ELECTRONIC ENGINEER: OCCUPATIONAL SKILL SHORTAGE ASSESSMENT

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1 NOVEMBER 2005 ELECTRONIC ENGINEER: OCCUPATIONAL SKILL SHORTAGE ASSESSMENT Current Situation: Genuine skill shortage Short-term Outlook: Genuine skill shortage 1 Executive Summary 1.1 Employment of electronic engineers grew strongly by an average of 6.6% per annum between 1991 and This growth has been driven by the increasing use of electronics in a wide variety of businesses. Strong employment growth is likely to have continued since 2001, with considerable growth in the electronic equipment manufacturing industry (an average of 9.5% per annum between 2000 and 2004). The Department of Labour therefore considers that shortages have mainly arisen as a result of rapid growth in demand, especially in highly specialised skill areas, coupled with shortfalls in graduate supply. 1.2 Approximately 115 students graduated with a Bachelor of Engineering in Electronic/Electrical Engineering in both 2002 and A comparison of graduate output with the total number working in this field yields a training rate of 5.8%. However, graduate supply has not kept up with the rapid growth in demand, and it is low when compared to the training rate for electronic engineers in New South Wales, Australia (7.2%). Between 20 and 30 electronic engineers retire each year. 1.3 The Department of Labour expects strong demand growth for electronic engineers to continue in the short to medium term as electronics are increasingly being used in a wide variety of businesses. The New Zealand electronics industry is largely reliant on exports, and while the high exchange rate may affect future demand to some extent, the industry is not highly sensitive to price. Many of New Zealand s large electronics companies are predicting substantial growth. The number of graduates achieving degree qualifications is not expected to increase over the next 1-2 years, and therefore the Department of Labour foresees the shortage of electronic engineers persisting in the short to medium term. Unisys House, 56 The Terrace, PO Box 3705, Wellington, New Zealand. Tel Fax

2 2 2 Introduction 2.1 The purpose of this report is to investigate skill shortages in the electronic engineer profession in New Zealand. It aims to assess whether or not there is a shortage of electronic engineers, and to provide an insight into demand and supply factors contributing to this situation. It also offers a short-term outlook for shortages in this occupation. 2.2 Electronic engineers study, design, test and supervise the production of electronic equipment. This equipment can include: broadcast and communications systems; computers; machinery controls in aircraft and radar navigation systems; and power generating, controlling, and transmission devices 1. Because the electronics field has undergone rapid changes in technology, and continues to increase in complexity, electronic engineers tend to specialise in one particular area. The Department of Labour (the Department) estimates that approximately 2,000 electronic engineers were employed in New Zealand in Further background to this occupational report, including a discussion of the methodology; a glossary of terms; and an overview of the Department s Survey of Employers who have Recently Advertised (SERA), including the survey questionnaire, can be found in the Background and technical note at Note on Occupational Classification The Department has defined electronic engineers under the 5-digit occupational category of electronic and telecommunications engineer - code in the New Zealand Standard Classification of Occupations (NZSCO). However, some data sources such as the Household Labour Force Survey (HLFS) and External Migration, are only available at the broader 3-digit category, architects, engineers and related professionals (NZSCO code 214), and electronic engineers comprise only 8% of this broader group. This means that some of the data presented in this report must be interpreted with considerable caution, as it includes professions other than electronic engineers. 3 Demand for Electronic Engineers 3.1 Historical Demand The demand for electronic engineers has been increasing due to technological advances in the field of electronics, including both advanced communications equipment and consumer electronic products. New Zealand businesses have proven themselves to be successful and flexible in supporting high growth niche markets in electronics (such as navigation equipment). Table 1 shows that between 1991 and 2001 the number of employed electronic engineers grew at an annual average of 6.6%. This was faster than the growth for all professionals (3.4%) and the growth for all occupations (2.1%). 1 Description adapted from Kiwi Careers, (

