distribution reinforcement, modernisation and new business activities Manage the on-site, POC and non-contestable connections activity Develop close liaison and interface with other businesses thereby ensuring optimum network security and integrity and effective long-term network planning Proactively manage design priorities and network risks Pro-actively manage network reinforcement designs and develop optimum network solutions balanced with commercial awareness Carry out network studies to determine optimum design solutions To lead and coordinate the activities of the Proposals Team in all stages of the bidding process from expression of interest through to tender award Manage the Proposals team including Senior Proposals Coordinators and Proposals Coordinators Develop Bid Strategies with the Business Development team Take proactive lead as Bid Manager on key bids including leading bid workshops Support business in developing new bid opportunities Work with Bid Controls Team to track and monitor key stages in the bidding process Work with other teams to coordinate their input to bid submissions HNC or Degree in Electrical Engineering HNC or Degree in a relevant engineering or business discipline Two years post-training experience in a relevant engineering role within a utility business Two years post-training experience Page 13 of 37

14 Salary Occupation range SOC 3113 Engineering Technicians Key roles and responsibilities Qualifications required Experience required From the MAC s own analysis 36% of the current workforce in this SOC received training in the last 13 weeks, which is slightly higher than the skilled occupations median Commissioning Engineer SOC Job title: Engineer, commissioning 35,000-45,000 To undertake the commissioning of new and refurbished asset on to the network ensuring all appropriate scenarios are worked through before final commissioning authorisation is undertaken To carry out pre- and post-commissioning document checks To carry out on-load commissioning testing To deliver work packages ensuring productivity, efficiency and utilisation of various work groups by taking responsibility for direct control of staff To ensure operational and maintenance issues are embedded into the design of new installations To undertake complex fault finding and resolution on a wide range of plant and protection systems To be proactive in all aspects of the work programme communicating with the Project Engineers as appropriate to enable the work programme to stay on track and be updated to maintain target prioritisation as necessary HNC or Degree in electrical engineering Three years substation commissioning Page 14 of 37

15 Occupation Salary range Key roles and responsibilities SOC 5243 Lines Repairers and Cable Jointers Qualifications required Experience required From the MAC s own analysis 28% of the current workforce in this SOC received training in the last 13 weeks, which is slightly lower than the skilled occupations median Overhead Linesworker SOC Job title: Linesman, overhead Low voltage (up to 132kv) 19,000-25,000 High voltage (up to 400kv) 28,000-35,000 Undertake earthing and rigging duties as a key member of working parties Platform work, including spacering/ de-spacering Tower assembly and erection Clipping in and out Lead earthing parties, read and authorise safety documentation Lead small working parties as appropriate Responsibility for the work and supervision of Linesworker/Erector 2 and trainees NVQ level 3 Electricity Distribution and Transmission Engineering City & Guilds 2322 Electrical Supply Two years post-training experience Four years post-training site experience with a minimum of refitting and refurbishment work as part of a team, if not on a structured linesworker development programme NOTE: Currently only transmission (i.e. HV) overhead linesworkers is included on the UK s Shortage Occupation List, this submission requests that this is extended to cover the electricity distribution (i.e. LV) industry as well SOC 5249 Electrical/electronics engineers nec From the MAC s own analysis 31% of the current workforce in this SOC received training in the last 13 weeks, which is on a par with the skilled occupations median Site Supervisor SOC Job title: Supervisor, service (electrical engineering) 25,000-32,000 To supervise all the day-to-day activities within nominated contract(s) to achieve agreed profit and service objectives, safely, through effective client relationship management, customer focused service delivery & staff leadership Manage the performance of contracts/project within area of control to meet agreed targets Manage resources and materials to complete tasks Manage health and safety of team ECITB Supervisory Management or IOSH Safety Management (or equivalent) Three years post-training experience on an electrical construction site Page 15 of 37

