Labour shortages grow by 10%, retirement of baby boomers a challenge for SMEs: Report

Accounting firm KPMG expects the retirement of baby boomers over the next decade to present labour challenges to small- and medium-sized businesses.

Releasing its 2011 skilled migration survey, KPMG says the labour shortage worsened by 10% over the past year. And it’s not just the booming resources sector that’s feeling the pinch – foreign workers are also being sought in the areas of accounting, finance, IT, planning and policy.

The report, based on surveys of 300 Australian businesses conducted through July and August, shows that 61% of respondents have reported skills shortages over the year, up from 51% the previous year.

The survey also found that 28% of respondents were feeling the effects of the departure of baby boomers from the workforce, and 42% expect the generation’s retirement to deliver a “moderate to significant” impact over the next five years. This year the first of the baby boomers are set to retire.

But it’s not all doom and gloom: KPMG says an “encouraging” 69% of respondents had some sort of strategy in pace for dealing with skills, and 57% reported planning for generational change.

Furthermore, 89% of respondents said they were training Australian employees to meet future skill needs, with 78.5% finding it more effective to train and retrain existing local employees than recruit skilled offshore workers under the 457 visa program.

The report notes that smaller companies – those with up to $20 million in revenue – are less likely than larger companies to be more reliant on offshore skills, with 12% tipping an increased reliance on skilled migration over the next five years, versus 33% for companies with revenue between $201 and $400 million.

But Karen Waller, head of KPMG’s Migration program, says SMEs battling skills shortages are open-minded on the prospect of sponsoring foreign workers, particularly after lulls during the GFC and amid skills shortages in some sectors.

“In the GFC, the demand did quieten across the board,” Waller says, nominating marketing and finance as areas that have seen demand pick up over the past couple of years.

Waller says training and support for young people is crucial to help prepare Australia for its growing infrastructure and health needs, but foreign workers will also be needed.

“There will be a heavy reliance on bringing people in from overseas,” Waller says. “Even with the training of Australians, we have expectations this will continue to grow.”

While stressing that demand for foreign labour will depend on global economic conditions, Waller says Australia might find itself battling other Western countries for foreign labour in the years to come.

While some parts of the bureaucratic process can be surprisingly quick and cheap – with sponsorship and visa applications often taking just a few weeks and costing up to $2,500 per person – Waller says the area of immigration is prone to many legislative changes.

The report says the only state to report a decrease in their skill shortage troubles was Queensland, having reported the most difficulty the year before – a turnaround KPMG attributes to the natural disasters last summer.