Australia will need hundreds of thousands more skilled workers than it has to drag the nation back to its economic feet following the pandemic. Directors and management need to rethink their approach to future talent acquisition and skills development.
You’d think the Australian infrastructure boom would be welcome news for an engineering and construction giant like John Holland. The company is currently building Melbourne’s West Gate and Metro tunnels, and with spending on major public projects set to reach a record annual $52 billion next year, there’s much more work in the pipeline. The challenge, however, is that peak spending is set to coincide with a deficit of around 93,000 skilled infrastructure workers across the country, and John Holland is not alone in feeling the squeeze.
“It’s impacting us in project delivery roles, like project managers, engineers, architects and the civil trades, but we’re also seeing a push in areas like safety and contract administration,” says Jayne Whitney GAICD, chief strategy officer at John Holland, which employs approximately 5000 people. “That shows you the magnitude of what we are seeing in terms of the skills shortage.”
No industry is immune to this workforce challenge. When Australia closed its borders in March 2020, it slowed the surge of COVID-19, shut off a steady supply of international workers and cast a spotlight on a skills problem that existed long before the pandemic.
AICD’s 2H 2021 Director Sentiment Index identifies workforce shortages as the top economic challenge facing Australian businesses, more concerning than COVID-19 and climate change. The reopening of borders may present short-term relief to a challenge in need of a long-term solution, but with almost 40 per cent of Australian workers considering leaving their current employer in the next 12 months, according to the PwC Future of Work report, the problem demands fresh thinking. To counter the skills shortage, directors and executives must reshape their approach to recruitment, development and retention of talent, and invest in upskilling for the future.
Inside the skills shortage
Research from RMIT Online and Deloitte Access Economics shows a significant fall in skilled migration over the past two years, with 380,000 fewer people entering the workforce at a cost of $32b to the Australian economy. When borders opened at the end of last year, the government estimated 235,000 overseas visa holders would be eligible to enter Australia. While 162,000 of them are foreign students, 57,400 are skilled workers.
The skills shortage is a significant issue, but it’s not a new challenge. Structural change has been occurring across the economy for decades, creating a need for new jobs and for new skills within existing roles. Digital transformation, for instance, demands higher levels of digital literacy across industries and the call for technology workers is louder than ever.
Megan Lilly GAICD, education/training head at national employer association Ai Group, says the skills shortage is now felt “across the economy and across geography”. “Technically, the borders are open, but we haven’t seen big influxes of students or backpackers yet, and that will only help relieve the areas where you can get labour quickly and allocate it quickly,” she says. “This is not the case when you need deep technical skills or graduate engineers, because they’re in shortage around the world.”
Engineers are on the priority list for Western Australia’s mining and resources industry. The state has around $140b of projects currently in the pipeline, but modelling from the Chamber of Minerals and Energy WA (CME) predicts the sector will need another 40,000 workers over the next two years to meet demand.
Robert Carruthers GAICD, director of policy and advocacy at CME, says the industry is competing with sectors such as construction and agriculture. “Poaching of talent is a reality now, and we’re not seeing the wage disparity that we saw post-GFC, when particular roles in the west were getting a premium on similar roles on the east coast. We’re going to have to work extra hard to create that value proposition for people — and skilled migration will be absolutely fundamental to getting anywhere near meeting the demand shortfalls that we see over the next couple of years.”
Talent beyond borders
The absence of skilled migration is being felt beyond the mines. A dearth of foreign workers across agriculture has left fresh fruit and vegetables rotting at the farm gate. Starved of a stream of workers, cafes and restaurants have been forced to cut trading hours. Across the aged care sector, where approximately 30 per cent of the current workforce are migrants, at least nine care homes closed during the recent Omicron wave of COVID-19, with the skills shortage cited as a key factor.
Allambie Heights Village on Sydney’s Northern Beaches employs approximately 55 people and is home to 151 residents across its residential aged- care facility and two retirement villages. The board is working closely with management on strategies to counter the skills shortage, but board president Wendy Kramer says it’s a tough challenge.
“Addressing the skills shortage is high on our agenda because we want to retain staff for the continuity of care,” she says. “Outside the typical board meetings, we also meet for strategy meetings, because challenges like the workforce shortage in aged care require targeted strategies. Fortunately, our staff retention of carers is high. Many have been with us for more than 11 years, and that’s quite unusual for aged care.”