16 4 Shortage This section provides evidence that the occupations listed above are, in fact, in shortage in the UK. 4.1 UK and global demand for engineers There are a number of external factors which make it even more difficult over the shortterm to attract skilled UK workers into the UK electricity transmission and distribution industry. Amongst these are the numerous urban regeneration programmes going on around the UK (e.g. Thames Gateway), the Olympics (which will require over 100km of cabling and 100 substations) and the Government s ship building programme, which is forecast to take around 20% of professional engineers and technicians from engineering construction contractors. The employer-led Power Sector Skills Strategy Group recognises the issue of global demand for power engineering skills and the fact that much of the infrastructure around the world is of a similar age to that of the UK s. Also, with demand for power output increasing the world over the UK will have to work hard to gain the quantity and quality of skills it needs and then even harder to keep it. The United States of America, for example, which has a similar transmission and distribution system to that of the UK, is also approaching a phase of infrastructure renewal and repair and has a similar ageing workforce. Consequently, there is strong global demand for skilled workers with experience of the electricity transmission and distribution industry, and it is likely to increase considerably in the coming years. 4.2 Drivers of increased labour demand and skills shortages Transmission The Energy Networks Strategy Group has estimated that the reinforcements necessary to strengthen the current transmission system so that it can accommodate a further 45GW of generation (34GW of which could be a combination of on- and off-shore wind) by 2020 will cost in the region of 4.7bn iii. The practicalities of implementing these improvements will lead to significant demand for network and substation planning and design and construction. These reinforcements will be essential if Government is to meet its 2020 renewable energy targets. The Group found that much of the existing infrastructure is already operating near maximum capacity and that any increase in generation (which will occur in any scenario) would result in the need for network expansion/reinforcement. The Group also identifies the availability of suitably skilled people as a major risk, as many of those with the necessary skills are approaching retirement. Other limiting factors on skills supply in the short-term include: Lead-time to full competency being around five years Limited capacity to train to sufficient numbers (including physical constraints, limited availability of trainers and assessors, etc.). The Group has brought this to the attention of both EU Skills and the National Skills Academy for Power that is currently under development. iii Our Electricity Transmission Network: A Vision for 2020, Energy Networks Strategy Group, March Page 16 of 37

17 4.2.2 Distribution In addition to the aging workforce described above, the DNOs are planning to increase their expenditure on their main activities by around 1bn during DPCR5 (from 7.5bn in DPCR4 to 8.5bn in DPCR5) iv. As with transmission, the practicalities of implementing the required improvements will lead to significant demand for skilled workers in a number of key craft, technical and engineering roles. This increase in activity is a key driver of the increased labour demand by DNOs over the next five years and has resulted in the DNOs forecasting an additional 174m of workforce renewal costs (from 87m in DPCR4 to 261m in DPCR5). Workforce renewal includes the costs of replacing staff that leave and increasing the workforce to manage the additional workload forecast for DPCR5. Figure 3: Workforce renewal costs ( m) by region, DPCR4 and 5 Note: SSE have now provided Ofgem with their DPCR4 costs: SSE Hydro = 6m; SSE Southern = 11m. As can be seen in the chart above, all DNOs are forecasting significant additional investment in their workforce v. The additional 174m forecast to be spent on workforce renewal in DPCR5 is split evenly between operational costs (i.e. maintaining the current network) and network investment (e.g. network expansion activities). In total, 139m is forecast to be spent on operational workforce costs, while 122m is expected to be spent on network investment workforce costs. Investment programmes that are driving this demand for labour include 10bn to connect the third round of off-shore wind farms to the grid, as well as 4.7bn to accommodate the additional 45GW of power that will need to be generated by iv Electricity Distribution Price Control Review Methodology and Initial Results Paper, Ref: 47/09, Ofgem, May v Note: Scottish & Southern Energy s costs for DPCR4 are not shown on the chart. Page 17 of 37

