Skilling Australia: The case for more apprenticeships and training
We need to go from the post-pandemic labour shortage to a new mantra of manufacturing locally and training locally.
It is an issue that is afflicting the property industry as well as other sectors (especially mining). Insufficient pools of skilled labour to meet local demand.
There have been skills shortages previously, such as during the resources boom that followed the global financial crisis. But the current skills crunch is different. Covid isolation plus closed borders have combined to kink the labour hoses that have traditionally supported the Australian economy.
International borders have (mostly) reopened, and the Covid menace seems to be receding, but Australia’s skilled labour pools remain seriously depleted.
Border openings are a bit like using a garden hose to fill an empty swimming pool. It will take months, possibly well into 2023, to regain the depth required to supply skilled labour to businesses operating in different parts of Australia.
Let’s examine the demographics of the workforce required to sustain the Australian property and construction industry.
Property jobs in demand
In order to complete this exercise I have relied upon the ABS Labour Force survey which provides quarterly estimates of employment across 430 occupations. The most recent data relates to November 2021.
Together with data scientist Hari Hara Priya Kannan I have scanned all occupations and identified 17 jobs that I think best represent the trades and technical workforce required to sustain the construction (ie property) industry. These “property” jobs include carpenters and joiners (134,000 in November), electricians (148,000) and plumbers (88,000).
The core of the trades and technical workforce required by the construction industry comprises 719,000 workers in total. Five years earlier this workforce comprised 686,000 workers.
In aggregate terms, the core trades component of the construction workforce jumped 34,000 or 5 per cent over the five years to November 2021.
Of the basket of 17 “property” jobs, 13 are traditional trades occupations classified by the ABS as skill level 3 requiring an apprenticeship. Another four occupations are technician jobs such as draftsperson and safety inspector which are classified skill level 2 by the ABS. Skill level 1 requires a university degree.
This particular skills story is comprised of trades and technical skills in high demand (for example, safety inspectors up 206 per cent), as well as others where job numbers have contracted.
For example, the ABS Labour Force survey estimates that demand for floor and wall tilers dropped by 9000 or 34 per cent over the five years to November 2021.
Eleven of the 17 core trades workers comprising the construction workforce expanded by 52,000 over this 5-year period. Whereas demand for six trades contracted by an aggregate of 18,000 jobs.
And since wall and floor tilers for example cannot step into a job vacancy for a plumber, then the real growth in demand for trades and technical skills (as defined) over the past five years has been 52,000 or say 10,000 per year.
Let’s see how the (expanding) apprentice training system is positioned to meet the rising demand for 10,000 net extra trade and technically skilled construction workers per year.
Apprenticeships on the rise
Data published on January 27 by the National Centre for Vocational Education Research shows that over the year to June 2021 there were 215,000 enrolments in apprentice training programs, including 51,000 in the construction industry.
Four years earlier, apprentice enrolment in construction industry trades was 34,000. Australia’s apprentice intake is expanding to meet local demand.
In broad terms the number of enrolling apprentices in construction trades has increased by an average of 4000 per year since 2017. And I am sure many readers will immediately see the problem:
Demand for workers with (quite specific) construction trades skills is rising – according to published estimates – by 10,000 per year. But the training of trade-skilled apprentices is rising by just 4000 per year
• This mismatch between the demand for, and the supply of, skilled construction workers results in a shortfall of 6000 workers every year.
• This shortfall has been traditionally met, presumably, by access to skilled migration
• But with borders closed for two years, and with limited access to local labour due to Covid isolation requirements, the skills shortage (in construction) has become acute.
And while this example relates to the construction (or property) industry it is emblematic of a broader skills issue that threatens to hobble the Australian recovery.
In the case of the construction industry, and based on my review of the broad numbers, this industry (like many others) appears to have been reliant upon access to skilled immigrant workers to meet roughly half the annual growth in demand. This proportion – say 50 per cent in the case of construction – would vary between industries. The intake of net new workers from overseas over recent years may well have been even higher in mining, healthcare and professional services.
An analysis of the 2021 Census results will reveal the extent to which our trades, technical and professional workforces were reliant upon access to overseas labour pools over the five years leading up to the census. That data analysis can be conducted in November as the new census material is released.
But just as we Australians have resolved to increase local manufacturing capacity in the post pandemic era, perhaps we should also resolve to train a far greater proportion of local workers.
For example, if my estimates are correct, then by 2027 (say, five years hence) the construction industry should be aiming to access around 75 per cent of net new skilled workers locally. That objective would require further investment in, and commitment to, the Australian apprenticeship system.
It is not possible to completely align the training pipeline with workplace opportunities, and especially over several years. And particularly when two of the forward years are shaped by a global pandemic and closed borders.
However, as a nation we should commit to lifting the overall proportion of locally trained workers in construction, and in other industries too.
If we aim to be world’s best practice in construction, then we should also aim to be world’s best practice in apprenticeship training and support.
University enrolments on the rise
The other issue in managing the long-term skills pipeline is the scope for preference shifts in the education market. The Department of Education, Skills and Employment published data on higher education enrolments in February which tracks, over time, shifts in the fields of (university) study.
This dataset shows there were 1.7 million enrolments in higher education across Australia during 2020. This number was up 420,000 or 33 per cent on enrolments in 2011.
Over nine years, university enrolments increased by an average of 47,000 per year. A large proportion of this growth would have been accounted for by expansion of the international student market.
While it remains to be seen how the pandemic, and closed borders, impacted this market (and which is a driver of demand for the property industry) the real value of this dataset is the way it tracks changes in fields of study.
Over the nine years to 2021 the number of enrolments in information technology courses jumped 146 per cent. Health increased by 60 per cent while architecture and building increased by 51 per cent.
On the other hand enrolments expanded sluggishly in management and commerce (ie business) up 13 per cent, creative arts up 15 per cent, agriculture up 16 per cent and education up 19 per cent.
Just over a decade ago, most university students were enrolled in a business course (334,000). Business still dominates by 2020 (380,000 enrolments) but society and culture (344,000) is closing the gap.
The fastest growing courses, in a broad sense, seem to be focused on the acquisition of technical skills and especially in IT and health which is helpful to the current skills crunch. And maybe the sluggish growth in agriculture over the past decade was in part a response to the drought which has since broken.
Produce property skills locally
Australia’s future lies not just in developing into a nation with a highly skilled and agile workforce but also in leveraging our natural assets such as agriculture and our penchant for, indeed fixation with, property.
If we are to remain obsessed with property, with home building and adornment, with state-of-the-art commercial and industrial buildings, with leading-edge civil infrastructure, then we should also be highly skilled at producing the skills necessary to deliver these outcomes.
The alternative is that we evolve into a nation that relies heavily upon open access to overseas skilled labour pools.
I think some of Australia’s best interests lie in manufacturing locally and in training locally. This really needs to be our mantra in the 2020s.
Bernard Salt is executive director of The Demographics Group; research, data and graphics by Hari Hara Priya Kannan
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