THE ENGINEERING PROFESSION: A STATISTICAL OVERVIEW. Eleventh Edition, October 2014

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1 THE ENGINEERING PROFESSION: A STATISTICAL OVERVIEW Eleventh Edition, October 2014

2 The Engineering Profession: A Statistical Overview, ELEVENTH edition, AUGUST 2014 ISBN Author: Andre Kaspura Institution of Engineers Australia 2014 All rights reserved. Other than brief extracts, no part of this publication may be reproduced in any form without the written consent of the publisher. The report can be downloaded at Public Relations and Marketing Engineers Australia 11 National Circuit, Barton ACT 2600 Tel:

3 Engineers Australia i

4 CONTENTS Chapter 1 Introduction 1 Main Points Engineers and Engineering Objective of the Statistical Overview The Engineering Team Data Sources and Caveats What s New in this Edition? 4 Chapter 2 The Engineering Labour Market 6 Main Points The Supply of Qualified Engineers The Demand for Qualified Engineers Retention in Engineering Unemployment Labour Force Participation Types of Engineering Qualifications Distribution between States and Territories 10 Chapter 3 Skilled Migration 13 Main Points Country of Origin and the Engineering Labour Market Sources of Australia s Migrant Engineers Australia Retention in Engineering Occupations Proficiency in Spoken English 21 Chapter 4 Transition from School to Engineering Education 22 Main Points Year 12 Mathematics and Science Studies Completion of Year 12 Mathematics and Science Basis of Admission to Bachelor Degrees Transition from School to University Engineering Courses 28 Chapter 5 University Engineering Education 30 Main Points Course Commencements Enrolments in Engineering Courses Course Completions Annual Retention Rates for Bachelor Degrees The Engineering Share of Course Completions State and Territory Shares of Bachelor Degree Completions 42 Chapter 6 Supply and Education 45 Main Points What is Included in Statistics Labour Market Choices of New Graduates Engineering Technologists Professional Engineers New Degree Qualified Engineers Associate Engineers 52 Engineers Australia ii

5 6.7 Annual Additions to the Engineering Team 54 Chapter 7 Supply and Skilled Migration 56 Main Points Australia s Skilled Migration Policy Assessing Overseas Engineering Qualifications Trends in Skilled Migration of Engineers Permanent Visas Temporary Visas 60 Chapter 8 Industry Distribution of Engineers 64 Main Points Industries and Industry Statistics Employment at Industry Group Level Industries with Large Engineering Employment 68 Chapter 9 Geographic Location 74 Main Points The ABS Approach to Geographic Statistics New South Wales Victoria Queensland South Australia Western Australia Tasmania The Territories 77 Chapter 10 Engineering Specialisations 83 Main Points Engineering Courses and Engineering Specialisation Broad Specialist Areas of Engineering Detailed Engineering Streams 86 Chapter 11 Average Ages and Age Structure 89 Main Points Average Ages of Engineers Age Structure and how it has changed Age and Labour Force Participation 93 Chapter 12 Experience, Remuneration and Age 95 Main Points The Framework Employed Length of Experience Average Ages Salary Movements 102 Chapter 13 Change Indicators for the Engineering Labour Market 106 Main Points The Need for Change Indicators Trends in Engineering Construction 107 Engineers Australia iii

6 13.3 Vacancies for Engineers Recruitment Difficulties Survey 111 Chapter 14 The Engineering Labour Market in Main Points Assessing the Engineering Labour Market Changes in the Supply of Engineers Changes in the Demand for Engineers 116 Engineers Australia iv

7 LIST OF TABLES Chapter 2 Table 2.1: The Engineering Labour Markets in 2006 and Table 2.2: Comparative Statistics for States and Territories 11 Chapter 3 Table 3.1: The Engineering Labour Market in 2006 and Table 3.2: The Regions of Origin of Overseas Born Engineers 16 Chapter 5 Table 5.1: Domestic Students Commencing Engineering and Related Technology Courses 32 Table 5.2: Overseas Students Commencing Engineering and Related Technology Courses 32 Table 5.3: Students Commencing Engineering and Related Technology Courses, by Country of Domicile 33 Table 5.4: Students Commencing Engineering and Related Technology Courses, by Gender 33 Table 5.5: Domestic Students Enrolled in Engineering and Related Technology Courses 35 Table 5.6: Overseas Students Enrolled in Engineering and Related Technology Courses 35 Table 5.7: Students Enrolled in Engineering and Related Technology Courses, by Country of Domicile 36 Table 5.8: Students Enrolled in Engineering and Related Technology Courses, by Gender 36 Table 5.9: Domestic Students Completing Engineering and Related Technology Courses 38 Table 5.10: Overseas Students Completing Engineering and Related Technology Courses 38 Table 5.11: Students Completing Engineering and Related Technology Courses, by Country of Domicile 39 Table 5.12: Students Completing Engineering and Related Technology Courses, by Gender 39 Table 5.13: Annual Retention Rates for Bachelor Degree Students, in Engineering And in Institution 40 Chapter 6 Table 6.1 Domestic Students Completing Three Year Bachelors Degrees in Engineering 48 Table 6.2 Domestic Students Completing Four Year Bachelors Degrees in Engineering 49 Table 6.3 Domestic Students Completing Four Year Bachelor Double Degrees in Engineering 50 Table 6.4 Domestic Students Completing Bachelors Degrees in Engineering, All Durations 51 Table 6.5 Domestic Students Completing Associate Degrees and Advanced Diplomas in Engineering at Universities 52 Table 6.6 Completions of Associate Degrees and Advanced Diplomas in Engineering from Australian TAFE Colleges 54 Engineers Australia v

