SPECIALISED ENGINEERING OCCUPATIONS

SPECIALISED ENGINEERING OCCUPATIONS Submission to Skills Australia 31 March 2010 Contact: Andre Kaspura Policy Analyst, International & National Policy, Engineers Australia 11 National Circuit Barton ACT 2600 Tel: 02 6270 6581 Fax: 02 6273 4200 Email: akaspura@engineersaustralia.org.au www.engineersaustralia.org.au

1. The Engineering Team The Australian education system offers engineering qualifications at several levels of competency. Universities offer Bachelors degrees of four years and three years (full time equivalent) duration and also Associate degrees and diplomas and advanced diplomas in engineering. TAFE colleges offer diplomas and advanced diplomas in engineering. University Bachelors degrees in engineering are accredited by Engineers Australia and discussions are presently underway to extend the accreditation process to diploma and advanced diploma courses offered by TAFE colleges. In the workforce, engineering services are often closely inter-related. Some engineering services, depending on circumstances, can be undertaken by engineers with any of the qualifications mentioned above, but other engineering services require the application of competencies that are available only in qualifications with longer durations. For this reason Engineers Australia prefers to conceptualise the arrangement of engineering qualifications into the engineering team. The engineering team comprises: 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 complex problems. Professional Engineers exercise a disciplined and systemmatic approach to innovation and creativity, comprehension of risks and benefits and use informed professional judgment to select optimal solutions, 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 Bachelors 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 Bachelors 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 an Associate degree in engineering or a diploma or advanced diploma in engineering from a university or TAFE college. ENGINEERS AUSTRALIA 31 March 2010 Page 1

The relationships described above define the complementarity between the three levels of the engineering team. Engineers Australia believes that this complementarity is the key to optimising productivity in the delivery of engineering services. This is especially important when there are engineering skills shortages. Deploying inappropriate engineering skills and competencies does not make the best use of the skills available and so can intensify the impacts of skills shortages. Engineers Australia believes that the most appropriate way to proceed is to investigate the availability of skills and competencies at all levels of the engineering team and to instigate corrective policies to bring forward a balanced team. 2 Evidence of Engineering Skills Shortages In the Government s revised arrangements for skilled migration, skills shortages are seen as short term cyclical phenomena to be addressed by employer nomination visas, by sponsored visas by State and Territory Governments and bt temporary 457 visas. The independent skilled migration program is intended to supplement skills in which Australia has a medium to long term shortage. The Skilled Occupation List (SOL) is intended to apply only to the independent skilled migration stream. Engineers Australia contends that Australia has a long term shortage of engineers at all levels in the engineering team. This part of the Submission briefly reviews that evidence. Australian Engineering Graduation Levels Australia engineering graduation levels have been largely static (Table 1) but is showing some signs of increasing in recent years. This is particularly the case for Professional Engineers. The apparent 5.0% increase between 2007 and 2008 should be seen against the graduation levels in 2004. This shows a smaller increase of 1.1%. Graduations of Engineering Technologists showed signs of increasing in 2005 and 2006 but in the last two years have fallen back to the levels experienced in 2002 to 2004. The only clear signs of growth in Table 1 are for Engineering Officers or Associates. Graduations here increased from 3,391 in 2002 to a peak 4,025 in 2007 but fell back slightly in 2008. While encouraging on the surface, these statistics need to be understood against the strongly skewed distribution of TAFE engineering specialisations between jurisdictions. In NSW, the two largest groups of graduates are in Mechanical and Industrial engineering and Electrical and Electronic Engineering. In Victoria, the largest group of graduates is in Manufacturing Engineering. In Queensland, the largest group of graduates is Other Engineering and in Western Australia it is Electrical and Electronic Engineering. This pattern of graduations requires particularly high mobility to locate graduates to areas of high demand. The statistics in Table 1 are all entry level graduations that have the potential to move into the engineering profession. Table 1 uses the Australian Standard Classifications of Education (ASCED). The actual numbers of degree graduates that move into the labour market are about 9.6% smaller 1. This is the proportion of graduates who move directly into full time higher education studies. This proportion varies from over 13% in chemical engineering to zero in mining engineering. 1 Graduate Careers Australia, Graduate Destinations 2007, www.graduatecareers.com.au ENGINEERS AUSTRALIA 31 March 2010 Page 2