3 3 Table 1: Employment Growth of Electronic Engineers, Annual Growth in Employment Electronic Engineers 5.6% 7.6% 6.6% All Professionals 2.7% 4.0% 3.4% All Occupations 3.1% 1.2% 2.1% Source: Census of Population and Dwellings, Statistics New Zealand It is probable that substantial employment growth has continued since Whilst electronic engineers are employed in a range of industries, a considerable number are employed in electronic equipment manufacturing. Table 2 indicates that strong employment growth has occurred in the electronics equipment manufacturing industry since 2000, with the average annual growth rate being 9.5% over the last four years. Table 2: Employment Growth in Electronic Equipment Manufacturing 2, Year (February) Enterprises Employees Source: Statistics New Zealand, Business Demographic Statistics. 3.2 Future Demand The Department expects forces driving growth in demand for electronic engineers to continue in the short to medium term The New Zealand industry is heavily reliant on exports and a high exchange rate would suggest growth is likely to weaken in the future. While it may affect demand to some extent, New Zealand s electronics industry is not highly sensitive to price. It has established a reputation as a customer focused and innovative electronics supplier, targeting niche international markets which are less likely to be vulnerable to the exchange rate. The industry s competitive advantage lies in its ability to provide short, low quantity production runs of tailor-made products Canterbury is acknowledged as being the centre of the New Zealand electronics industry with industry estimates suggesting that the local sector contributes as much as 50% of the total national electronics output most of this coming out of the Canterbury Electronics Group (CEG) 3. The CEG consists of the region s six 2 3 Using ANZSIC code C2849. An enterprise is defined as a business or service entity operating in New Zealand; this can be a company, partnership, trust, estate, or individual operator. Employees include both full and part-time, as at February each year. Electronics South, The Canterbury Electronics Industry: A Mapping Survey and Report, commissioned by the Canterbury Development Corporation, July The six companies which make up the CEG are Trimble Navigation, Powerware, Pulse Data, Allied Telesyn, Dynamic Controls and Tait Electronics.

4 4 largest electronics companies, which together employ nearly 2,000 staff. In 2001, the CEG contributed more than $850 million to the New Zealand economy. The CEG predicts that by the end of 2006, its economic output (including downstream multipliers) will rise to $1.4 billion, with 20,000 jobs reliant on the industry (up 60% and 66% respectively) Summary Employment of electronic engineers grew strongly by an average of 6.6% per annum between 1991 and This growth has been driven by the increasing use of electronics in a wide variety of businesses. Strong employment growth is likely to have continued since 2001, with considerable growth in the electronic equipment manufacturing industry (an average of 9.5% per annum between 2000 and 2004). Strong demand growth is expected to continue in the short to medium term. 4 Supply of Electronic Engineers 4.1 Tertiary Education To become a fully-qualified electronic engineer, a four-year Bachelor of Engineering (BE) majoring in Electronic Engineering or Electronic/Electrical Engineering is required There is only one institution offering a BE with an Electronic Engineering major. The majority of institutions offer a BE with a combined major in Electronic and Electrical Engineering because there is significant commonality between the fields. Table 3 therefore shows graduation statistics that reflect achievements in both electronic and electrical engineering. The estimated number of people graduating with a BE majoring in Electronic/Electrical Engineering was 112 and 122 in 2002 and 2003 respectively. Based on the number of students enrolled for second and third year courses in 2003, the Department expects little change in graduate numbers in 2004 and Table 3: Enrolments and Achievements of Electronic/ Electrical Engineering Degrees Year Total Students Enrolled Achievements Source: New Zealand Council of Engineering Deans 4 5 Caroline Saunders, Impact of Electronic firms in Christchurch on the Canterbury and New Zealand Economy, Canterbury Development Corporation, KPMG, in ICT Sector Profiles-Electronics, Given the diversity of work that electronic engineers are engaged in, it should be noted that there is scope for significant crossover from other engineering degree courses. For instance, a Bachelor of Science in Software Engineering may be useful for those wishing to specialise in programming computer software for electronics.

5 A comparison of graduate output with the total number of people working in this field yields a training rate for electronic/electrical engineers of 5.8% (see Table 4). The training rate provides a rudimentary measure of the rate at which supply can potentially grow through training. While this is marginally higher than the average training rate for all professionals surveyed (5.5%), the equivalent training rate in New South Wales, Australia is 7.2% 6. The New Zealand training rate of 5.8% for electronic/electrical engineers also seems low in relation to the strong growth in employment in electronic equipment manufacturing over the past four years (9.5% per annum). Table 4: Training Rates for Electronic/Electrical Engineers, 2003 Indicator Explanation Electronic/ Electrical Engineers (NZ) All SERA Professionals Surveyed (NZ) Electronic Engineers (NSW, Australia) Training Rate (BE) Number of persons achieving a relevant qualification expressed as a percentage of employment in that occupation 5.8% 5.5% 7.2% Source: Department of Labour (New Zealand), Department of Employment and Workplace Relations (Australia). 4.2 Retirement Based on 2001 Census data, it is estimated that approximately 0.8% of the electronic engineer workforce retires each year. This amounts to an annual loss of between 20 and 30 electronic engineers. This is lower than the average retirement rate for the broader group of architects, engineers and related professionals (1.4%), and lower than the retirement rate for all professional occupations (1.3%). The percentage of electronic Figure 1: Age Profile of Electronic Engineers, % 20% 15% 10% 5% 0% Source: Census of Population and Dwellings, Statistics New Zealand. engineers aged 50 years or more rose from 10% to 19% between 1991 and As the electronic engineer workforce ages, the number retiring each year will increase over time and this is likely to place constraints on supply in the future. 4.3 Summary Approximately 115 students graduated with a BE in Electronic/Electrical Engineering in both 2002 and 2003, and the Department expects little change to 6 In this report, comparisons are made between New Zealand and New South Wales, Australia to contextualise the findings. No national level estimates of training rates are available for Australia, so statelevel data have been used. New South Wales is Australia s most populous state with the largest economy and its economy most closely resembles the structure of the New Zealand economy. It was thus deemed to provide the most suitable jurisdiction for labour market comparisons.