Allambie Heights CEO Ciarán Foley says retaining registered nurses is the primary challenge, especially with state health systems drawing nurses from the sector with promises of a bigger pay packet.
“How are you supposed to compete with state health systems that are giving a 30 per cent pay rise [to nurses]?” asks Foley. “How do you compete with that, when in the past few years, $1.8b was taken out of our system?”
Optimising skilled migration
Despite a reliance on skilled migration to fill workforce gaps, recent research from CEDA shows almost one in four permanent skilled migrants are working in a job beneath their skill level. Smart recruitment strategies aim to make better use of the skills they have.
“What we are hearing from business is that having access to skills is a bigger factor in driving investment decisions than tax,” says Melinda Cilento, CEO of CEDA. “We know that there was already pent- up demand for people with technology skills, digital skills, data skills and project management. This has come to bear more strongly throughout COVID-19 and the demand is going to continue to grow. There is a need to look not just at the temporary shortages that we’re seeing now, but to understand future skill needs and likely shortages in the longer term and to factor that into our planning. We need to plan for longer-term skill shortages that are going drive innovation, productivity and competitiveness. We need a conversation that identifies the areas where skilled migration, and migration broadly, have a really important role to play.”
John Holland is tapping into skilled migration through a partnership with CareerSeekers, a non-profit organisation that supports Australia’s humanitarian entrants to continue their professional careers. The program includes a 12- week professional internship opportunity for skilled refugees or asylum-seekers. Of the 27 people who participated in the program last year, 24 are still engaged with John Holland in part-time or casual working roles.
“We partner with CareerSeekers to help us tap into the refugee network of skilled workers,” says Whitney. “Some are qualified engineers that find themselves working as Uber drivers.”
She notes that John Holland has also put a “strong career framework” in place for employees.
“A clear career pathway is one of the most important things to our staff, in addition to remuneration, wellbeing and flexibility (see breakout, page 63). I know the board is very focused on how we are addressing the skills shortage facing the industry. It’s discussed regularly — and the reports on how the business is going in attracting and retaining people with the skills we need get close attention.”
Uptake in upskilling
Inflation is soaring in Australia while wage growth remains stagnant. One strategy to counter the skills shortage is to pay people more. But while a higher salary may attract workers, is it actually enough to make them stay?
“Up until last year, people who moved jobs were getting a salary increase of around five to 10 per cent,” says Greg Allen, NSW regional director of recruitment firm Michael Page.
“Now, it’s more like 15–20 per cent. That’s pretty much across the board and counter-offers are happening more and more because the market is so tight. But where companies really need to be investing is in their retention strategies, otherwise there will be a lot more holes to fill.”
For Kate Hillman, Oceania leader of people, place and culture at EY Australia, attraction and retention are two sides of the same coin. The Australian Financial Review Top 100 accounting firms survey shows three-quarters of Australia’s largest accounting firms report challenges in recruiting and retaining staff. Hillman says both tasks require equal focus. “This is particularly at a time when we are seeing many organisations coming after our people with a lot of cash in hand.”
EY, which employs 9500 people in Australia, has adopted strategies to counter the skills shortage (see breakout, page 63) including the EY Masters in Sustainability with Hult International Business School. The fully accredited MBA launched in February this year and is free for all EY staff. “It ticks off a few things for us,” says Hillman, citing a huge demand for sustainability work its client base. “And our people also tell us that one of the things they rate most highly when considering where to work is the experiences and learning they’re going to get.”
Lilly says companies are also investing in micro- credentialing and shorter forms of training to upskill their workforce.
“We surveyed our members recently and 90 per cent of them said that they either expect to spend the same or more on training and development this year compared to last year. That’s very good, but what it tells me is that companies are having so much trouble recruiting the skills that they have to really invest in the people they’ve got in the company already.”
With skills in shorter supply, employers may have to engage more workers from outside their traditional talent pools. This is especially the case for technology roles. The Tech Council of Australia aims for the sector to employ one million people by 2025. To hit this number, 260,000 people will need to enter tech jobs in the next three years and the Tech Council estimates that 140,000 jobs will be filled by reskilling and transitioning workers into the sector.
Cilento stresses that employers must think more broadly about “experience and skills that translate to other opportunities.”
“You hear this a lot in cybersecurity, for instance, because finding someone who’s got those credentials stamped is proving increasingly difficult, but there are many other occupations that have skills that translate,” she says. “People are recruiting on potential, perhaps more so than they were before COVID-19. They’re looking far more laterally at the sorts of skills and experience that people can bring.”
