We need to become the clever, the skilled and the agile country

THE Australian economy is changing, as is the workforce.

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THE Australian economy is changing, as is the workforce. And not just in terms of jobs and industries, but also in terms of skills and workplace location.

During the three years to August this year, the Australian workforce expanded by 501,000 jobs, or 5 per cent, to 11.344 million jobs. About 30 per cent of jobs are now part-time; before the global financial crisis the proportion was 28 per cent.

For every full-time job created in Australia since the GFC, another two part-time positions have been created.

There are two forces at play behind this trend. On the one hand, business would prefer to cut back hours rather than offload staff. On the other, there is a rising preference for job sharing.

Indeed, the paid-work burden is now more likely to be shared between the genders (though perhaps not with equal pay and access) so that two working partners support the modern household.

Male workforce participation has dropped two percentage points to 72 per cent during the past 20 years, whereas female participation has jumped seven points to 59 per cent.

In the three years to August 2008, Australian job growth was 853,000, or 9 per cent.

Population growth has oddly remained the same: 5 per cent over the three years to August 2008 and again over the following three years.

And here is the concern: despite population growth remaining consistent over two successive three-year terms, job growth dropped by 41 per cent, or 352,000.

Of course, part of the explanation lies in the fact that the unemployment rate jumped from 4.2 per cent to 5.1 per cent over the three years to August this year.

The bottom line is that, despite some sectors of the Australian economy booming, a consistent population growth rate is increasingly unable to deliver the same workforce growth.

In other words, the Australian economy is not getting good workforce yield out of its population growth; this is an issue, because population growth requires infrastructure, which is in turn derived from workforce taxation. This may be an education and training issue (not skilling sufficient people), an immobile workforce issue (workers not prepared to relocate), or it could be due to the natural ageing of the population (boomers retiring).

The other issue confronting the Australian workforce is a structural shift in the economic base.

Over the three years to August, most job growth was not in mining; it was in healthcare and social assistance, which delivered 217,000 net extra jobs (full-time and part-time); mining managed 53,000 by comparison.

It's not necessarily fly-in, fly-out miners that are required to avert the skills crisis, it's workers in all aspects of health and community care.

Other high-growth industries over recent years include professional and scientific services (includes geologists), up 102,000 jobs, and public administration (bureaucrats), up 76,000.

Conversely, those sectors where jobs have been shed over the past three years include manufacturing, down 107,000, and agriculture, down 43,000. Retail has been sluggish: up barely 3000 jobs over three years on a base of 1.2 million. There has also been only modest growth in full-time work in the accommodation and food sectors (largely hospitality), up just 2 per cent over three years.

All of this points to a number of workforce trends. It appears there is a real shift in the structure of the Australian workforce: jobs contracting or growing sluggishly are in manufacturing, retail, agriculture and hospitality.

These industries typically employ low-skilled or even non-skilled workers. These sectors also deliver jobs to every part of the Australian continent and to most age cohorts (the retail sector, especially).

On the other hand, those sectors growing most rapidly require a high level of skill and training, most notably the health professions as well as the professional and scientific community and, of course, mining.

The challenge for the Australian economy over the coming decade is to re-skill and up-skill excess non-skilled labour to the sectors and to the locations where the workforce is expanding.

And therein lies the difficulty: training and skilling an assembly plant worker and transferring that skill via fly-in, fly-out to the Surat and Bowen basins is more difficult than it might appear.

The assembly plant worker may not want to be retrained and may not want to fly in, fly out to work after years of working in an industrial estate near his home.

The current workforce participation rate is 66 per cent; for every percentage point by which this rate can be increased -- by whatever means -- 175,000 workers are drawn out of the unemployed pool (now at 620,000). The solution to managing Australia's workforce into the 2010s is an articulated approach. There is a need for targeted skilled migration to offset real skill and labour shortages in the Australian workforce.

There is also a need to up-skill and re-skill workers recently laid off in the manufacturing, retail and agriculture sectors.

Such programs need to be supported by broader programs that seek to lift skill and education levels in especially disadvantaged areas.

Single-dimension solutions such as "bringing in more migrants" or "employing the unemployed" are not the answer.

The answer lies in a targeted approach to managing the workforce as well as in sensitive policy development.

While it might be all very well to up-skill and re-skill a 35-year-old steel worker from Port Kembla to work in the mines, is it really feasible to expect such re-skilling for a 53-year-old?

More than 20 years ago, Australians were excited by the notion of our trajectory towards the clever country. This agenda needs to be rewritten for the 2010s and beyond: we need to become the clever, the skilled and the agile-workforce country -- so that our modest population base is correctly applied to those parts of the nation that are at any point in time delivering prosperity.

Bernard Salt is a KPMG Partner; twitter.com/bernardsalt; Facebook/BernardSalt Demographer; [e-mail]