On the Floodplain Manager Skills Shortage

Transcription

1 A.R. and K. A. Austin Sinclair Knight Merz Pty Ltd, 590 Orrong Rd, Armadale Vic Abstract In Australia, issues of an aging workforce and skills shortages are affecting most businesses now and are projected to worsen. These issues apply to the water industry in general and floodplain management in particular. Recent work for the Water Services Association of Australia (WSAA) projected a skill gap of several thousand people over the next 5 to 10 years in the water industry. The actual shortages are likely to be much larger because a number of water industry employers were not considered including floodplain management and catchment management authorities. Responding to the issues of an aging workforce and skills shortages requires both cooperative and competitive strategies. 1. INTRODUCTION This paper outlines aging workforce and skills shortage issues in the water sector. These issues apply to the water industry in general and floodplain management in particular. Broad strategies are explored for addressing these issues. This paper includes: An introduction to skills shortage, labour shortage and aging workforce issues; Two simple models of the labour force within an industry and related to an employer such as a floodplain management authority; General strategies suggested by these models; Activities within the water industry to address aging workforce and skills shortages issues; and An annotated bibliography of the major reports related to these issues. 2. SKILLS SHORTAGE/AGING WORKFORCE: THE BASICS 2.1. What is a skills shortage? According to the Productivity Commission: Labour shortages refers to difficulties experienced by employers generally in employing particular occupations at what were previously adequate wages and conditions (DEWR 2004b) the demand for people in these occupations at a given wage, exceeds their supply. Such specific skilled labour shortages are on-going features of any market economy as shifts in consumption and production occur (for example, shortages of geologists during the mining boom and bricklayers during the housing boom). Generally, such specific occupational skill shortages (and excesses) are transitory, as training institutions respond to demand, industry structures change and relative occupational wage rates vary. Productivity Commission (2004, p69)

2 From an economic perspective, a labour shortage is likely to be a short-run imbalance as industry adjusts to changes in demand and supply (Trendle, 2004) unless there are external factors that prevent the situation coming into balance. We are assuming that labour shortage and skills shortage are different terms for the same issue. An aging workforce can lead to a skills shortage if the number of experienced people leaving an industry through retirements is greater than can be replaced. There is talk of a skills shortage in the water industry. Two simple models can be used to understand the situation and possible actions: 1) A model of employment within a particular industry; and 2) A model of employment by a particular employer 3. SIMPLE MODEL 1: EMPLOYMENT WITHIN AN INDUSTRY There has been much discussion of shortage of workers in particular industries. Most of this has just focused on demand e.g. Barrett (2008), where retirements and numbers leaving the industry are summed to produce a projected gap in the workforce. In fact, there will only be a skills shortage if there is an imbalance between demand and supply. A simple model of employment within a particular industry is shown in Figure 1. Figure 1 Simple model of employment within an industry The inputs are: graduates, skilled immigrants, leakage in (people transferring from other industries) and people returning from temporary departures (e.g. maternity leave). Outputs are: retirements, leakage out (people transferring to other industries), emigration (people leaving the industry to live in another country) and people leaving to temporary departures (e.g. maternity leave). Over time, the change in the number of people working in an industry will be the difference between the inputs and the outputs. The need for workers in a particular industry can also change over time; for example, the number of people employed in Agriculture decreased by about 25% following the 2002/03 drought when agriculture output also declined by about 25%. Similarly there has been a long term increase in the size of the consulting segment of the water industry as the technical workforce within government has Joint NSW and Victorian Flood Management Conference Albury Wodonga February of 11