Remote working went mainstream during COVID-19 and flexibility remains a high priority for workers in Australia, even as more return to the office this year. Recent research from the Swinburne UTS Centre for the New Workforce shows 43 per cent of workers would be likely to leave an employer that doesn’t offer flexible working.
However, Kevin Alexander, managing director of recruitment firm Adecco Australia, says many employers struggled to maintain culture and collaboration with remote workers during the pandemic.
“We know that some organisations are thinking about mandating five days back in the office now,” he says. “It’s not about filling the office footprint, it’s more about bringing people together to build capability and expertise in the workforce. It’s not going to go down very well, because people are now used to flexibility and it’s what they’ve come to expect.”
Cilento notes the future of flexibility is “something that everyone’s grappling with”.
“But we can’t necessarily assume that the ways we learned informally in the workplace are the [same] ways that the next generation will learn and gather skills,” she says. “There’s still a real challenge for us to rethink the way we do this.”
Lilly says flexibility must be a central theme of retention strategies.
“There is absolutely no doubt that if employers start to wind back some of the flexibility around hybrid work, they will lose their employees who value it. You’ve got to keep who you’ve got and you’ve got to keep upskilling them quite regularly. If you don’t have really good retention strategies and flexibility options, people will vote with their feet, because they can.”
John Holland: Building flexibility into construction
Construction tends to be a six-days- a-week sector, with few options for flexibility. To improve culture, diversity and work-life balance, NSW and Victorian governments are pursuing reforms that will require tenderers on infrastructure projects to sign up to five-day work weeks.
Employers like John Holland are seeking change from within. Chief strategy officer Jayne Whitney GAICD says the company introduced a flexibility framework last year as part of its retention strategy. It is working with the Australian Constructors Association to explore options such as five-day weeks or capping work to 50 hours a week.
“We now have job-sharing and part-time work, which is normal for some industries, but it’s not as normal in construction and on projects,” says Whitney. “Pre-start meetings on projects typically start at around 7am, but childcare centres aren’t open then, so we’re also looking at the option of staggering the pre-start meetings.”
John Holland workers are now entitled to two paid wellbeing days a year, which Whitney says is “quite progressive” for the construction industry. The company is also seeking to attract more women to the sector. “We’re partnering with SALT (Supporting and Linking Tradeswomen) so we can support a pathway into the industry for trades women and work with them through the apprenticeships,” says Whitney. “In our graduate recruitment process, we’ve removed reference to gender and we’ve found we’re bringing in almost a 50:50 gender split of grads.”
Whitney says current market volatility makes it “hard to accurately measure the impact on retention of some of these initiatives”. However, the company is looking to remove reference to gender throughout all of its recruitment process.
“As a result of the mandating of inclusion and diversity ratios for shortlists and interviews at the beginning of 2021, the percentage of female candidates rose to 35 per cent of all interviews, resulting in 33.6 per cent of all external hires for the year,” says Whitney. “We are doing a lot better, but we’re far from having the answer.”
When it comes to flexibility, Whitney says there’s no single solution. “We need a portfolio of options because flexibility means different things to different people. If you have a flexibility policy, but don’t promote it and don’t celebrate the successes, you won’t get traction. We’ve got some fantastic leaders who are leading loudly when it comes to flexibility and wellbeing to make it part of the normal vernacular of the workplace.”
EY: Welcoming employees back to the fold
At EY, the recruitment campaign extends beyond the search for new talent. There are now enticements for former workers to make a return. “We have a strong recruitment campaign to bring back people who have left EY,” says Kate Hillman, Oceania leader of people, place and culture at EY Australia. “We recognise their prior years of service, so they don’t have to start again.
It’s been very successful. In my local practice team of about 22, we’ve recently had three people come back to the business.”
EY is also tackling the skill shortage by investing in education and training. Along with its new EY Masters in Sustainability, it offers an EY Tech MBA in association with Hult International Business School. Launched last year, it’s available free to all employees and delivered entirely online. Subject areas include AI, blockchain and robotic process automation.
Hillman says developing a tech skillset among employees helps deliver value to clients while attracting and retaining workers. “What we love is that people get to relate [the MBA] directly to the work they’re doing and they often work in groups to learn, so that deepens relationships across our firm, as well. It has lots of dividends for us.”
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