Unemployment figures underline fears of skills shortages

While economists have praised yesterday’s drop in unemployment to 5.1%, various industry representatives are bracing for the worst as skills shortages worsen in the housing construction, engineering and IT sectors.

The warning comes after some industry experts have warned against small businesses increasing salaries and over-promising promotions and benefits to staff to convince them to stay on.

Harley Dale, chief economist at the Housing Industry Association, says the shortage of skilled labour in construction will only become worse.

“It’s a concern of ours. We have a quarterly measure of trade availability, and that shows there was a shortage of skilled tradespeople in the first half of 2010. So while there is a general widespread skills shortage coming, we are actually already there.”

“Clearly if you were to have a situation where you have a sustained pick-up in housing, then it’s a bit of a no brainer that along with that recovery there’s going to be an increase in skills shortages.”

A recent report from Access Economics shows housing is set to recover over the next year. But Dale says the industry is already struggling to find skilled workers, and any increase in trade will stretch the industry thin, potentially pushing property prices higher.

“The housing industry is already recovering from an extremely low base. Before the financial crisis, one of the obstacles to new home building was the shortage of skilled labour, and that has the potential be another pressure on prices.”

The engineering industry is also suffering a skills shortage, with companies in the mining, electrical and civil industries unable to find new workers. Consult Australia chief executive Megan Motto says companies in rail, civil and construction are falling behind.

“The skills shortage is already here for us. The unemployment figures don’t really drill down in to the markets or professions, because the engineering skills shortage is quite prominent.”

She points to civil engineering and civil drafting as areas where companies are especially struggling, and says companies operating in environmental and climate change technology will suffer over the next few years.

“A lot of expertise is going to be required for these areas, and companies are struggling to fill them. Irrespective of government policies towards climate change, the world is heading down that path.”

“There is going to be strong recruitment, and salaries will be reflective of that. A lot of companies are going to be focussing on more home-grown engineering programs as well, some other associations are doing that as well.”

A recent Randstad survey also found 78% of businesses in the IT and education sectors also believe they will have difficulties finding new staff in the year ahead. Clarius chief operating officer Kim Quick says the IT industry is definitely facing a shortage, along with the health and construction industries.

“IT is certainly a significantly emerging area of skills shortages moving forward. Interestingly, that shortage varies from state to state which you don’t often see in the overall analysis. Heath is another obvious one…and we are also seeing shortages among a number of trades.”

A separate survey from Peoplebank also reveals IT salaries are rising, particularly in Perth, as employers become desperate for specialised workers.

However, companies have been warned not to overinflate salaries for job seekers. Workers are keen to look for new jobs after staying in the some position during the financial crisis, various experts warn, and overinflating salaries isn’t the answer.

LMA managing director Grant Sexton told SmartCompany earlier this year businesses should avoid making promises regarding salaries if they can’t keep them. Instead, they should recruit aggressively and

“Three or four years ago you were getting all types of incentives, including companies offering an extra $20,000 for people to stay. It was just so difficult to get good quality people, and now… the possibility is that you will see price hikes in wages over the next six to 12 months. Companies could have avoided this if they were smarter.”