18 4.3 Specific signs of skills shortages in the transmission and distribution industry Forecasts developed by ECITB in 2007 vi show that the likely annual demand from the engineering construction industry for project managers will be c385, c1.300 for design and project engineers and c440 for professional engineers and technicians (just over 10% of the current workforce). Some of these workers will be working on activities being carried out by the electricity transmission and distribution companies, but where there is no overlap, this demand will be in direct competition with the needs of the electricity transmission and distribution industry. Occupation Notes on skills shortages SOC 1122 Production, Works and Maintenance managers Project Manager SOC 1123 Managers in Mining and Energy Site Manager SOC 2123 Electrical Engineers Power System Engineer Control Engineer Protection Engineer The latest MAC data suggests that the occupation passes 4 out of 12 shortage indicators. NESS07 states that 39% of vacancies are skills shortage vacancies (SSVs) (as are 95% of hard-to-fill vacancies (HTFVs)). From the MAC s own analysis 3% of the current workforce in this SIC is born outside of the EEA, as are 3% born in the EEA (excl. UK). This suggests that the global workforce (outside of EEA) is of equal importance in terms of being a source of skilled labour into this occupation. Data from the MAC s September 2008 report suggests that the occupation passes 3 out of 12 shortage indicators. NESS07 states that no vacancies are classified as SSVs this does not reflect the reality that the electricity transmission and distribution industry finds itself it. From the MAC s own analysis 8% of the current workforce in this SIC is born outside of the EEA, while 0% was born in the EEA (excl. UK). This suggests that the global workforce (outside of EEA) is an important source of skilled labour into this occupation. The latest MAC data suggests that the occupation passes 7 out of 12 shortage indicators. NESS07 states that 39% of vacancies are SSVs (as are 86% of HTFVs). From the MAC s own analysis 7% of the current workforce in this SIC is born outside of the EEA, while 1% was born in the EEA (excl. UK). This suggests that the global workforce (outside of EEA) is an important source of skilled labour into this occupation. vi Securing Engineering Construction Skills for the Future, ECITB, Page 18 of 37

19 Occupation SOC 2126 Design and Development Engineers Design Engineer Notes on skills shortages The latest MAC data suggests that the occupation passes 5 out of 12 shortage indicators. NESS07 states that 38% of vacancies are SSVs (as are 69% of HTFVs). From the MAC s own analysis 9% of the current workforce in this SIC is born outside of the EEA, while 2% was born in the EEA (excl. UK). This suggests that the global workforce (outside of EEA) is an important source of skilled labour into this occupation. SOC 2128 Planning and Quality Control Engineers Planning/Development Engineer QHSE Engineer SOC 2129 Engineering Professional nec Project Engineer Proposals Engineer SOC 3113 Engineering Technicians Commissioning Engineer The latest MAC data suggests that the occupation passes 5 out of 12 shortage indicators. NESS07 states that 27% of vacancies are SSVs (as are 98% of HTFVs). From the MAC s own analysis 5% of the current workforce in this SIC is born outside of the EEA, while 6% was born in the EEA (excl. UK). This suggests that both the EEA and global labour markets are equally important sources of skilled labour into this occupation. The latest MAC data suggests that the occupation passes 4 out of 12 shortage indicators. NESS07 states that 24% of vacancies are SSVs (as are 82% of HTFVs). From the MAC s own analysis 7% of the current workforce in this SIC is born outside of the EEA, while 2% was born in the EEA (excl. UK). This suggests that the global workforce (outside of EEA) is an important source of skilled labour into this occupation. The latest MAC data suggests that the occupation passes 6 out of 12 shortage indicators. NESS07 states that 36% of vacancies are SSVs (as are 100% of HTFVs). From the MAC s own analysis 6% of the current workforce in this SIC is born outside of the EEA, while 1% was born in the EEA (excl. UK). This suggests that the global workforce (outside of EEA) is an important source of skilled labour into this occupation. SOC 5243 Lines Repairers and Cable Jointers Overhead Linesworker From EU Skills Workforce Planning Model, estimates that around 600 linesworkers at level 3 will retire before the end of DPCR5 (2014). The latest MAC data suggests that the occupation passes 4 out of 11 shortage indicators. NESS07 states that 18% of vacancies are SSVs (as are 41% of HTFVs). From the MAC s own analysis 1% of the current workforce in this SIC is born outside of the EEA, while 6% was born in the EEA (excl. UK). This suggests that the EEA is an important source of skilled labour into this occupation. Page 19 of 37