8 Table 6.7 Annual Changes in the Engineering Team from Course Completions by Citizens and Permanent Residents 53 Chapter 7 Table 7.1 An Overview of Skilled Migration of Engineers to Australia 58 Table 7.2 Engineering Specialisations Granted Permanent Migration Visas 60 Table 7.3 Temporary Visas Granted to Engineers on the SOL in the Skilled Migration Program 62 Chapter 8 Table 8.1 Engineering Employment in the Context of General and Skilled Employment, 2006 and Table 8.2 Annual Growth in General, Skilled and Engineering Employment, 2006 and Chapter 9 Table 9.1: The Distribution of the Engineering Labour Force Throughout NSW, Table 9.2: The Distribution of the Engineering Labour Force throughout Victoria, Table 9.3: The Distribution of the Engineering Labour Force Throughout Queensland, Table 9.4: The Distribution of the Engineering Labour Force Throughout South Australia, Table 9.5: The Distribution of the Engineering Labour Force Throughout Western Australia, Table 9.6: The Distribution of the Engineering Labour Force Throughout Tasmania, Chapter 10 Table 10.1: The Engineering Labour Force, Broad Streams of Engineering Education, 2006 and Table 10.2: The Engineering labour Force, Detailed Streams of Engineering Education, Table 10.3: The Engineering labour Force, Detailed Streams of Engineering Education, Chapter 11 Table 11.1 The Average Age of the Engineering Labour Force 90 Table 11.2 The Age Structure of the Engineering Labour Force, 2006 and Chapter 12 Table 12.1 Average Experience of Private Sector Professional Engineers 97 Table 12.2 Average Experience of Public Sector Professional Engineers 97 Table 12.3 Average Age of Private Sector Professional Engineers 99 Table 12.4 Average Age of Public Sector Professional Engineers 100 Table 12.5: The Average Age of Professional Engineers 102 Table 12.6 Average Salary Packages for Professional Engineers in the Private Sector 102 Table 12.7 Average Salary Packages for Professional Engineers in the Public Sector 103 Table 12.8 Average Growth in Professional Engineer Salary Packages 104 Engineers Australia vi

9 Chapter 11 Table 11.1 Difficulties Experienced in Recruiting Engineers 93 Table 11.2 The Consequences of Difficulties Recruiting Engineers 94 Engineers Australia vii

10 LIST OF ILLUSTRATIONS Chapter 2 Figure 2.1: Engineering Qualifications and Retention in Engineering, Figure 2.2: Comparative Annual Growth Rates for the Supply and Demand for Qualified Engineers in States and Territories 11 Chapter 3 Figure 3.1: Unemployment Rates in 2011 of Overseas Born Qualified Engineers by Time of Arrival in Australia 17 Figure 3.2: Overseas Born Qualified Engineers in 2011, Region of Birth and Time of Arrival in Australia 18 Figure 3.3: Unemployment Rates in 2011 for Overseas Born Qualified Engineers, Region of Birth 19 Figure 3.4: The Proportion of Overseas Born Qualified Engineers Employed in Engineering Occupations in 2011, By Arrival in Australia 20 Figure 3.5: Proportion of Overseas Born Qualified Engineers Employed in Engineering Occupations, By Region of Birth 20 Figure 3.6: The Proportion of Overseas Born Qualified Engineers Who Assessed their Spoken English as Very Well or Well in Chapter 4 Figure 4.1: Year 12 Participation in Mathematics 22 Figure 4.2: Year 12 Participation in Physics and Chemistry 23 Figure 4.3: Year 12 Participation in Science 23 Figure 4.4: Year 12 Course Completions by Subjects 24 Figure 4.5: Trends in the Completion of Year 12 Mathematics Courses 25 Figure 4.6: Trends in the Completion of Year 12 Science Courses 25 Figure 4.7: The Basis for Admission to Bachelor Degrees, Domestic Students 27 Figure 4.8: The Basis for Admission to Bachelor Degrees, Overseas Students 27 Figure 4.9: Applications for, Offers Made and Acceptances of Places in University Engineering Courses, 2001 to Figure 4.10: Offers Made by Universities by ATAR Scores, Chapter 5 Figure 5.1: The Share of Overseas Students in Engineering Compared to All Course Completions 41 Figure 5.2: The Engineering Share of Doctoral Degree Completions 41 Figure 5.3: The Engineering Share of Coursework Masters Degree Completions 41 Figure 5.4: The Engineering Share Of Bachelors Degree Completions 42 Figure 5.5 Jurisdictional Shares of Completions of Bachelor Degrees in Engineering, Domestic Students 43 Figure 5.6 Jurisdictional Shares of Completions of Bachelor Degrees in Engineering, Overseas Students 43 Chapter 6 Figure 6.1: The Destination of New Engineering graduates Compared to New Graduates in General, 2009 to Engineers Australia viii

