scoping our future - ANET - Australian National Engineering Taskforce

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 1ContentsForeword by Prime Minister Julia Gillard. ............................... 2Introduction ..................................................... 3Executive Summary. .............................................. 4Part 1: Industry needs engineers ..................................... 8Key Industry Shortfalls ............................................ 11Part 2: An issue of supply. ......................................... 18Part 3: Systemic workforce issues ................................... 24Part 4: A national engineering skills strategy. ........................... 30Paper produced by the Australian National Engineering TaskforceAuthors: Alicia Pearce, Karinda Flavell, Natacha Dao-ChengOctober 2010

2 | Scoping Our Future Addressing Australia’s Engineering Skills ShortageForeword byPrime MinisterJulia GillardThis report puts a spotlight on keyaspects of a major challenge forAustralia – skilling our workforceto take advantage of the significanteconomic opportunities that lieahead of us.The Australian Government recognisesthat skills shortages in the engineeringprofession are of serious concern, holdingback investment and productivity growth.While these issues are most apparent inthe resources sector, they also impactupon the effectiveness of other sectorssuch as manufacturing, construction andcivil engineering as well.That is why the Government has placed itssupport behind the important work of theAustralian National Engineering Taskforce(ANET), which brings together industry,the education sector and engineeringpeak bodies to preserve and expand ournation’s engineering skills base.The taskforce is working closely with theDepartment of Education, Employmentand Workplace Relations to conduct keyresearch on workforce development,including issues of demand and supply,and making engineering studies moreaccessible and relevant.ANET will also look at ways to improveretention rates to provide more stability foremployers within the sector, with a focuson equity and best practice, including theretention and participation of women.These developments, along with therecent increase in the number ofuniversity applications for engineeringcourses, give me great encouragementthat the shortfalls and challenges thatprompted ANET are finally starting to beovercome.In that optimistic spirit, I warmly commendall the ANET partners on this outstandingreport and the pathways it opens forfuture development of the engineeringprofession, which is so vital to our nation’sfuture growth and prosperity.The Hon Julia Gillard, MPPrime Minister

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 3IntroductionThis report provides somebackground to the work of theAustralian National EngineeringTaskforce (ANET).ANET is a coalition formed to investigatethe shortfall in engineering capacity,which continues to have far-reachingeffects on industry and infrastructuredevelopment in Australia. Membershipincludes the Association of ProfessionalEngineers, Scientists and ManagersAustralia (APESMA), EngineersAustralia, Consult Australia, TheAustralian Council of Engineering Deans(ACED) and the Australian Academy ofTechnological Sciences and Engineering(ATSE). Together these organisationsrepresent the major professional,industrial and academic interests in theengineering sector.ANET was established in recognition thatengineering skills shortages continueto constrain Australian innovation andgrowth. This is a national problem, witha recognised skills shortage in genericand specialist scientific and engineeringdisciplines, with effects in national,sectoral and regional labour markets. InMarch 2010, ANET released two surveysof its member bodies’ constituents:a qualitative survey of consultingemployers through Consult Australia,and a qualitative and quantitative surveyof engineers through APESMA andEngineers Australia. Both employersand engineers shared the effects of theskills crisis on their work, with employershighlighting the difficulty in findingqualified staff and engineers commentingon the quality and safety aspects of a lossof capacity at their workplaces.In 2010, skills shortages in engineeringhave been highlighted as a keyconstraint on a resources-led economicrecovery, with the National ResourcesSector Employment Taskforce hearingindustry’s concerns of a major labourmarket shortfall. Skills Australia hasalso designated engineering as askillset requiring structured workforcedevelopment interventions to ensurethat community need is met, particularlyaround climate change infrastructureadaptation. Engineers are globally inshort supply, with Australian highereducation providers producing onlyaround half of the graduates neededto fill domestic demand, and in thisenvironment systemic cultural issues, lownumbers of women in education and inthe workforce and an ageing workforcehave produced widespread issueswith retention and sustainability. Thispaper surveys the available informationabout the scope of this skills crisisand highlights areas where action andresearch are needed.If these issues are to be addressed, it isclear that all parties must work togethercollaboratively to create innovativesystemic solutions. To this end, ANET isworking in partnership with Governmentand industry, asset owners andconsultants, to develop complementaryworkforce development strategies for theengineering workforce.In announcing funding for ANET’s firsttwo projects, then-Deputy Prime MinisterJulia Gillard recognised “the vital role ofengineering in innovation, productivityand the capacity of industry.” With strongGovernment leadership on this issue,ANET will build on recent increases inengineering university applications andinitiatives in vocational education andtraining, to help protect industry fromfuture skills shortages.ANET represents a new form ofcollaboration between professional,education and industry bodies to provideinnovative, research-based solutionsto longstanding problems of supplyand demand in the engineering sector.ANET is a pilot vehicle for workforcedevelopment, modelling consultativesolutions based in rigorous evidencebasedresearch and bringing keystakeholders together to ensure thatcurrent labour supply issues are able tobe addressed with input from employersand engineers on the ground.ANET’s work will enhance employmentand learning outcomes for students andindustry, increasing the supply of qualifiedengineering personnel to meet nationalskills needs into the future and increasingthe number of women engineers,supporting business innovation andgrowth. ANET aims to ensure thatAustralia is able to design, build andmaintain high quality and infrastructure,underpinning a strong economy and ahealthy, functioning community.Australian Academy of TechnologicalSciences and Engineering