20 Occupation SOC 5249 Electrical/electronics engineers nec Site Supervisor Notes on skills shortages Data from the MAC s September 2008 report suggests that the occupation passes 4 out of 12 shortage indicators. NESS07 states that 66% of vacancies are SSVs (as are 94% of HTFVs). From the MAC s own analysis 5% of the current workforce in this SIC is born outside of the EEA, while 3% was born in the EEA (excl. UK). This suggests that the global workforce (outside of EEA) is a slightly more important source of skilled labour into this occupation than the EEA. Note: Many of the sources of data for the 12 top-down indicators of shortage date back to It is an obvious point, but one worth mentioning, that back in 2007 transmission and distribution companies would not be aware of the investment plans for DPCR5, starting in April Therefore, we would expect the 2007 data to show fewer indications of shortage than is the case now, in Vacancies and length of time to recruit The ratio of vacancies per 100 employee jobs (Figure 4) has fallen in the construction sector since April. The rate for the energy and water sector increased between December 2007 and May 2008 after which it has remained fairly stable, but significantly higher than for construction or manufacturing. Manufacturing vacancy rates have remained stable throughout the period. Figure 4: Ratio of vacancies per hundred employee jobs by SIC sector Averages for three months Although this data covers the whole of the electricity, gas and water industries it does give a clear indication that the effect of the current economic downturn (which is clearly affecting the construction industry at the moment) is not a major issue for the utilities. With Government investment in major new build and refurbishment programmes going ahead, strong demand for skilled labour is expected to continue over the coming few years. Page 20 of 37

21 Evidence from those companies interviewed as part of this submission shows that employers in the electricity transmission and distribution industry are finding it a difficult and lengthy process to find and recruit appropriately skilled and experienced workers. While it generally takes several months to fill most roles it recently took one employer 273 days to fill one vacancy. As an indication of the number of vacancies currently being advertised, the Total Jobs website is currently showing (as at 10 th July 2009) 1,524 UK-based commissioning engineer and 1,663 design engineer vacancies Current work permit levels Evidence has been provided by employers that workers from outside of the EEA are increasingly being sought to fill vacancies as it becomes more-and-more difficult to recruit from the resident workforce. Data submitted by employers suggests that around 4% of the current workforce in the occupations considered to be in shortage in the UK is from outside of the EEA. However, this proportion increases to around one-in-five (21%) of those recruited within the last 12 months. vii 4.4 The Energy White Paper (2007) viii Around seven pages of the 2007 Energy White Paper are devoted to the skills agenda, highlighting the importance of this area to the industry at this time. Importantly in terms of this paper, it highlights the likely need to recruit skilled workers from outside of the UK in order to alleviate some of the short-term skills deficiencies: 6.43 In cases where skills shortages become acute, training might not be able to fill immediate vacancies in time. Also, as older workers retire, knowhow and experience will be lost. Immigration may have to play a part in maintaining the skills base in the short term and the Government will therefore ensure that work permit policy can respond to requests for recruitment from overseas when labour market tightness indicates that it is necessary. However, this will not provide a long-term solution to the problem; the international demand for skills is increasing and the UK will not be able to rely solely on immigration to supply large numbers of workers. Nor would we want to be reliant on overseas workers in place of developing our own people. Therefore, overseas recruitment will be only part of the solution to bolster experience levels whilst the skills of the UK workforce are further developed. 4.5 Energy & Utility Skills Workforce Planning Model Data taken from Energy & Utility Skills Workforce Planning Model (more details of which are provided in Section 5.5) shows that there are currently c20,000 employees working in craft, technical and engineering roles in the electricity distribution industry; c16,000 of these operate at level 3 or above. Figure 5 below shows the current age profile of this workforce. vii These estimates are based on incomplete submissions; not employers were able to provide such data from their records at this time. viii Meeting the Energy Challenge, A White Paper on Energy, DTI, May Page 21 of 37

22 Figure 5: Age profile of the UK s electricity distribution workforce 4,500 4,000 Number of Employees 3,500 3,000 2,500 2,000 1,500 1,000 Total Workforce < Source: EU Skills Workforce Planning Model, Age Group In all, around 45% (c9,000) of the current distribution workforce is expected to retire within the next three regulatory periods Leavers in DPCR5 Of the 16,000 level 3 workers currently in the workforce, during DPCR5 just under 1,700 will retire (based on an average retirement age of 63) and a little over 1,700 will be promoted internally within their organisation leaving a vacancy behind them that will need to be filled. The chart below shows the number of retirements expected within the distribution industry between 2008 and Figure 6: Retirements in year by level Retirements in Year by Level Level 6 Level 5 Level 4 Level 3 Level 2 Level year Source: Energy & Utility Skills Workforce Planning Model Page 22 of 37