11 Figure 6.2: The Annual Flow into the Engineering Team from Course Completions by Citizens and Permanent Residents 55 Chapter 7 Figure 7.1 Skilled Migration Visas Granted to Engineering SOL Occupations 58 Figure 7.2 Permanent Visas Granted to Engineering Occupations 59 Figure 7.3 Temporary 457 Visas Granted to Engineering Team Occupations 61 Chapter 8 Figure 8.1 Employment of Qualified Engineers in Engineering Occupations in Industries that Employ at least 1,000 Engineers 68 Chapter 11 Figure 11.1 The Age Structure of the Engineering Labour Force in 2011 And how it has changed since Figure 11.2 The Age Structure of Engineers in Engineering Occupations in 2011 And how it has changed since Figure 11.3 Labour Force Participation of Engineers and Age Structure 93 Figure 11.4 The Age Profile of Labour Force Participation in Engineering Compared to All Skilled Areas, Chapter 12 Figure 12.1 Comparing Work Experience of Professional Engineers in the Private and Public Sectors 98 Figure 12.2 Change in Average Experience Levels for Private Sector Professional Engineers 98 Figure 12.3 Change in Average Experience Levels for Public Sector Professional Engineers 98 Figure 12.4 Average Ages of Professional Engineers in the Private and Public Sectors 100 Figure 12.5 Average Ages of Professional Engineers in the Private Sector 101 Figure 12.6 Average Age of Professional Engineers in the Public Sector 101 Figure 12.7 Trends in Engineering Salaries compared to Full Time Adult Earnings 104 Chapter 13 Figure 13.1 Trends in National Economic Infrastructure and Total Engineering Construction Work Done 107 Figure 13.2 Annual Growth Economic Infrastructure Components, Past Decade, Past Five Years and Last Year 108 Figure 13.3 Annual Growth Components of Resources and Other Engineering Construction, Past Ten Years, Past Five Years and last Year 108 Figure 13.4 The Pipeline of Engineering Construction on Economic Infrastructure Australia 109 Figure 13.5 The Pipeline of Engineering Construction in the Resources And Other Sectors 109 Figure 13.6 Trends in Vacancies for Professionals, Engineers and Vacancies in General, Australia, January 2006 to August Figure 13.7 Monthly Changes in Vacancies for Engineers, Past Two Years, Past Year and past Three Months 110 Engineers Australia ix

12 Figure 13.8 Respondents who Experienced Difficulties Recruiting Engineers during the Past Twelve Months 111 Figure 13.9 Recruiting Difficulties Experienced by Grade Sought in 2013 Compared to the Medium Term Average 112 Figure Recruiting Difficulties Experienced by Location Compared to the Medium Term Average 112 Figure Difficulties Experienced Recruiting Engineers in 2013 Compared to the Medium Term Average 112 Figure The Consequences of Recruiting Difficulties Experienced in 2013 Compared to the Medium Term Average 113 Figure Expectations of Future Recruiting Difficulties 113 Engineers Australia x

13 Engineers Australia xi

14 Chapter 1: Introduction Main Points This Chapter describes the educational qualifications necessary to be part of the engineering team in Australia. The role of the Statistical Overview in piecing together fragmented labour market statistics on engineers and engineering is briefly discussed and key definitions used throughout the Report are explained. This edition updates statistics on trends in education, skilled migration and the characteristics of engineers. New material drawing out changes in the engineering labour force between the 2006 and 2011 is included in the Overview for the first time. Key topics include changes in the engineering labour market overall; changes brought about through skilled migration; a detailed review of industry distribution, including a ranking of the 50 largest industries by the number of qualified engineers employed and an analysis of the ages and age structure of engineers. 1.1: Engineers and Engineering Engineers and engineering are indispensable contributors to Australian prosperity and lifestyles. Engineering services are embodied in almost every good or service consumed or used by Australians, now and in the future. In this respect, engineers are the enablers of productivity growth through their role in converting brilliant ideas into new products, new processes and new services. Engineers also ensure that society gets the most out of existing facilities through optimising their operations and maintenance. Fully competent engineers hold accredited academic credentials in engineering and have then satisfactorily completed a process of professional formation that bridges the gap between academic studies and engineering practice. The time necessary to become an engineer is very long, academic studies are specific and highly analytical and the skills of engineering practice are vital to successful outcomes for the individual and society. Engineering is not homogeneous and there are numerous areas of engineering practice. To some degree specialisation begins with academic studies, for example, students can choose between degrees in mechanical engineering, civil engineering or electrical engineering. Most specialisation, however, takes place during the process of professional practice, for example, a graduate with a degree in civil engineering can choose to practice as a structural engineer, a geotechnical engineer, a coastal engineer or as a civil engineer. More detail on engineering specialisations can be found at Engineering skills and expertise are unique and cannot be substituted by skills and expertise offered by other professions. When engineers are over-ruled by others or when engineering decisions are not based on engineering designs and judgment, outcomes will be problematic. This has become particularly evident in areas where incremental cost cutting has reduced or eliminated engineering positions. The costs of some more dramatic examples have been highlighted in reports by auditorsgeneral 1. However, the training and experience of engineers offers transferable skills that are highly valued in many other fields of work. As a consequence qualified engineers are found in most occupations in the Australian economy, and, as demonstrated by the Statistics in Chapter 2, only about 60 to 62% are employed in recognised engineering occupations. The remainder are employed in a wide range of analytical and problem solving work outside engineering. Recognising means that retention of trained individuals in engineering is as important as growing the number of individuals with engineering qualifications. 1 See for example Engineers Australia 1

