The skills shortage: making headway, but no easy answers

Training and skills development is now firmly on the agenda of industry and government, and there have been some important success stories. But there is still a long road to travel before the manufacturing sector gets to where it needs to be. Derek Parker examines the issues.

FIRST the good news, after a long period of relative neglect, the subject of training and skills for the manufacturing sector is now receiving a high level of attention from governments and industry. There is a range of incentive programs in place, an organised policy framework is developing, and the training sector itself is expanding rapidly.

The bad news is, despite the growing recognition of the importance of training, the industry-wide skills base is not being developed at a sufficiently fast pace.

The shortage of skilled staff currently acting as a constraint on the growth of the manufacturing sector is likely to remain a significant problem, at least for the next few years. The issue is set against a backdrop of continuing structural adjustment in the manufacturing sector.

According to figures from the Department of Employment and Workplace Relations, the manufacturing sector could lose around 22,000 jobs over the next five years, due to global competition and technological change.

However, the likely increase in the number of retirements over the same period could easily absorb this projected reduction in employment, so that the demand for skilled people will still be greater than the supply. At the same time, manufacturing firms have to compete with the resources, services, and technology sectors, all of which are face similar concerns.

There are public campaigns under way to attract more young people into the manufacturing sector, but a larger part of the solution is to use existing employees more effectively — and that means a focus on skills development.

Bob Paton, COE of Manufacturing Skills Australia (MSA) an industry body which advises government on training needs and issues such as qualifications and accreditation, says there has been a broad change of thinking about skills and training in the past few years.

“In many companies, training is now taken very seriously by senior management, and even the board, rather than being left to a few HR officers.

“The training industry has itself become more organised and responsive. But, having said all that, there is still a very long way to go before the sector’s skills shortages are even close to being solved,” Paton told Manufacturers Monthly.

He says even if there is no ‘grand plan’, there is nevertheless a series of strategies and programs that are supported by governments and industry.

He also points to a number of important papers and studies published in the past year, including the Manufacturing Skills Industry Report from the Department of Education, Science and Training; MSA played a key role in the development of the Report.

“One of the aims of that Report was to provide a snapshot of the present situation,” Pato

“The manufacturing sector in Australia cannot really compete against Asian countries at the low-cost end of the product range, but we can successfully compete in the higher segments, and in niche markets — if we can get the right skills in place.

“Take the Australian Qualifications Framework, for example, which is an eight-step scale — the trade level of qualifications is level three.

At the moment, there is a large number of employees below that level. If we can lift people who are currently at levels two and three up one level, the gains are potentially huge.

As the average skills level of an organisation goes up, the range of products it can produce, and the amount of value-adding that can take place, increases.

“So it’s at that level, AQF two and three, that we should focus our efforts while still addressing high-end skills,” Paton said.

Structural weakness

A weak point in the training framework remains the apprentice system. In the past year especially, there have been important improvements in the area, with larger companies more likely to communicate about their needs with TAFE colleges, and the colleges are apparently more willing to listen than previously.

This has gone some way to address the common complaint from business that skills provided by TAFE to apprentices were often not relevant, but there is still the basic problem that there are not enough young people willing to become apprentices.

“It’s a double whammy,” says Jim Barron, COE of Group Training Australia, which represents training organisations across the country.

“There aren’t enough young people going into apprenticeships after leaving school, and not enough staying to completion. The dropout rate in the first two years is up to 40% in some cases.

“There are some larger social trends at work here. A lot of young people want to move between different jobs rather than make the investment of time that an apprenticeship requires.

“There has been a problem in the past where career advisers did not often discuss the benefits of apprenticeships.

“That has improved markedly in the past few years, mainly due to the efforts of the Manufacturing Skills Council,” Barron told Manufacturers Monthly. “But it’s still a tough sell in such a tight labour market.”

Barron welcomes the financial incentives that have been put in place by governments in the past few years, such as a tools subsidies and completion bonuses, and a better funding structure for technical colleges.

“The Manufacturing Skills Council has also been very effective at communicating the needs of industry to the TAFE sector, so that the skills provided are relevant.

“Our feedback suggests that these things are having positive results,” he said. “But a constant problem is the pay scales for apprentices.

“The structure hasn’t much changed for a half-century, it’s very difficult to understand, and it simply does not provide a good income.

“The Fair Pay Commission will be looking at this next year, and we hope that that will bring the pay system for apprentices into the 21st century.”

At the other end of the demographic scale, some companies are making efforts to retrain older workers, and to improve their level of skills. But, according to Barron, results have been mixed at best.

“So far, it’s a case of theory rather than practice,” he said. “A big stumbling block has been that the framework for Recognition of Prior Learning has not been properly funded.