3 declined. Activity may also be: Outsourced internationally which will decrease domestic demand, or Insourced which will increase demand for workers If we sum the inputs, outputs and change in demand over time then the three possible situations are. 1. The workforce demand and supply are in balance 2. There is oversupply of workers 3. There is a labour shortage There is evidence of a labour shortage in the water industry, for example, Work undertaken by the Water Services Association of Australia (Barrett, 2008) highlights skills shortages in the urban water sector. A report by Engineers Australia shows that based on surveys and indirect evidence there is a shortage of engineers, particularly Civil Engineers which is a discipline widely employed in the water industry and floodplain management (Kaspura, 2008). A report by the Department of Employment and Workplace Relations (2005) predicts that all industries will be affected by aging workforce over the next 5 years with shortfall of workers A SWOT analysis on Australian Hydrology suggested that skills shortages were an emerging issue (Nathan, 2007) Aging workforces and skills shortages lead to increased costs for business including: Higher wages Increased costs of recruiting Higher staff turnover Extra work that may be required to maintain the quality of products produced by inexperienced workers In addition, businesses are likely to have difficulty maintaining production because of a lack of workers Possible Responses if There is a Labour Shortage This model suggests several possible responses to a labour shortage: Increase the number of graduates Increase the net immigration of skilled workers for that particular industry Decrease retirements Increase leakage in Decrease leakage out Shrink the demand for workers by, cancelling projects, delaying projects or Outsource work internationally Introduce flexible work practices to allow people to leave temporarily and return to work or to maintain the balance between work and other commitments Joint NSW and Victorian Flood Management Conference Albury Wodonga February of 11

4 4. PARTICULAR ISSUES IN THE WATER INDUSTRY This section outlines some workforce issues for the water industry in particular Retirements Some reports (e.g. Barrett, 2008) suggest there will be a large number of retirements in the water industry over the next few years. If the age profile of an organisation is such that it includes people with ages evenly spread between 22 to 62 years i.e. 40 years; then you would expect 1/40 = 2.5% of the workforce to retire each year. The proportion of the workforce greater than 45 would be about 17 x 2.5 = 42.5%. The median age of workers would be about 42 years. Currently, in the water industry the workforce is not evenly spread across age ranges; there are more older workers which means retirement rates are increased. For example 49.2% of the workforce is greater than 45 years old compared to 40.2% for the all industry median and the retirement rate is around 5% per year (Barrett, 2008). The high retirement rate means there is a larger than normal loss of experienced workers. Strategies to decrease the impact of high retirement rates in the water industry can be summarised in three main areas: Reducing retirements by water sector employees o Provide flexible working arrangements e.g. part time work, additional leave. o Allow people to retire from the work they don t want to do while encouraging them to continue the work they like Increasing the size of the pool of retirees that are interested in working Increasing the number of recruits in the water industry from the pool of retirees o Develop recruitment strategies specifically targeted to people who have retired from full-time work 4.2. Remuneration Work by WSAA (Barrett, 2008) suggests that salaries are lower in the water industry than in other industries (Table 1). This is likely to lead to Leakage out as people move to industries where they are paid more. Work by APESMA suggests that Remuneration rated as the most important attribute of an employer of choice and the most significant factor by employees considering their next career move and More than 75% of respondents to an APESMA survey at Western Australia s Water Corp said their remuneration was inadequate, and nearly 60% intended to leave within five years (Bozik, 2008). These findings suggest that salaries in the water industry will have to increase or the skills shortages will worsen. Table 1 Median salaries in 2007 Water industry Australia all industry Male $59,000 $75,300 Female $55,800 $60,000 All $57,400 $68,800 Joint NSW and Victorian Flood Management Conference Albury Wodonga February of 11