15 1.2: Objective of the Statistical Overview Engineers Australia was formed to advance the science and practice of engineering for the benefit of the community. Engineers Australia sets and maintains professional standards for its members consistent with international benchmarks, encourages the development of engineering knowledge and competencies, facilitates the exchange of ideas and information and informs community leaders and decision makers about engineers and engineering issues. This objective can best be achieved through the dissemination of factual information about engineers and about broader policy issues that involve engineering. The Statistical Overview contributes to these efforts by articulating statistics about the number of engineers in Australia, how many of them are engaged in engineering work and where, how and the circumstances of their work. The reason the Statistical Overview is necessary stems from the fragmented nature of Australian statistics dealing with a specific profession. At the macroeconomic level, high quality statistics to assist labour market policy decisions are available monthly. But, there are severe limitations in applying these statistics to the analysis of a profession, primarily because they do not provide for the educational qualifications essential for entry to the profession. Some have chosen to ignore these limitations and have extended the application of statistics intended for macroeconomic purposes to the disaggregated requirements associated with changes in engineering 2. Unfortunately, comparing apples and oranges has never been a satisfactory basis for policy analysis. The interests of Engineers Australia are best served by compiling statistics that represent the engineering profession as closely as possible and that begins by ensuring that those included in statistical counts are actually qualified to be considered part of the profession. This objective can be achieved, to varying degrees, by building on several sources of official statistics, and some unofficial sources, within the structures of well-known labour market definitions, employing as far as possible the statistical classifications of Australia s official statistical agency the Australian Bureau of Statistics (ABS). The Statistical Overview has employed an incremental approach improving and refining statistics and adding new ones each edition. The framework for arranging statistics is a simple stock formulation; the opening stock plus additions less losses is the closing stock. The collection is far from complete and several important gaps remain, notably statistics on the retirement of older engineers. However, improvements continue to be made so that the Statistical Overview represents a comprehensive and consolidated collection of Australian statistics on engineers and engineering. 1.3: The Engineering Team In Australia the engineering profession is organised into the engineering team. The engineering team comprises Professional Engineers, Engineering Technologists and Engineering Associates. The three groups are differentiated by educational qualifications, which in conjunction with the process of professional formation undertaken, shape the engineer s degree of conceptualisation and independent decision-making and so determine the complementarity between the groups in engineering practice. In detail, the roles of the three groups are: Professional Engineers apply lifelong learning, critical perception and engineering judgment to the performance of engineering services. Professional Engineers challenge current thinking and conceptualise alternative approaches, often engaging in research and development of new engineering principles, technologies and materials. Professional Engineers apply their analytical skills and well developed grasp of scientific principles and engineering theory to design original and novel solutions to 2 See for example the Issues Paper released by the Australian Workplace and Productivity Agency (AWPA) in support of their study of the engineering labour force, Engineers Australia 2