“Quite a few employers have been reluctant to put training into older workers when they can put it into younger people, and many older workers have proved to be reluctant to switch directions later in life. There have been some successes, but in this area there is a very long way to go.”

For its part, the Commonwealth government claims significant progress in the area. The energetic Minister for Vocational and Further Education, Andrew Robb, recently noted that there are currently about 160,000 mature-age people undertaking apprenticeships; this is 6,000 more than the total number of people, of all age groups, undertaking apprenticeships ten years ago.

He is also quick to point out that serious money is involved, with Canberra committing $837m last year in its Skills for the Future package to boost training and qualification levels among both older Australians.

Maintaining momentum

Despite the problems in the broad training picture, some companies have established successful programs and are forging ahead. One is John Holland Group (JHG), which has received a number of awards for its efforts.

Alan Weston, training and development manager for the southern region for JHG, believes that an integrated approach is the key.

“One of the most successful initiatives was the development of a Certificate 3 course in transport and distribution,” Weston told Manufacturers Monthly.

“It’s a nationally-recognised qualification, and we are the only ones who offer it. It has been very popular with employees — in many cases, it is the first qualification they have held.

“At the same time, we have developed our training programs to give people career paths, up through the supervisor levels, if that is what they want. Even our graduate engineers can link their company training with their professional development requirements.”

Weston explains that training is a part of the company’s Enterprise Agreement, and that there is now no shortage of applicants for training opportunities.

“People are interested in their career development,” he said.

“It’s often raised in job interviews as a crucial issue. Yes, you can argue that if you provide people with training, especially with portable qualifications, they might go to another employer.

“That has not been my experience — if they see a good path in front of them, they are likely to stay. And, in any case, it makes more sense for a company to have a well-trained person for five years than an untrained person for ten.”

Another firm that has won plaudits for its training is Dingo Australia, which manufactures mini-loaders and attachments. Based in Dalby, Queensland, the company has about 160 employees around the country, including 30 apprentices and trainees.

Tom Steverink, Dingo’s national training manager, says a company needs to have a person whose role is just about training.

“You need a person who can constantly talk to employees about their training needs, and stay in touch with new developments on the apprenticeship and education side.

“For example, there will soon be a new qualification in surface finishing, and Dingo is going to be first into that area. Training has to be constant process if you want to lead your field,” Steverink told Manufacturers Monthly.

Even though the company focuses on manufacturing, and much of its training is engineering-orientated, Steverink notes that it also provides training in sales, marketing, and IT to specialists. In fact, it encourages people to look outside their area of usual expertise. The company also takes people on work experience, which can help to identify potential employees.

“There are up-front costs but there are greater returns,” Steverink said. “And it can become a big part of your reputation.

“Like every other company in Australia, we are feeling the impact of skills shortages, but I think it is less for us — we even have people knocking on our door.

“The response from existing employees is very positive, so long as the training is structured and relevant. They see it as a way of expanding their career horizons.”

Such cases deserve applause, although the real signposts of positive change might lie in the bigger picture.

Barron believes the most important news is that governments are now taking the issue of training seriously.

“I hope that it is not just a passing fashion, because the area requires long-term attention.

“Governments and employers have to continue their willingness to put money on the table, and to do it a systematic, planned way.

“There are no silver bullets, no single answers, but a lot of pieces that have to be brought together,” Barron said.

Paton agrees, and underlines the significance of cultural shifts. “The idea that training is a cost rather than an investment in the company still persists, but it is much less common than it used to be.

“It will take some more time yet, but I think the problems in this area can eventually be solved. Improving the apprentice system, better communication between business and the education sector, more incentives from governments for businesses to take on trainees and to up skill existing workers: all these things are starting to happen. But we need to stay focused and not lose the momentum,” Paton said.

Sites for further information

• Department of Education, Science and Training — www.skillsforthefuture.gov.au/about.htm

There is a series of facts sheets about financial assistance and incentives under the Skills for the Future package available from this site.

• Department of Education, Science and Training — www.australianapprenticeships.gov.au

Information on all aspects of apprenticeships for employers, jobseekers, students and careers advisers can be obtained from this site.

• Manufacturing Skills Australia (Manufacturing Skills Council) — www.mskills.com.au

The DEST paper Manufacturing Skills Industry Report and other publications are available from this site.

• Australian Industry Group — www.aigroup.asn.au

Papers and research associated with the Skilling the Existing Workforce Project can be obtained from this site.

• Business/Higher Education Round Table — www.bhert.com

A wide range of research and discussion papers can be accessed through this site, as well as information on the Round Table’s forthcoming Symposium, Building Tomorrow’s Engineers, planned for November 2007.