TABLE 1 THE POTENTIAL FLOW OF NEW GRADUATES TO THE ENGINEERING PROFESSION MEN POTENTIAL FLOW TO 2002 2003 2004 2005 2006 2007 2008 Engineering Officer (University) 176 141 115 134 106 213 269 Engineering Officer (TAFE) 2810 2850 2905 2898 2961 3070 2968 Engineering Technologist 473 449 441 583 679 475 472 Professional Engineers 4098 4224 4398 4016 4252 4324 4574 Total 7557 7664 7859 7631 7998 8082 8283 WOMEN Engineering Officer (University) 10 15 9 7 8 72 78 Engineering Officer (TAFE) 405 390 420 550 595 670 651 Engineering Technologist 77 74 76 133 130 99 127 Professional Engineers 847 879 857 785 792 737 741 Total 1339 1358 1362 1475 1525 1578 1597 ALL DOMESTIC ENTRY LEVEL GRADUATES Engineering Officer (University) 186 156 124 141 114 285 347 Engineering Officer (TAFE) 3205 3300 3165 3530 3556 3740 3619 Engineering Technologist 550 523 517 716 809 574 599 Professional Engineers 4945 5103 5255 4801 5044 5061 5315 TOTAL 8886 9082 9061 9188 9523 9660 9880 Source: Statistics supplied by DEEWR and NCVER Unemployment Among Engineers Unemployment rates measure the prevailing balance between the demand for labour and its supply. Unemployment rates among qualified engineers in Australia have been considerably lower than in the labour force as a whole indicating that the demand for engineers is much stronger than the demand for labour in general and the supply of engineers is much weaker than the supply of labour in general. Direct time series statistics on the labour market for engineers can be obtained from the ABS Labour Force Survey. This survey was designed to assist responses to macroeconomic policy questions and has been demonstrably successful for this purpose. But the Labour Force Survey was not designed to provide statistics for microeconomic analyses addressing policy in respect to specific occupations. Statistics at this level are fraught with standard error problems and meaningless for practical purposes. A much better alternative is to use 2006 Population Census statistics to set a comparative benchmark that can be complemented by other statistics to allow sensible judgments about the situation. Table 2 shows the unemployment rates for degree and diploma qualified engineers in ENGINEERS AUSTRALIA 31 March 2010 Page 3