16 complex problems. Professional Engineers exercise a disciplined and systematic approach to innovation and creativity, comprehension of risks and benefits and use informed professional judgment to select optimal solutions and to justify and defend these selections to clients, colleagues and the community. Professional Engineers require at least the equivalent of the competencies in a four year full time Bachelor s Degrees in engineering. Engineering Technologists exercise ingenuity, originality and understanding in adapting and applying technologies, developing related new technologies or applying scientific knowledge within their specialised environment. The education, expertise and analytical skills of Engineering Technologists equip them with a robust understanding of the theoretical and practical application of engineering and technical principles. Within their specialisation, Engineering Technologists contribute to the improvement of standards and codes of practise and the adaptation of established technologies to new situations. Engineering Technologists require at least the equivalent of the competencies in a three year full time Bachelor Degree in engineering. Engineering Associates apply detailed knowledge of standards and codes of practice to selecting, specifying, installing, commissioning, monitoring, maintaining, repairing and modifying complex assets such as structures, plant, equipment, components and systems. The education, training and experience of Engineering Associates equip them with the necessary theoretical knowledge and analytical skills for testing, fault diagnosis and understanding the limitations of complex assets in familiar operating situations. Engineering Associates require at least the equivalent of the competencies in a two year full time Associate Degree in engineering or a two year full time Advanced Diploma in engineering from a university or TAFE college. Engineers Australia believes that formal qualifications in engineering are the first step towards becoming a competent practicing engineer. Demonstrating professional competence is common to the professions, but engineering differs in the process used. Other professions typically employ formal off-the-job training, often in conjunction with formal examinations. In engineering, the process of professional formation is entirely an on-the-job process over three to four years concluding with a formal assessment of skills and competencies acquired against sixteen documented and internationally recognised criteria. An important reason for an on-the-job process is that specialisations in engineering practice primarily occurs at this stage and the practicalities of alternative processes given the large number of engineering specialisations. Many professions, like doctors, lawyers or accountants, are regulated by governments and practitioners are unable to operate unless registered. Registration in these cases verifies that individuals have the necessary educational qualifications, have satisfied the standards necessary to be admitted to practice adhere to an appropriate code of ethical conduct and are subject to legal sanction if they practice unethically or negligently. Similar registration provisions apply to common trades like plumbers and electricians. Unfortunately, in Australia there are no similar registration provisions for engineers, except in Queensland. An important function of Engineers Australia is set up and administer arrangements equivalent to expectations in a legislated registration system. Of course, membership of Engineers Australia is entirely voluntary and these arrangements carry no force with non-members. Engineers Australia sees this as a major source of vulnerability for the Australian economy. 1.4: Data Sources and Caveats The three primary sources of official statistics used in the Statistical Overview are the Australian Bureau of Statistics (ABS), the Department of Education (DE) and the Department of Immigration and Border Control (DIBC). The ABS is the official Australian statistical agency and as such is responsible for statistical classification systems and these are used by the other agencies mentioned. From time to time, Engineers Australia 3

17 ABS classification systems change and time delays in the adoption of new systems can cause differences between agencies. There are no such problems at present. This apparent straight-forward situation does contain some inherent limitations. The most notable one being classification of individuals according to their highest qualification. Thus, a practicing engineer who holds an MBA as well a Bachelor degree in engineering is counted as belonging to the field of their highest qualification. Other minor issues have been canvased in earlier editions. The ABS is the source for census statistics covered in the Statistical Overview. These statistics are extracted by Engineers Australia using the ABS TableBuilder facility. The Department of Education is the primary source for higher education statistics and the Department of Immigration and Border Control is the primary source for statistics on skilled migrants granted visas. Limited statistics on TAFE completions are extracted from the National Centre for Vocational Education Research (NCVER) Vocstats system. Non-official statistics are sourced from a number of sources. For the last eight years, Engineers Australia has included several questions on recruiting difficulties experienced by engineering employers in an annual salaries survey conducted by its subsidiary, Engineers Media. This survey is appropriate because survey respondents, HR managers and business principals, are likely to be better informed about recruiting difficulties than individual engineers. On the other hand, statistics on the characteristics of engineers are better reflected in statistics collected by Professions Australia whose survey respondents are individual engineers. Graduate Careers Council statistics are used to inform the progress of new engineering graduates. Unfortunately, these sources do not employ ABS classification systems, complicating comparisons with other statistics. Engineering is a profession and not simply an occupation; how an engineer is qualified and what he/she does with the knowledge acquired are both important. In the Statistical Overview, two measures are used in conjunction. In the first measure conventional labour force definitions are combined with the educational qualifications essential for inclusion in the engineering team. This measures the engineering labour force or the supply of individuals who are qualified to be engineers. The second measure is more complex and seeks to answer the question; how many individuals in the engineering labour force work in occupations recognised as involving engineering work? This measure was derived from research by Engineers Australia which identified 52 of 358 four-digit ANZSCO occupations as engineering occupations 3. These occupations are not constrained by narrow occupational nomenclature but recognise the wide range of work that engineers are engaged in and recognise the range of occupations that engineers move through from initial graduation to retirement. This measure can be thought of as a measure of the number of individuals who have engineering qualifications retained in engineering work. In many situations the ratio of the two measures is employed as a simplification. From the policy perspective, the number of individuals with recognised engineering qualifications is important, but when employers experience engineering skill shortages, their complaints relate to the numbers of qualified individuals willing and able to work in engineering occupations. 1.5: What s New in this Edition? Following the pattern of past years, time series statistics on university applications, offers and acceptances, university education, TAFE completions, skilled migration, experience levels, salary packages and age are updated. These include some disaggregated statistics within the limits of what is available. Some new time series material has become available through the cooperation of the Australia Council of Engineering Deans. This includes a new section 4.3 on the basis of admission to Bachelor degree 3 Engineers Australia, The Engineering Profession in Australia; A Profile from the 2006 Population Census, September 2010, Engineers Australia 4