5 4.3. Working Conditions Other areas where the water industry varied substantially from averages across all industries were: Employment status: 93% of employees were full time compared to 75% for the average across all industries. This could suggest a lack of flexibility in work practices. Tenure: almost 50% of the water industry have more than 10 years tenure compared to 33.7% for all industry averages Resignation rates: the median resignation rate was 8.1% compared to all industry median of 14.7% however resignation rates for Civil Engineers were 20.7%, much higher than the water industry median suggesting there may be retention issues within particular job roles. Work by the Department of Employment and Workplace Relations (2005) also showed that Civil Engineers, as a group, had a higher median age than average. This suggests there is a high leakage rate amongst Civil Engineers and on-going loss of experienced professionals Graduates Graduates are often assumed to be the key source of new skilled workers in an industry and a pool of new graduates will clearly be important to overcome skills shortages. Engineering graduate numbers are tracked by the Engineers Australia (Kaspura, 2008). Data is available from 2001 to 2006 and show that the number of domestic students completing bachelors degrees in engineering has been reasonably constant about 6,000 per year. Civil Engineering, an important discipline for the water industry, experienced a steadily declining share in graduations falling from 899, or 15.4% of graduates in 2001 to 686, or 11.4% of graduates in 2006 (Kaspura, 2008). About 22,000 people identified themselves as Civil Engineers in the 2006 census (2,000 women and 20,000 men) (Kaspura, 2008). If we assume a 5% retirement rate then about 1,100 Civil Engineers will be leaving the workforce every year, around double the number of new Civil Engineering graduates. The total demand for Civil Engineers is likely to be much greater than just replacing retirements given the current and planned large infrastructure projects. Other data shows that the number of engineers available to undertake work on infrastructure projects, as a ratio of the cost of the projects had approximately halved between 1994 and In 1994 there were 26.3 new engineering graduates for each $100 million in engineering construction activity and this decreased to 12.3 new engineering graduates for each $100 million in engineering construction activity in 2006 (Kaspura, 2008). This supports the notion of a skills shortage. One of the reasons that there are so few engineering graduates is the high dropout rate. About 12,000 Australian nationals commence degrees in engineering each year but only about 6,000 complete their courses (King, 2008). Perhaps teaching quality at Universities has declined. Since 1996 there has been a large increase in average class sizes and the full-time equivalent student to teaching staff ratio has risen from about 14 to 21 (King, 2008) Immigration of skilled workers Another important source of workers to an industry is skilled migrants. This is particularly significant in engineering where there are a large number of permanent and temporary workers arriving each year with a recent rapid increase. In the overall total of engineering immigrants was 6,090; 4,120 were permanent and 1,970 on temporary 457 visas. About 2,000 of the permanent immigrants are on-shore applicants many of which are international students who have completed their engineering degrees in Australia. These numbers can be compared to engineering graduates. In 2006 there were 5,853 new baccalaureate graduates and 4,120 new migrant engineers. If the temporary engineers on 457 visas are included, the supply of new degree qualified engineers is 11,943 and migration accounts for 51% of the new supply. Considering just Civil Engineers, in there were 1,559 immigrants; 809 permanent and 750 on Joint NSW and Victorian Flood Management Conference Albury Wodonga February of 11

6 temporary 457 visas. This is more than double the number of domestic graduates. Considering both domestic and immigrant Civil Engineers, the total number of entrants to the workforce in was 2,245, about 10% of the existing Civil Engineering population. This suggests that Australia is under investing in educating engineers (King, 2008). Providing more engineering places in universities and decreasing the dropout rate are clearly strategies that should be considered in addressing the skills shortage. 5. SIMPLE MODEL 2: EMPLOYMENT BY A PARTICULAR EMPLOYER When considering employment by a particular employer e.g. a floodplain management authority, there are a few additional stocks and flows that are worth considering (Figure 2). Inputs: Graduates, recruitment of experienced staff, retiree recruitment, people returning from temporary departures (e.g. maternity leave). Outputs: Retirements, resignations, people leaving to temporary departures (e.g. maternity leave). There may also be a change in size of an employer, for example, the technical service area of authorities has tended to decline over time, while the number of employees in consulting companies has tended to increase. It is worth making a distinction between three pools of potential recruits, as strategies to recruit people from these pools are likely to be quite different. 1) Graduates 2) Experienced staff 3) Retirees 5.1. Possible Response If there is a Labour Shortage This model suggests several possible responses to a labour shortage both: Direct (increase inputs and decrease outputs) Indirect (increase the size of the pools that recruits can be attracted from) Direct responses: Increase graduate recruitment Increase the recruitment of experienced people Increase recruitment of retirees Decrease resignations Decrease retirements Direct responses will usually be in competition with other industries. Indirect responses: Increase the number of graduates Increase the pool of experienced people: o Increase leakage in o Increase skilled immigrants o Decrease leakage out Increase the pool of retirees that would be willing to work Indirect responses are likely to be more effective if they are undertaken cooperatively with other Joint NSW and Victorian Flood Management Conference Albury Wodonga February of 11