6 6 this number over the next two years. A comparison of graduate output with the total number working in this field yields a training rate of 5.8%. However, graduate supply has not kept up with the rapid growth in demand, and it is lower than the training rate for electronic engineers in New South Wales, Australia (7.2%). Between 20 and 30 electronic engineers retire each year. 5 Employer Recruiting Experiences 5.1 Survey of Employers who have Recently Advertised Employers interviewed in the 2004 SERA had differing experiences when trying to recruit electronic engineers. The majority found it quite difficult to recruit, and felt that recruitment was becoming more difficult. Several employers commented that it took them two to three months to find someone to employ, with one employer taking 18 months. Others were not having any difficulty recruiting straight from universities and polytechnics. They generally indicated that the quality of graduates from both polytechnics and universities was high. Some felt that too many engineering undergraduates were focusing on the IT industry, rather than the electronics industry Employers reported that they were mainly recruiting electronic engineers for new positions, rather than replacing existing ones, suggesting employment growth has occurred in the industry. There appears to be a shortage of electronic engineers with a few years relevant industry experience, which mainly reflects the rapid growth and fast pace of change in specialised fields of electronics. It was felt many potential employees lacked experience with equipment and the hands on skills necessary in repair and assembly Employers indicated that migrants are willing to come to New Zealand from a diverse range of countries, including, for example, from Japan and Russia. Given the constantly evolving nature of electronics, however, there is not a large pool of suitable applicants globally. Employers felt that while many New Zealand graduates do go overseas, a high proportion return, often with enhanced skills, experience, and overseas contacts. Student debt was commonly cited by employers as the prime reason for emigration amongst new graduates Most employers surveyed felt that the level of job satisfaction was high. People tended to stay in the occupation because it covers an interesting and fast growing sector. In addition, as more niche electronic companies are developing in NZ, electronic engineers have more choices around the areas they can specialise in Given the electronic engineering industry in New Zealand is reliant on exports, one employer interviewed noted that some electronics manufacturing firms were beginning to shift more work offshore, partly because of the high exchange rate. 7 A fill rate has not been calculated for electronic engineers as there were not enough records included in SERA. This is a consequence of the small number of advertised vacancies for electronic engineers appearing in the print and electronic media at the time of the survey. The occupation is very small and, on average, only two advertised vacancies are measured each month in the Job Vacancy Monitor. In order to supplement data from SERA, a number of enterprises that typically employ electronic engineers, but did not necessarily advertise at the time of the survey, were interviewed about their recent recruitment experiences.

7 7 6 Outlook 6.1 The Department expects strong demand growth for electronic engineers to continue in the short to medium term as electronics are increasingly being used in a wide variety of businesses. The New Zealand electronics industry is largely reliant on exports, and while the high exchange rate may affect future demand to some extent, the industry is not highly sensitive to price. Many of New Zealand s large electronics companies are predicting substantial growth. The number of graduates achieving degree qualifications is not expected to increase over the next 1-2 years, and therefore the Department foresees the shortage of electronic engineers persisting in the short to medium term. For queries regarding this report please contact Disclaimer: The Department of Labour has made every effort to ensure that the information contained in this report is reliable, but makes no guarantee of its accuracy or completeness and does not accept any liability for any errors. The information and opinions contained in this report are not intended to be used as a basis for commercial decisions and the Department accepts no liability for any decisions made in reliance on them. The Department may change, add to, delete from, or otherwise amend the contents of this report at any time without notice. The material contained in this report is subject to Crown copyright protection unless otherwise indicated. The Crown copyright protected material may be reproduced free of charge in any format or media without requiring specific permission. This is subject to the material being reproduced accurately and not being used in a derogatory manner or in a misleading context. Where the material is being published or issued to others, the source and copyright status should be acknowledged. The permission to reproduce Crown copyright protected material does not extend to any material in this report that is identified as being the copyright of a third party. Authorisation to reproduce such material should be obtained from the copyright holders.

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