Australia in 2006. No distinction can be drawn between Professional Engineers and Engineering Technologists because the ABS defines a Bachelors degree to have duration between 3 and 6 years full time equivalence. Thus the Table is confined to the distinction between degree qualified and diploma qualified engineers. The latter includes Associate degrees and advanced diplomas. TABLE 2 UNEMPLOYMENT RATES FOR ENGINEERING EDUCATION SPECIALISATIONS IN 2006 SPECIALISATION DEGREE DIPLOMA ALL LABOUR QUALIFIED QUALIFIED QUALIFICATIONS FORCE Engineering & Related Technologies NFD 2.53 2.64 2.56 106,148 Manufacturing Engineering 4.42 4.77 4.52 1616 Rest of Manufacturing Engineering 4.66 5.42 5.29 4030 Chemical Engineering 3.11 6.58 3.29 5829 Mining Engineering 1.79 1.65 1.75 3877 Materials Engineering 3.05 2.37 2.85 4384 Rest of Process & Resource Engineering 3.95 3.21 3.56 3621 Automotive Engineering 4.92 2.17 2.66 338 Rest of Automotive Engineering 0.00 5.50 5.45 220 Mechanical Engineering 3.13 2.88 3.02 18573 Industrial Engineering 5.10 3.37 4.52 1218 Rest of Mechanical & Industrial Engineering 4.76 4.49 4.50 844 Construction Engineering 3.67 0.00 3.67 381 Structural Engineering 2.66 3.34 2.92 1334 Building Services Engineering 0.00 0.00 0.00 22 Water & Sanitary Engineering 0.00 0.00 0.00 72 Transport Engineering 3.72 0.00 3.72 215 Geotechnical Engineering 2.36 0.00 2.36 127 Ocean Engineering 0.00 0.00 0.00 16 Rest of Civil Engineering 2.46 2.34 2.43 20336 Electrical Engineering 3.05 2.48 2.85 17484 Electronic Engineering 4.06 3.34 3.74 7110 Computer Engineering 4.32 7.26 4.84 3860 Communications Technologies 6.49 3.54 5.05 5547 Rest of Electrical & Electronic Engineering 5.61 2.93 3.59 21397 Aerospace Engineering 2.18 2.37 2.22 1618 Aircraft Maintenance Engineering 0.00 2.31 2.31 1428 Aircraft Operations 3.09 2.85 2.91 8843 Rest of Aerospace Engineering.. 0.71 1.21 580 Maritime Engineering 5.43 2.27 2.93 1501 Rest of Maritime Engineering 3.33 3.67 3.60 3582 Environmental Engineering 3.76 6.12 3.86 1087 Biomedical Engineering 4.60 0.00 4.28 421 Rest of Other Engineering 4.64 1.24 2.44 2130 ALL SPECIALISATIONS 2.97 2.92 2.95 249,789 Source: ABS, 2006 Population Census Tablebuilder Estimates are shown for all major engineering specialisations. The statistics in Table 2 are also classified using the ASCED system because the deployment of skills throughout the economy is better reflected by an education based system than an occupation system. A more practical reason is that educational qualifications held do not necessarily line up with an individual s occupation or occupational status. By definition an individual in an occupation is employed so that unemployment cannot be measured this way. When the 2006 Population Census was conducted the unemployment rate for the Australian labour force was 5.24%. In Table 2, groups of engineers that have unemployment rates at or above this rate are highlighted in yellow. ENGINEERS AUSTRALIA 31 March 2010 Page 4

Table 2 demonstrates several important issues: Only 3 groups of degree qualified engineers (Communications Technologies, Rest of Electrical and Electronic Engineering and Maritime Engineering) had unemployment rates at or above the national rate. Only 5 groups of diploma qualified engineers (Rest of Manufacturing Engineering, Chemical Engineering, Rest of Automotive Engineering, Computer Engineering and Environmental Engineering) had unemployment rates at or above the national unemployment rate. With the exception of one group, Engineering and Related Technologies not further defined, most engineering specialisations are comprised of relatively small stocks of individuals. Even relatively large groups (such as Mechanical Engineering with 18,573; the main body of Civil Engineering with 20,336 and Electrical Engineering with 17,484) are small when compared to the labour market at large. Key groups of engineers have exceptionally low unemployment rates including Mining Engineering with 1.75%; Mechanical Engineering with 3.02%;(Rest of) Civil Engineering with 2.43%; Electrical Engineering with 2.85%; Electronic Engineering with 3.74%; Materials Engineering with 2.85% and many other groups with similar unemployment rates. This result applies to both degree qualified and to diploma qualified engineers. In many cases the unemployment rates for diploma qualified engineers is lower than for degree qualified engineers including Mining Engineering (1.65% compared to 1.79%); Materials Engineering (2.37% compared to 3.05%); Mechanical Engineering (2.88% compared to 3.13%); Civil Engineering (2.34% compared to 2.46%); Electrical Engineering (2.48% compared to 3.05%) and Electronic Engineering (3.34% compared to 4.32%). Since the Census there has been very strong demand for engineers and these unemployment rates will have fallen. Although the global financial crisis has interupted economic growth in Australia, strong continuing growth in engineering construction, the infrastructure projects announced by State, Territory and Federal governments and new coal, gas and iron ore project announcements point to a resumption of the strong demand for engineers. What is important is that there are no anecdotal reports of unemployed engineers despite the record skilled migration intake of engineers in 2008-09. Skilled Migration of Engineers Australia s migration intake of engineers has shown exceptional growth during the past 9 years. Table 3 shows that engineers have come to Australia under both permanent and temporary visa classes. The statistics in the Table are classified according to the now outdated Australian Standard Classification of Occupations (ASCO) and are intended to reflect labour market destinations rather than just educational background. There are important limitations to these statistics. The statistics relate to degree qualified engineers only. Work is in hand to obtain similar statistics for diploma qualified engineers but this is not available yet. Nor are statistics for the engineering occupations in the Managerial occupations groups available at present. Never-theless, Table 3 is sufficient to compare the magnitude of the migration intake to domestic graduations and to the stocks shown in Table 2. ENGINEERS AUSTRALIA 31 March 2010 Page 5

