Foreign IT workers and local wage costs… Google search for SMEs… Fibre-to-the-home interest… Howard’s online pitch… more…

Foreign IT workers blamed for local wage costs

Escalating wage costs driven by skills shortages in the IT sector are being exacerbated by the higher minimum wage foreign workers in the sector are paid, an industry group says.

In its submission to an inquiry into temporary migration visas currently being conducted by a federal parliamentary committee, the Information Technology Contract and Recruitment Association claims that the $57,300 minimum wage overseas ICT workers are entitled to in Australia is having a negative effect on the ability of SMEs in the sector to afford the workers they need.

The minimum wage for ICT workers, which is more than $15,000 higher than the minimum wage that applies to other overseas workers, “has forced the average salary levels up needlessly across the entire industry, which has disadvantaged small to medium companies trying to expand their employee pool,” the submission says.

ITCRA executive director Norman Lacy says wages in the ICT industry are growing at an annualised rate of 14.8%, based on a sample of 25% of all professional ICT placements in the past six months conducted by the association.

“There is a lot wage pressure, primarily driven by a basic lack of workers in the industry,” Lacy says. “But you do have to look how wages being paid to overseas workers are feeding to local wages, and some SMEs are missing out because they can’t afford to bring workers in and they are having to pay more for locals.”

But Jeff Knowles, NSW State Manager for IT recruitment firm Ambit, says he does not believe the higher minimum wage paid to overseas IT workers has influenced wage levels significantly. “In our experience the people who are coming in from overseas tend to be very experienced and highly skilled so the overwhelming majority would be paid above the minimum wage,” he says.

– Mike Preston

Google search for SMEs

Small businesses wanting to improve the searchability of their websites will soon be able to buy a tailored Google search engine that can be embedded into their website, IT Wire reports.

Google currently enables web publishers to embed a free advertising supported search box in their sites, but the capability to customise the search functions to direct visitors to desired areas is limited. Even worse, because the search boxes are not context sensitive, searches would sometimes bring up Adword advertisements for competitors.

Google’s new search service does not use search-driven advertisements and enables small businesses to customise the look of their search engines. It will also be possible to tailor search results to push customers toward products the business wants to sell.

Of course, Google has to make up for the lost advertising revenue, so these new search tools come at a price – starting at $US100 a year for small sites and about $US500 for substantial sites of up to 50,000 pages.

– Mike Preston

Coonan confirms fibre-to-the-home interest

Federal Communications Minister Helen Coonan has been approached by at least one international company that is interested in building an advanced fibre-to-the-home network in Australia.

The Australian Financial Review reports today that one of several early proposals Coonan has received would involve lodging a bid tender to the Federal Government’s broadband tender panel for approval to build a fibre-to-the-home network in metropolitan areas, to deliver broadband even faster than is possible under the Telstra or Optus/G9 proposals.

Fibre-to-the-home technology is currently most common in Japan and Korea, where top broadband speeds of up to 100 MBPS are possible (four times the speed of Australia’s fastest ADSL2+), but has not yet been seriously considered in Australian discussions on broadband infrastructure because of its high cost.

Geoff Johnson, research vice-president of technology analysis firm Gartner, says the high cost of building a fibre-to-the-home network have to be balanced against the massive productivity gains such a system could provide.

“There is high competitive advantage for businesses and the whole economy in this; there are software applications being developed in places like Japan that won’t be deployable in this country and entertainment products that we won’t be able to access without it,” Johnson says.

A fibre-to-the-home network would be much more expensive than the current fibre to the node proposals being considered, with even a rollout in metropolitan areas like to cost $30–50 billion.

But Johnson says these are costs that will have to be met eventually. “Fibre-to-the-node is just a stepping point to fibre to the home; the rest of the world is focusing on fibre-to-the-home,” he says. “Costs are high, but as it is rolled out more and more around the world there will be advantages in terms of bulk pricing and we need to be looking at that.”

– Mike Preston

Coo-ee Mate … Howard online

One can only imagine the angst of John Howard’s spin doctors this morning. Howard chose YouTube to announce an emissions trading scheme after starting his own page on the site less than a week ago. But it is hard to find the Howard video this morning amid the diatribes against it – a stark reminder to business about the downside of marketing online.

Since the announcement yesterday, business groups have increased pressure on Howard to set a target for greenhouse reductions, saying they cannot plan new energy infrastructure without knowing more detail. Howard has refused to set a target before next year.

– Jacqui Walker

Therese Rein contracts

Entrepreneur Therese Rein has received another blow after losing Federal Government contracts believed to be worth millions of dollars. Of 44 offices operated by Rein’s company WorkDirections, 13 will be given to other companies to run, according to the Australian newspaper. This could affect the sale of the company under negotiation.

Rein, the wife of Opposition Leader Kevin Rudd, announced she would sell the business later this year, after an audit questioned the performance of her company.

– Amanda Gome

Overtime excluded from notice payment calculations

Regular overtime does not need to be taken into account when calculating notice payments to departing employees, a court has found.

The Federal Magistrates Court found that welder Ivan Moloney’s notice payment should be calculated on the basis of his ordinary hourly wage, even though he regularly worked seven to 15 hours of overtime each week for his former employer, the Australian Financial Review reports today.

If upheld, the decision has the potential to save employers millions in reduced payments made in lieu of notice to exiting employees.

– Mike Preston

Ford plant closure blow to SMEs

Ford’s decision to stop making engines in Geelong will cost more than 600 jobs at the plant: many small manufacturers and suppliers to the factory in Victoria will also be hit.

The Federal and Victorian Governments have announced a multi-million dollar assistance package to bolster the industry and those who lose their jobs.

– Mike Preston

Economy roundup

The Australian economy is set for strong growth over the next six months, according to the Westpac-Melbourne Institute Leading Index of Economic Activity, released today. The index, which indicates the likely pace of economic activity over the next six months, was 6.1% in May, above its long-term trend of 4.4%.

“The index is pointing to strong growth into the first half of 2008, likely to be between 4% and 4.5%,” Westpac chief economist Bill Evans says.

At 12.18 the Australian dollar was trading at US87.50¢, up from yesterday’s closing price of US87.14¢. At the same time, the S&P/ASX 200 was 6348 points, 33.6 points or 0.5% down on yesterday’s close.

– Mike Preston