23 The data shows that one-in-ten of current level 3+ workforce will retire during the five years of DPCR5. This figure increases to one-in-seven during DPCR6 ( ) and one-in-five during DPCR7 ( ). In total, 45% of the current level 3+ workforce will retire over the next three DPCR periods. Over the next five years the industry will need to recruit the equivalent of just over onefifth of its current level 3 workforce (c680 per year). In addition, around 2,000 workers will leave their current employer (e.g. staff turnover), a small proportion of whom will leave the industry entirely and will need to be replaced. Taking into account all leavers from the industry, the number of new recruits required by the distribution industry is shown in the chart below. Figure 7: FTEs required each year by level Required in Year by Level year Level 6 Level 5 Level 4 Level 3 Level 2 Level 1 Source: Energy & Utility Skills Workforce Planning Model Around 7,000 new recruits will be required across the industry during DPCR5, 5,400 of which will be needed at level 3 or above. Since privatisation in the early 1990s, the industry has implemented efficiency savings through the introduction of new technologies and changing working practices; this has meant a period of downsizing throughout the subsequent decade. To make matters worse, the impact of an aging workforce (i.e. high levels or retirements) is about to hit the industry at the same time as increasing levels of investment are required in order to expand and refurbish the aging network infrastructure so that it can handle the increased need for new connections of renewable energy and distributed generation sites. This is discussed in more detail later Current trainees In 2009 it is estimated that there are currently well over 700 trainees in their first year of training, with an additional 600 in their second year and 260 in their third year. During DPCR5, the industry is expecting to take on a total of around 3,600 new trainees. Due to the scale of investment being planned in the electricity industry over the coming years, the current levels of graduate and trainee in-take are insufficient to meet expected demand. In order to address this situation and ensure a sufficient and adequately skilled future for the future, a number of things must occur: 1. An increase in the number of young people (<16 years) taking STEM subjects Page 23 of 37

24 2. Improved career guidance within schools which makes young people better aware of the many career opportunities available in the industry and of the career pathways open to them to achieve this (e.g. vocational (Apprenticeships) as well as academic (HE)) 3. If points and 1 and 2 occur, then in the medium-term an appropriate and sufficient increase in in-house training capacity will be required along with increases in trainers, assessors and verifiers 4. An increase in the number of STEM graduates that choose the electricity industry as a career option In the short-term, there is actually very little the generating companies can do to address existing engineering skills shortages as the supply of UK talent is wholly insufficient; they cannot recruit their way out of this problem as there is an absolute shortage of appropriately skilled/qualified applicants and a ceiling on internal training capacity that would take several years to expand. In the longer-term, the industry is committing themselves to a number of initiatives which will hopefully raise awareness of the industry amongst the potential workforce and also of the many career opportunities available to young people within the industry (see Section 5.6 below). 4.6 Overall supply and demand for engineers Acceptances The following analysis is taken from The ETB s Engineering UK 2008 report ix. The number of acceptances onto STEM-related courses is shown in Figure 8. Figure 8: STEM acceptances by Higher Education subject area ix Engineering UK 2008, The Engineering Technology Board, December Page 24 of 37

25 The number of acceptances onto engineering and technology HE courses appears to be on a very slight upward trend looking back over the last five years. Acceptances onto both biological and physical science courses are increasing also. However, acceptances onto mathematical and computer science courses have fallen quite sharply. Figure 9 below shows the number of acceptances from UK and non-uk students. Figure 9: Acceptances on Higher Education engineering courses by sub-discipline in 2006/07 There has been a decrease since 2004/05 in the number of acceptances from UK students in mechanical engineering and electronic and electrical engineering courses; while there has been a slight increase in civil engineering and chemical, process and energy engineering. The number of acceptances from UK students on general engineering courses has remained at similar levels to those seem in 2004/05. Across all measures applications, acceptances and degrees achieved there has been a general upward trend in the supply of engineering students. This is especially positive given the increased competition to engineering and technology from the rising level of subject choices available at first-degree level to prospective undergraduates Graduate destinations It has been widely suggested that a large proportion of engineering and technology graduates entering employment do not work in engineering-related occupations or for engineering employers. Data prepared by HESA on behalf of The ETB shows that this is actually not the case. Over one-half of engineering and technology graduates who entered employment joined either Engineering Professionals (SOC Major Group 212) or ICT Professionals (Major Group 213). When combined with the other engineering and technology occupations (17%) and occupations associated with engineering (22%) categories, this makes up the vast majority of roles entered into (89%). Page 25 of 37