18 courses and a new section 5.4 on annual retention in Bachelor degrees in engineering. Engineers Australia expresses its thanks to the Deans for this material. Additional time series material from the Graduate Careers Council on the labour market choices made by new graduates has been included in a new section 6.2. In 2012, the Statistical Overview included for the first time statistics from the 2006 and 2011 population censuses undertaken by the ABS. This material provided important information on the structure of the engineering labour force and how it changed between those years. In 2013, new structural material looking in detail at the characteristics of overseas born engineers and the industry distribution of engineers was added. The latter included a list of the detailed industries that employ the most engineers in order of employment size. This year we have added further to the structural material by including a new Chapter 9 that deals with the geographic distribution of engineers in major regions within States and Territories. There is also a new Chapter 10 that looks at specialisation in engineering. Other changes made this year include a major reorganisation of the material covering the experience, salary packages and ages of professional engineers and a new approach to analysing how the age structure of the engineering labour market changed between 2006 and The most important difficulty encountered from the start of this project remains; there are no contemporary, reliable and readily available statistics on labour market changes. To compensate we have had to make do with alternative indicators. This year these have been reorganised into a new Chapter 13 on change indicators. A new Chapter 14 then brings together what we know about changes in supply and changes in demand to assess the status of the engineering labour market in Engineers Australia 5

19 Chapter 2: The Engineering Labour Market Main Points This Chapter considers the size of Australia s engineering labour market and how it changed between 2006 and When considering this topic it is important to differentiate between the number of people with acceptable qualifications in engineering and how many of them are employed in engineering. The number of people with acceptable engineering qualifications active in the labour market, otherwise known as the supply of qualified engineers, grew by 5.6% per year to 263,890 while employment, or demand, grew a little slower, 5.5% per year, to 254,515. This difference meant that more qualified engineers were unemployed in 2011 than in 2006, increasing from 6,045 to 9,375 and the unemployment rate increased from 3.0% to 3.6%. Growth rates for the supply and demand of women engineers were higher than for men; for women, supply grew by 8.0% per year and demand by 7.8% per year; for men, these figures were 5.3% per year and 5.2% per year, respectively. Unemployment rates were considerably higher for women engineers than for men; 5.1% compared to 2.8% in 2006 and 6.1% compared to 3.2% in The proportion of women qualified engineers increased from 10.6% to 11.8% in Retention of qualified engineers in engineering occupations, or the proportion of the supply of engineers engaged in engineering occupations, increased from 60.9% in 2006 to 62.1% in This small change in the proportion masked the more rapid increase in demand for this segment than the supply of engineers. Demand for qualified engineers in engineering occupations increased by an average 6.0% per year compared to 5.6% per year for the supply of engineers. As a result the number of qualified engineers employed in engineering occupations increased from 122,258 to 163,912 in The level of retention and how it changes has important policy implications. Ultimately, the availability of people with engineering qualifications determines growth in the profession giving rise to policies in higher education and skilled migration. However, the essence of engineering is the work undertaken in engineering occupations and rates of retention in engineering demonstrate that a much smaller group is involved. This points to the importance of policies to retain more engineers in engineering to avoid future skill shortages. The reasons why qualified engineers leave engineering for alternative work are complex and are not yet fully understood. Retention varies between groups in the engineering labour market; including between genders with retention of women lower than men and between Australian and overseas born engineers with the latter exhibiting much lower retention. Possible causes of low retention are personal choices in highly competitive professional labour markets and inability to find opportunities in engineering due to intermittency in engineering employment, lack of career options or general labour market conditions. The mix of engineering qualifications held by qualified engineers has been fairly stable over time. Unemployment experience does not appear to be influenced by qualifications. However, retention in engineering increases with the level of qualifications, being highest for engineers with Doctoral degrees and lowest for engineers with Associate Degrees or Advanced Diplomas. There are marked differences and some similarities between States and Territories. Growth in demand for, and supply of, engineers was highest, and well above national averages, in the resource States of Western Australia and Queensland and in the Northern Territory. The shares of women engineers was highest in the two largest States, NSW and Victoria, and below national average in remaining jurisdictions. Conversely, retention in engineering was lowest in the two largest jurisdictions and highest in areas where demand growth was high and in the smaller jurisdictions. Engineers Australia 6

