Broad context…

• Increasing integration of world’s economies resulting in changes in competitiveness

• Emergence of BRIC economies• Accelerating technological innovation• Increased pressure to improve environmental

outcomes and more sustainable resource use• Ageing population

Current Forces

The World Class Skills for World Class Industries Report….

• Analyses the perspectives of employers on the current state of skilling in Australia

• Develops an understanding of future skilling needs

• Provides a set of strategic policies to impact on skilling

The centrality of skills …

The Report highlights that skills are seen as integral to competitiveness.

There are three main implications for skilling:the need for higher level skillsthe need for a broader range of skillsskills need to be updated more often

The importance of skills…

STRATEGIES FOR REMAINING COMPETITIVE OVER THE NEXT THREE YEARS

Developing offshore production facilities

Securing export markets

Benchmarking company performance

Being lean (driving down costs)

Introducing new technology and processes

Building strong supply chains

Upskilling existing and older staff

Introducing new products and services

Building the skills base

Strengthening growth opportunities

0 10 20 30 40 50 60 70 80 90 100

Per cent of sample agreeing

93

85

80

79

78

78

78

70

40

19

What do firms look for in their employees….

IT proficient

Comparable with the bestin the world

Have formal qualifications

Committed to the company

Multi-skilled

Appropriately experienced

Good communicators

Committed to excellence

Technically competent

Team workers

Willing to learn on the job

Flexible and adaptive

30 40 50 60 70 80 90 100Per cent of sample

9596

9595

9496

9494

9395

8892

8788

8692

8490

5662

5567

3655

Now In 3 years

Skill shortages a major threat to competitiveness …

BARRIERS TO COMPANY SUCCESS OVER THE NEXT THREE YEARS

Inability to secure exportmarkets

Poor innovation culture

Inability to retain skilledstaff

Insufficient domesticmarket growth

Insufficient labour flexibility

Competition from domesticproducers

Competition from lowcost countries

High cost of skilled labour

Inabilty to secure skilled staff

0 10 20 30 40 50 60 70 80

Percent of sample agreeing

74

70

63

59

57

47

46

23

20

Skills in demand: where the skills shortages are…

DIFFICULTIES SECURING SKILLS (BY TYPE OF EMPLOYEE) IN THE LAST 12 MONTHS

IT professionals

Clerical and administrators

Other professionals

Labourers and process workersManagers

Apprentices and trainees

Engineering professionals

Technicians and paraprofessionals

Trades

0 10 20 30 40 50 60 70Per cent of sample agreeing

64

48

46

36

3635

26

19

15

Impact of skill shortages

IMPACT OF SKILL SHORTAGES ON BUSINESS

Lost contracts

Work needs to be outsourced

Damage to the industry overall

Reduced staff morale

Production delays

Reduced productivity

Added costs to production

Higher overtime levels

0 10 20 30 40 50 60 70 80Per cent of sample agreeing

72

67

63

58

56

49

47

35

Higher skilled jobs……….

Managers and administrators % of total employment 7.85% Growth in past 2 years 1.07%

Associate professionals % of total employment 12.7% Growth in past 2 years 0.24%

Professionals % of total employment 19.18% Growth in past 2 years 0.76%

Tradespersons and related workers % of total employment 12.61% Growth in past 2 years (0.16%)

Lower skilled jobs……….

Advanced clerical, sales & service workers % of total employment 3.87% Growth in past 2 years (0.17%)

Intermediate production & transport workers % of total employment 8.48% Growth in past 2 years (0.22%)

Intermediate clerical, sales & service workers % of total employment 16.35% Growth in past 2 years (1.03%)

Elementary clerical, sales & service workers % of total employment 10.25% Growth in past 2 years (0.09%) Labourers and related workers % of total employment 8.7% Growth in past 2 years (0.16%)

Qualifications for jobs and the qualification profile…

Potential qualifications pathways for jobs % of employment

• Jobs that currently and potentially have a

university pathway 24.0• Jobs that currently and potentially have

a VET pathway 62.3• Jobs not requiring qualifications 13.7

Current qualifications profile of the population % of 15-64 pop.

• University qualifications 20.0• VET qualifications 29.9• No qualifications 50.1

Action to overcome skills shortages

ACTION TO OVERCOME SKILL SHORTAGES NOW AND IN THREE YEARS

Employers signal a step-up in their efforts to meet skill needs …

FORMAL AND INFORMAL LEARNING, AUSTRALIAN COMPANIES, NOW AND IN THREE YEARS, PER CENT OF TURNOVER

Apprentices and trainees Other employees

0

1

2

3

4

5

2.9

43.5

4.7

Present

Future

New products & processes - Australian Companies 2005

NEW PRODUCTS AND PROCESSES, AUSTRALIAN COMPANIES, 2005

Per cent of annual turnover

Per cent of annual turnover derived from• New products & services (introduced in last three years) 10.4

Per cent of annual turnover spent on:

• New technology 5.2• Research & Development 4.2• Skills Acquisition & Training 4.0• Environmental Management 2.5

Source: Survey of Australian employers 2005

Barriers to upskillingBARRIERS TO UPSKILLING EMPLOYEES

Uncertain what is required to meetfuture needs

Administrative load/paperwork istoo demanding

Training is too expensive

Employee resistance

Relevant training not available

Difficulty in retaining staff aftertraining

Lack of understanding of skilldeficiencies among employees

Training is not sufficiently flexible

Insufficient time to plan andco-ordinate training

Insufficient experienced peopleto act as trainers or mentors

Insufficient financial incentivesfrom government

Training can't be accommodatedaround work demands

0 10 20 30 40 50 60Per cent of sample agreeing

56

52

43

42

41

37

36

34

34

34

30

25

What needs to be done?

Australia not yet skilling in a world class way.

The responsibility for change is shared between:– employers– individuals– employer groups– providers– governments