26 Figure 10: Destination Occupations of All UK-domiciled Engineering and Technology Graduates who Obtained First Degrees and entered employment by Standard Occupational Classification (SOC) Codes 2006/07 Overall, nine out of 10 first-degree engineering and technology graduates entering employment took up occupations that were engineering and technology-related. Contrary to popular opinion, only one tenth of such graduates entered roles that were nonengineering and technology occupations. This further reduces to one in 15 graduates once those leavers who do not go into employment are taken into account. Another way to look at destinations is to examine the types of employers that engineering and technology leavers have gone to work for. Employers main economic activities are classified by Standard Industrial Classification (SIC) codes. It should be noted that SIC codes reflect what employers consider to be their main economic activity, and this does not necessarily reflect what work is actually undertaken by the employer. In other words, engineers or technicians may work in an engineering and technology role at an employer whose main activity may be categorised as something other than engineering and technology. It is often remarked that a large proportion of engineering and technology HE leavers go to work in the City. However, this analysis makes it clear that of the 63% with a first degree in engineering and technology who enter employment just 3.1% go to work for an employer in Financial Services, compared to 6.6% of all subject leavers who do so. Consequently engineering and technology graduates are actually less than half as likely as all subject first-degree graduates to enter employment with a Financial Services employer. Even if the scope is extended to encompass Business and Management Consultancy, Marketing, Market Research and Advertising, these together take just 1.6% of engineering and technology first-degree leavers. Accountancy and Law employers combined employ only 1.1% of engineering and technology leavers. The total City-type non-e&t occupations right across the UK is just 5.8% of leavers. Thus, the significant job losses that have been occurring recently due to the credit crunch will not particularly help the electricity transmission and distribution industry find the skills they need both now and in the very near future. 4.7 Registered engineers This section looks at the current quantity and age profile of register engineers. Figure 11 shows the total volume of all memberships of registered engineers by grade over the last decade. Page 26 of 37

27 Figure 11: Total Volume of All Memberships of Registered Engineers by Grade The total number of registered has fallen steadily over this time; only Engineering Technicians seem to be showing any sign of resilience, albeit from a much lower base than IEng and CEng grades. The following three figures show the age profile of current CEng, IEng and EngTech grades now compared to Figure 12: Age profile of Chartered Engineers (CEng) 1998 v 2007 There has been a significant decline in the volumes of registered CEngs in all working age bands. The number of those aged under 55 has fallen by nearly a quarter, whereas those aged over 70 has doubled in the last 20 years. The ageing profile of CEngs over the last 20 years is of significant concern. An analysis of IEng age profiles (Figure 13 below) illustrates an even more stark shift in the age profile and an accompanying decline in the volume of those aged <50. Page 27 of 37

28 Figure 13: Age profile of Incorporated Engineers (IEng) 1998 v 2007 There has been a two-thirds decline in the volumes of registered IEngs in all age groups under 50 between 1988 and To a lesser extent this reflects an ageing profile of IEng registrants with a doubling in volumes of those aged over 65 in the period. The group aged alone has risen by two-thirds between 1998 and These IEng registrants will all reach retirement age within the next 10 years, which highlights a potential slump in working-age IEng registrants. Figure 14: Age profile of Engineering Technicians (EngTech) 1998 v 2007 Among EngTechs too there has been a near 50% decline in registration volumes in all age groups under 50 between 1988 and Once again this reflects to a lesser extent an ageing profile of registrants with a 60% increase in volumes of those aged over 50 in the period. A similar demographic time bomb can be seen amongst EngTechs aged whose volume has risen 75% between 1998 and The 3,500 such EngTech registrants in 2007 are all due to reach retirement age within the next 10 years. Page 28 of 37