TABLE 3 IMMIGRATION OF ENGINEERS TO AUSTRALIA YEAR PERMANENT PERMANENT TOTAL TEMPORARY OVERALL OFF-SHORE ON-SHORE PERMANENT 457 VISA TOTAL 2000-01 1240 31 1271 0 0 2001-02 1140 271 1411 0 0 2002-03 1447 451 1898 0 0 2003-04 1420 952 2372 1250 3622 2004-05 1732 1800 3532 1810 5342 2005-06 2312 1629 3941 2970 6911 2006-07 1980 2140 4120 3510 7630 2007-08 2503 1909 4412 4580 8992 2008-09 2746 2458 5204 4210 9414 Source: To 2003-04 Birrell, Sheridan and Rapson; since 2004-05 and 457 data Department of Immigration and Citizenship In 2008-09, when the global economic crisis was at its height, Australia accepted 5,204 engineers as permanent migrants. This compares to 5,914 new domestic degree qualified graduates in 2008. In addition another 4,210 migrant engineers were admitted on temporary 457 visas. These outcomes provides a measure of the demand for engineers not satisfied by the potential supply of graduates. Assuming that 2008 graduates all enter the labour market in 2008-09, domestic graduations comprise 38.6% of new engineers in the Australian labour market that year. All key engineering specialisations were represented among the permanent migration intake. In 2008-09, Civil Engineers were 23.2% of the intake; Electrical and Electronic Engineers were 24.3% of the intake; Mechanical and Production Engineers were 20.8%; Mining and Materials Engineers were 7.8%; Engineering Technologists were 7.4% and Other Engineers, including Chemical Engineers were 9.1% of the intake. When these statistics are compared to the stock statistics for the engineering education specialisations in Table 2, the significance of Australia s dependence on migration for its engineers is highlighted. In the Government s recently announced changes to skilled migration arrangements, temporary migration is seen as an important component of how migration is expected to deal with cyclical excess demand in conjunction with employer nominations and State/Territory sponsorship under permanent migration. As expected temporary migration of engineers fell in 2008-09 compared to 2007-08, reflecting the economic uncertainties of the time. What is surprising is that the fall was just 8.1% and the temporary intake of engineers, 4,210, was higher than in any other previous year with the exception of 2007-08. Survey Evidence Since 2006 Engineers Australia has included a number of questions on engineering skills shortages experienced in the preceding 12 months in its annual survey of engineering salaries. The survey is aimed at business entities, both private and public sector, that employ large numbers of engineers. The results of the survey are consistent with the evidence discussed above. In 2006, 2007 and 2008 over 70% of business entities experienced significant problems in recruiting ENGINEERS AUSTRALIA 31 March 2010 Page 6