7 employers and industries. Skilled immigrants. Figure 2 Simple model of employment within an industry 6. EXISTING ACTIVITIES BY THE WATER INDUSTRY RELATING TO SKILLS SHORTAGES Aging workforce/skills shortages issues are well recognised by the water industry and there are a number of strategies in place WICD (Water Industry Capacity Development) The Water Industry Capacity Development program (WICD) is a collaborative initiative, headed by the Australian Water Association, that aims to address the long-term skills issues in the water sector. The four highest priority WICD projects are: 1) Gaps in skills training and professional development Assess and map water industry gaps in skills, training and professional development. Identify regional gaps in availability of training courses and fill them. Phase 1 of this project is completed. 2) University courses Joint NSW and Victorian Flood Management Conference Albury Wodonga February of 11

8 Industry input into university courses. Coordinate and develop a range of opportunities for students to gain scholarships and industry experience. Create multi-disciplinary professional development opportunities 3) National Water Industry Employment Branding Create a national brand to market the water industry/sector and careers. See 4) Intra Water Industry Secondments A multidisciplinary approach to enhance water industry capability through structured workplace enhancement programs that provide opportunities to upgrade skills and knowledge of all staff Additional projects, many of which haven t started yet, are: 5) Generic training resources 6) Awards program 7) Develop learning and Development Industry standards 8) Develop Job Profiles/Industry skills sets 9) Mature Age Worker Strategy 10) Web-based tools 11) National Licensing 12) Graduate Literacy and Communication Tools A National Water Industry Skills Forum was held in Canberra on 17 March 2008 convened by the National Water Commission, Australian Water Association (AWA) and the Water Services Association of Australia (WSAA) as part of WICD. Outcomes include: The industry will back a national awareness campaign to attract people into the water sector and promote the industry as a sector of choice. To support career pathways in the industry, WSAA and AWA will spearhead an industry-wide exchange program to promote skills sharing. Incentives to attract skilled professionals will also be pursued through cadetship and fellowship schemes. Recognising that the chronic shortage of maths, science and engineering graduates is impacting productivity across many industry sectors, the Forum strongly supports Australian Government incentives to boost enrolments in these courses. The industry will work with the education sector to increase the number of places in higher education programs. In a first step to support this commitment, the Australian Government, through the National Water Commission, has announced $1.7 million in funding for a graduate course in water planning, and a further $ to target skills shortages across the sector. In addition to these moves designed to tackle longer term skills and capacity building requirements, the industry also calls for short-term solutions such as more creative use of immigration arrangements to allow the water industry to target and attract skilled migrants. To ensure these strategies are taken forward as part of an active plan for industry self-help, the Forum agreed to form a Water Industry Skills Taskforce. A Water Industry Capacity Development Conference was held on 31 March There is a WICD website and water related organisations are invited to join Joint NSW and Victorian Flood Management Conference Albury Wodonga February of 11

9 6.2. Water Industry Skills Taskforce The Water Industry Skills Taskforce is chaired by Tom Mollenkopf (CEO AWA) and is made up of CEO-level representation from the water industry and related education and government sectors: AWA, WSAA, NWC, SA Water (Urban water utility representative), Veolia Water (consulting engineering organisation representative), GHD (Infrastructure/Construction organisation representative), Government Skills Australia (Vocational sector), University of Melbourne (University sector), Irrigation Australian Limited and the Council of Australian Governments (CoAG) Working Group on Human Resources and Skills (ex officio). The role of the taskforce is to promote and oversee a nationally coordinated effort to address the skills shortage in the water sector Water Education Network (WEN) The Water Education Network (WEN) has been developed by a partnership of the Australian Water Association (AWA) and the NSW Government Water for Life Program. A web-based searchable database contains information on educational resources related to the water industry 7. ANNOTATED BIBLIOGRAPHY This section lists the key reports related to Aging workforce/skill shortage issues 1) ICEWaRM (International Centre of Excellence in Water Resources management)(2008) Gaps in skills, training and education in water management: a preliminary report. Reviewed skill requirements, current training offerings and identified gaps. 2) Barrett, K. (2008) An assessment of the skills shortage in the urban water industry. WSAA Occasional Paper No. 21. March Water Services Association of Australia. Suggests a large skills shortage in the water industry and highlights particular issues with high turnover of Civil Engineers. 3) Leslie, G. (nd) Addressing the skills shortage in the urban water industry. Water Services Association of Australia. Mainly based on Barrett (2008); suggests that skills shortages may be much larger than indicated because a number of water industry employers have not been considered: regional water utilities, the irrigation sector, local government (e.g. stormwater), the construction industry associated with the water industry and environmental consultants. Identifies a particular issue related to recruiting and retaining operators of water and wastewater plants. 4) Department of Employment and Workplace Relations (2005) Workforce tomorrow: adapting to a more diverse Australian labour market AdaptingtoamorediverseAustralianlabourmarket.htm Predicts that all industries will be affected by aging workforce over the next 5 years with shortfall of workers. Industry will have trouble maintaining production because of a lack of workers and face additional costs because of: 1) extra work required to maintain quality of goods produced by inexperienced workers; 2) higher wages; 3) increased costs of recruiting. Strategies to address these issues include: Creating a more diverse workforce Retaining mature-age employees through strategies such as phased retirement and ageaware training Mentoring and coaching new employees to improve their productivity Increasing education and training for existing employees (both on the job and off the job) Joint NSW and Victorian Flood Management Conference Albury Wodonga February of 11