20 2.1: The Supply of Qualified Engineers The supply of qualified engineers, or the engineering labour force, is the number of individuals with educational qualifications consistent with the engineering team, who are actively engaged in the labour market, either by being employed, or if unemployed, actively seeking work. Often the supply of qualified engineers is referred to as the supply of engineers, a convenient short form. In 2006, the supply of engineers was 200,615; 179,448 men and 21,167 women. Table 2.1 shows that by 2011, the supply of engineers had increased to 263,890, an increase of 63,275 or 31.5%, equivalent to annual compound growth of 5.6%. Engineering has been, and still is, male dominated. In 2006, 10.6% of supply of engineers was women. Although in the next five years the number of women increased much faster than men, 8.0% per year compared to 5.3% per year, the proportion of women in supply grew more slowly and in 2011 was still just 11.8%. Table 2.1: The Engineering Labour Markets in the 2006 and 2011 Censuses Labour force Engineering Team 2006 Engineering Team 2011 status Men Women Total Men Women Total Employed FT Employed PT Employed away TOTAL EMPLOYED Unemployed (FT) Unemployed (PT) TOTAL UNEMPLOYED LABOUR FORCE Not in labour force ENGINEERING POPULATION Participation Rate (%) Unemployment Rate (%) Employed in Engineering % in Engineering Source: ABS, 2006 and 2011 Population Census, compiled using TableBuilder Pro The supply of engineers is a small component of Australia s skilled labour force. For the purposes of comparison, the latter is measured by the number of individuals with at least an associate degree or an advanced diploma in any field. In 2011, the supply of engineers was 8.4% of the skilled labour force; with the share higher for men (15.7%) men than for women (1.9%). In turn, the skilled labour force was 29.8% of the entire Australian labour force. In this broader context, the supply of engineers was 2.5% of Australia s labour supply. 2.2 The Demand for Qualified Engineers The demand for engineers is measured by the numbers employed. In 2006, the demand for engineers was 194,570. As Table 2.1 shows, demand increased by 30.8% by 2011 to 254,515; equivalent to annual compound growth of 5.5%. Gender proportions of demand were similar to supply in both census years, but this masks comparatively rapid growth in demand for women engineers. Their numbers increased from 20,079 to 29,192, an increase of 45.4%, equivalent to compound annual growth of 7.8% compared to 5.3% for men. Engineers Australia 7

21 In 2006, 87.3% of qualified engineers worked full time and 12.7% worked part time 4. Proportionally, more women than men worked part time, but in numerical terms, almost four times as many men than women 4 Full and part time proportions were used to allocate those away from work. Engineers Australia 7

22 worked part time. By 2011, the proportion of full time work fell to 86.7% and the proportion of part time work increased to 13.3%. Both genders experienced increases in part time work between 2006 and 2011; in the case of men, part time employment increased by 31.6%, compared to 29.4% for full time, and in the case of women, part time employment increased by 55.9%, compared to 41.2% for full time employment. The incidence of part time employment is lower for engineers than for either skilled workers or employment as a whole. In 2011, 72.3% of skilled employment was full time (84.5% for men and 61.2% for women) and 27.7% was part time (15.5% for men and 38.8% for women); for total employment, 67.5% was full time (80.6% for men and 52.5% for women) and 32.5% was part time (19.4% for men and 47.5% for women). 2.3 Retention in Engineering Research has shown that individuals holding recognised qualifications in engineering are employed in almost every occupation in the ABS Australian and New Zealand Standard Classification of Occupations (ANZSCO). Many occupations are familiar to engineers, but the connections of many others to engineering are remote or non-existent. This dichotomy led to systematic research that identified 52 of 358 four digit occupations in the Classification as engineering occupations. The research applied criteria relating to type and level of qualifications, level of work undertaken and the degree of attachment to engineering 5. The selected occupations cover the wide range of positions that are common in engineering careers, from entry level positions to senior management and the diversity of working arrangements in engineering, and avoid the confusion often caused by relying on job nomenclature. The number of individuals with engineering qualifications employed in engineering occupations is substantially less than those with engineering qualifications and is a measure of retention of qualified people in engineering. A useful short hand measure is the proportion of engineering supply employed in engineering occupations. There is a vital policy reason for distinguishing between the supply of engineers and the proportion of supply employed in engineering occupations. Growing the number of individuals with recognised engineering qualifications is essential to ensure the growth of supply. But it is not sufficient to ensure adequate growth in the number of qualified people employed in engineering. To achieve this objective requires policies to encourage retention in engineering as well as policies to grow the number of people with engineering qualifications. Thus, complaints about engineering skill shortages are more complex than an inadequate supply of people with engineering qualifications. The reasons why qualified engineers leave engineering for alternative work are complex and are not yet fully understood. In a free labour market like Australia s, individual choices and preferences can change over time. Engineering education and training offers highly attractive transferable skills in problem solving and analysis. These factors mean that salaries, working conditions and career prospects in engineering must compete with those in other fields. Another important factor is employment intermittency. Often project based work, for example, an infrastructure project, involves intensive work for several years, followed by lay-offs when the project is completed. When new projects are available, there are prospects of employment continuity, but all too often breaks between projects are too long and engineers (and others in the construction work force) need to find alternative employment to sustain them. The longer that individuals are away from engineering, the fewer that return to engineering. In many cases they do not return at all. Several other sources of variation in retention can be identified. Retention appears to be related to the level of engineering qualifications held, highest for individuals with doctoral degrees and lowest for individuals with associate engineer qualifications. Retention also appears to be related to gender with the retention of men substantially higher than for women. Finally, the following chapter will demonstrate 5 Engineers Australia, The Engineering Profession in Australia, A Profile from the 2006 Population Census, September 2010, Engineers Australia 8