engineers. In 2009, despite the global financial crisis, 53% of respondents still experienced these difficulties. The survey considers actions taken by businesses to deal with the shortages and the consequences of engineering shortages. Details can be made available. 3 Engineers Australia s Position In Submissions responding to the discussion papers proposing changes to the former MODL and to the migration points test, Engineers Australia has supported the direction of the Government s skilled migration programs. Engineers Australia reiterates that support. Available evidence strongly supports the view that Australia will need to continue accepting large numbers of qualified engineers in its skilled migration programs. Domestic graduations are showing some signs of increasing, but the changes that have occurred to date have only just overcome an earlier falling trend in graduations. This change may have been encouraged by the strong demand for engineers but is not yet sufficient for Australia s needs. The benchmark statistics from the 2006 Population Census show that unemployment rates for most engineering specialisations were exceptionally low. These low rates were evident for both degree qualified and diploma qualified engineering groups. There has been strong growth in demand for engineers since the 2006 Population Census. The evidence for this is the large intakes of both permanent and temporary migrant skilled engineers since then. The permanent migration intake was not affected by the global financial crisis, although a lagged effect may become evident later. However, the strong intake of temporary visa engineers in 2008-09 and the comparatively small fall in this intake from 2007-08 suggests any lag in the size of the permanent intake is likely to be just as small. Skilled migration of engineers is an expression of strong excess demand for engineers relative to domestic supply. The migration intake is evenly divided between permanent and temporary visa classes and, together with the scale of the intakes, indicates that on-going supplementation of domestic supply through permanent migration will be necessary for some time. Engineers Australia strongly believes that the engineering profession is most productive when engineers with different skills and competencies work in teams to complement each other. The evidence shows that there are shortages of diploma qualified engineers and degree qualified engineers. There are a few categories of engineers in each group that are the exceptions to this general desciption. However, for all major engineering specialisations this conclusion holds. Engineers Australia acknowledges that the application of the concept of specialised occupations to the Skilled Occupations List (SOL) is a significant improvement over former arrangements. However, this concept is also partially susceptible to the market forces that determine labour market destinations. Because of this rigid application of the concept is not necessarily in the best interests of skilled independent migration. Engineers Australia believes that as well as including Civil engineering Draftspersons and Technicians on the SOL, the inter-dependency that is critical to maximising engineering productivity suggests that the following occupations should be included on the SOL: ANZSCO 3123 Electrical Engineering Draftspersons and Technicians ANZSCO 3124 Electronic Engineering Draftspersons and Technicians ENGINEERS AUSTRALIA 31 March 2010 Page 7

ANZSCO 3125 Mechanical Engineering Draftspersons and Technicians ANZSCO 312912 Metallurgical or Materials Technicians This proposal is consistent with the statistical arguments presented in this Submission and Engineers Australia s views on how to maximise productivity from the engineering team. Table 2 demonstrates that not all engineering specialisations were in short supply in the 2006 Population Census. The Table demonstrates the importance of definitive information at the appropriate level of disaggregation. For Example when Manufacturing Engineering and Technology is considered as a whole the unemployment rate that is produced is close to the rate for the labour force as a whole. But when disaggregated to focus on specialist Manufacturing Engineering shortages are evident. In recent years there have been important changes in the degree groups highlighted in Table 2. The number of degree graduates in Electrical and Electronic Engineering has fallen sharply from 1,727 in 2001 to 1,076 in 2008. This group includes the Rest of Electrical and Electronic Engineering and Communications Technology. If this trend continues then the circumstances of these groups may change, particularly as the roll out of the National Broadband Network proceeds. Similarly, there have been changes in Maritime Engineering education including the incorporation of the Launceston Australian Maritime School into the University of Tasmania. The implications of this change will need to be worked through. However TAFE graduations in Manufacturing Engineering have remained relatively high. This, together with the concentration of these courses in some jurisdictions, is an issue that requires attention. There is a similar issue in respect of TAFE graduations of chemical engineers and automotive engineers. Finally, the largest group of TAFE graduates is in Electrical and Electronic Engineering which accounts for about one third of TAFE engineering graduates. This group includes diploma level electrical and electronic engineers who are in short supply and communications technologies who are in over-supply. Engineers Australia has little confidence in DEEWR skilled vacancies surveys. These statistics are not an adequate substitute for ABS statistics. Surveying skilled vacancies cannot provide statistics about the labour market status of engineers. Statistics on skilled vacancies reflect the churn that occurs in the labour market as well as genuine unfilled vacancies. There are also other problems with the surveys relating to data collection and occupational coverage. Engineers Australia believes in evidence based policy design. In skills development and migration, statistics to support analyses are fragmented and often based on different classification systems. Engineers Australia believes strongly that the present statistical base for migration policy requires serious development to increase the level of objectivity possible. ENGINEERS AUSTRALIA 31 March 2010 Page 8