10 Improving the work/family balance for their employess to attract and retain workers with children and/or caring for elders Providing child care facilities in or near the workplace to retain workers who are primary carers for young children Modifying the workplace and tasks so that they can be performed by employees with various levels of disability Taking advantage of government incentives to try out new employees with different characteristics from their current employees The report highlights issues associated the aging workforce in the water industry and amongst Civil Engineers. These issues were confirmed by the Barrett (2008). 5) Workforce Planning Resource Kit. A series of publications from the State Services Authority of Victoria that identifies issues associated with the aging workforce and skills shortages in the Victorian Public Service. Findings include: Infrastructure project management is likely to experience substantial shorages over the medium-term which will have a significant impact on service delivery outcomes. Significant shortages are expected in the water area of the public sector. Recommends a workforce planning approach to identifying and addressing skills shortages 8. CONCLUSION There has been a series of reports over the last 5 years that have highlighted issues of aging workforce/skills shortage. Aging workforces and skills shortages lead to increased costs for business and government agencies including: Higher wages Increased costs of recruiting Higher staff turnover Extra work that may be required to maintain the quality of products produced by inexperienced workers In addition, organisations are likely to have difficulty maintaining production because of a lack of workers. Issues around aging workforces and skills shortages are well recognised by the water industry and there are strategies being developed by industry bodies including: 1) WICD - Water Industry Capacity Development program which is a collaborative industry initiative that aims to address the long term skills issues in the water sector. 2) Water Industry Skills Taskforce which aims to promote and oversee a nationally coordinated effort to address the skills shortage in the water sector. These initiatives deserve the support of all participants in the water industry, including floodplain managers. 9. REFERENCES Barrett, K. (2008) An assessment of the skills shortage in the urban water industry. WSAA Occasional Paper No. 21. March Water Services Association of Australia. Joint NSW and Victorian Flood Management Conference Albury Wodonga February of 11

11 Bozik, M. (2008) Mind the gap: pubic sector organisations are losing their ability to attract and retain the best technical professionals. Career Matters. APESMA Employment. Issue 9. Association of Professional Engineers, Scientists and Managers, Australia Department of Employment and Workplace Relations (2005) Workforce tomorrow: adapting to a more diverse Australian labour market AdaptingtoamorediverseAustralianlabourmarket.htm Engineers, Australia (2004) Submission to the Productivity Commission on the Economic Implications of Ageing Australia. Kaspura, A. (2008) The Engineering Profession, a statistical handbook. Institution of Engineers, Australia. King, R. (2008) Engineers for the future: addressing the supply and quality of Australian Engineering graduates for the 21 st century. Australian Council of Engineering Deans. Murray, A. and Seddon, S. (2008) Preliminary water industry interaction with universities survey. Water Industry Capacity Development. Nathan, R. J. (2007) The future: a hydrological SWOT analysis. Australian Journal of Water Resources 11(2): National Farmer s Federation (undated) Summary of labour shortages in the agricultural sector. PC (Productivity Commission) (2004) Economic implications of an ageing Australia. Productivity Commission Research Report. 24 March data/assets/pdf_file/0020/69401/ageing.pdf Trendle, B. (2004) Perspectives on skill shortages. Labour Market Research Unit. Department of Employment and Training Queensland Government. tages.pdf Joint NSW and Victorian Flood Management Conference Albury Wodonga February of 11