23 that retention appears to be related to country of origin, with retention lower for overseas born engineers than Australian born engineers. The last two rows of Table 2.1 show the importance of differentiating between the supply of engineers and retention in engineering. In 2006, 122,258 qualified engineers were employed in engineering occupations; 60.9% of the supply of engineers. These figures were markedly different between genders; 112,286 or 62.6% of men and 9,972 or 47.1% of women were in engineering occupations. Conversely, 39.1% of qualified engineers were not employed in engineering occupations and worked in occupations with little or no connection to engineering; alternatively they were unemployed. The growth in demand for engineers in engineering occupations in the five years to 2011 was higher than demand for people with engineering qualifications; 6.0% per year compared to 5.5%. This was the key reason why employers experienced engineering skill shortages. Although, retention in engineering increased to 62.1%, this change was not rapid enough, and its distribution across different engineering disciplines exacerbated the situation, creating recruiting problems for employers. Once again there was a pronounced gender difference with retention increasing more for women than men. Employment growth for women in engineering occupations grew by 9.8% per year compared to 7.8% per year for women with engineering qualifications, much higher than for men where the corresponding figures were 5.7% and 5.3%, respectively. 2.4 Unemployment Unemployment has been low for people with engineering qualifications. In 2006, 6,045 qualified engineers were unemployed with an unemployment rate of 3.0%. The number unemployment increased to 9,375 by 2011 and the unemployment rate to 3.6%, reflecting the increase in the size of the engineering labour market and the overhang from the global financial crisis. Unemployment has been proportionally much higher for women. In 2006, women qualified engineers had an unemployment rate of 5.1% compared to 2.8% for men, and in 2011, women had an unemployment rate of 6.1% compared to 3.2% for men. In 2011, the unemployment rate for qualified engineers was marginally higher than for skilled workers generally, 3.6% compared to 3.4%. In both cases, the rates were below unemployment in the economy as a whole which was 5.6%. However, the gender difference in engineering was not evident in other skills. 2.5 Labour Force Participation In engineering, labour force participation rates are quite high, consistent with high participation observed among skilled workers. Table 2.1 shows that participation rates in engineering were relatively stable between 2006 and In 2011, the participation rate was 81.8% compared to 80.6% for skilled workers and 65.0% for the Australian labour force as a whole. The participation rate for women in engineering has been lower than for men and the gender gap was larger than for skilled workers; 75.0% compared to 77.4%. The implications of high labour force participation limits the scope of policy to increase the number of engineers through policies designed to increase participation. This is why policies to increase the numbers studying engineering are important. 2.6 Types of Engineering Qualifications The mix of engineering qualifications in Australia has been relatively stable over recent years. In 2011, 79.8% of qualified engineers were degree qualified; 3.4% with Doctoral degrees, 12.5% with Masters Engineers Australia 9

24 degrees, 2.1% with post-graduate Diplomas and Certificates and 61.8% with Bachelor degrees. The remaining 20.2% either held an Associate Degree or an Advanced Diploma in engineering Figure 2.1: Engineering Qualifications and Retention in Engineering, 2011 Men Women Total 70.0 Retention in Engineering (%) Doctorates Masters Other Postgraduate Bachelors Associate Total Retention in engineering increases with qualification level. Retention is lowest for qualified engineers holding associate engineer qualifications and highest for those with Doctoral qualifications. This relationship is the same for both genders, but generally the retention of women is lower than for men at each qualification level. 2.7 Distribution between States and Territories This section briefly reviews the main developments in States and Territories. Table 2.2 shows statistics for a range of variables consistent with Table 2.1 for each State and Territory. Figure 2.4 looks at the relative growth in the supply and demand of qualified engineers between 2006 and The rank order of the size of State and Territory engineering labour markets did not change between the two census years, however, the resources boom significantly increased it in affected States. In 2006, there was a substantial gap between the engineering labour markets in NSW and Victoria and the third ranked State Queensland with another substantial gap to Western Australia, the fourth largest labour market. The engineering labour market in South Australia was about half the size of Western Australia and the three smallest jurisdictions combined were about two-thirds the size of South Australia. Unemployment rates in NSW, Victoria and South Australia were higher than the national average in 2006, but were still consistent with relatively tight labour market conditions. Unemployment rates in Western Australia and the two Territories were 2% or less, indicating particularly tight labour market conditions. The rates in Queensland and Tasmania were higher still well below the national average. This pattern confirms the difficult labour market circumstances experienced in the resource States at the time. Just as important is a second conclusion; labour market pressures for qualified engineers were not confined to resource States but were widespread across all States and Territories. The proportion of women engineers varied and was generally in single digits outside of NSW and Victoria. The 2006 pattern in the proportion of the labour force employed in engineering occupations is almost the obverse of the pattern of unemployment rates. Jurisdictions with the tightest labour markets had proportions above the national benchmark and those with labour markets not as tight had proportions below the national benchmark. The only exception was South Australia which had both unemployment rate and proportion employed in engineering occupations above the national benchmark. Engineers Australia 10

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