4 | Scoping Our Future Addressing Australia’s Engineering Skills ShortageExecutive Summary

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 5There is widespreadunderstanding that Australianindustry faces an engineeringskills shortage.Professional engineers, engineeringtechnologists and technicians have beenin short supply in construction, road, rail,power generation, local Government andother industries over a period of severaldecades. This is a fact recognised byGovernment reviews, industry surveysand engineers themselves.This skills shortage is a significantproblem for business, the economy andthe community, with millions of dollars ofcost-overruns and opportunity loss as aresult. According to the Blake Dawsonreport Scope for Improvement, 42% ofprojects are inadequately scoped beforegoing to market. Scoping inadequaciesresulted in a quarter of projects over$1billion being more than $200 millionor up to 20% over budget. 1 Industryhas made the point that tendering costsare often a barrier to participation, withcontractors claiming up to $200 millionin reimbursements following the recentaxing of the NSW Government CBD Metroproject. 2 Scoping work is highly technical,and costs are exacerbated by key skillsshortages in design personnel. 3As we move into a period of economicupswing driven by the resourcesboom, Australia simply cannot affordto ignore this capacity crisis. This year,both Skills Australia and the NationalResources Sector Employment Taskforcehave identified that engineeringskills development requires strategicintervention nationally to ensure thatcommunity and industry need is metinto the future. Despite some easing inengineering labour shortages in 2009following the global financial crisis,there are clear indicators that shortagesare chronic rather than cyclical. TheAustralian Industry Group 2010 NationalCEO survey identified a key shortage ofengineers, with nearly 50% of businessesgiving the management of skillsshortages high or top priority. 4 Withoutstrong leadership on this issue, capacityshortages in engineering will continue toform a key constraint on innovation andbusiness growth.This is an issue of supply. There isan identified supply mismatch betweenthe number and specialisations ofengineering graduates produced byAustralian universities and the VETsector, and the identified needs ofindustry and the community. Graduationsfrom university engineering coursesare limited primarily by the number ofenrolments from qualified and motivatedschool leavers. In a student-demanddriven system, Australia cannot rely onstudent preferences to ensure the flowof engineering graduates that industryrequires, given that in many cases theproblem stems back to declining levels ofengagement with mathematics and thesciences in secondary and even primaryleveleducation.Universities and the VET sector are simplynot producing enough graduates, leadingto increasing reliance on internationallysourcedskilled labour in a competitiveglobal labour market. The total intake ofengineering professionals in permanenton-shore and off-shore programs in2007 was the equivalent of around 80%of domestic graduates produced thatyear. 5 Currently, skilled migrant engineersaccount for more than half of the supplyof newly qualified engineers. 6 However,competition from large internationalprojects means that globally, engineersare in short supply. There are significantquestions to be asked about thesustainability of our reliance on offshorerecruitment and international studentsgiven that engineers are in short supplythe world over.This skills shortage hashad significant import forbusiness, the economyand the community...1 Blake Dawson Waldron (2006) Scope forImprovement: A survey of pressure points inAustralian construction and infrastructure projectsReport for the Australian Constructors Association.2 (2010) AFR ‘Axed Metro to cost $500m’ 19March.3 Blake Dawson Waldron, op.cit.4 AiGroup and Deloitte (2010) Skills Shortages:A High-Risk Business, National CEO Survey,AiGroup.5 Engineers Australia (2009) The Engineeringprofession: a statistical overview, sixth edition.6 Engineers Australia (2009) The Engineeringprofession: a statistical overview, sixth edition.

6 | Scoping Our Future Addressing Australia’s Engineering Skills ShortageFurthermore, women make up only16% of commencing undergraduatestudents in engineering, and 9.5%of those with tertiary qualifications inengineering working in engineering orrelated occupations. 7 This figure remainsunacceptably low. While women’sinvolvement in engineering has increasedsomewhat over the past three decades,beginning from an extraordinarily lowbase, female participation remains verylow compared to overall female workforceparticipation rates, with cultural issuesand issues of workplace flexibility causingan exodus of women from the profession.In APESMA’s 2009-10 Women in theProfessions survey, 78% of respondentsindicated that they worked in a maledominatedindustry. Of engineeringrespondents, three quarters felt thatworking part-time in their current jobhas had or would have detrimentalimpacts on their career. And disturbingly,around 70% of engineering respondentsthought that taking maternity leave wouldbe detrimental to their career. Mostrespondents noted a lack of access tosenior roles for women, and issues withwork-life balance. 8 This is an issue ofworkplace culture that requires urgentattention. Attracting and retaining womenstudents and engineers is an issue ofboth equity and practical supply. In atight labour market, industry must investin best-practice workplace practices toensure that all available sources of skilledlabour are utilised.Engineers themselves have identifiedwidespread impacts of capacity shortageson costs, quality and professionalism.ANET’s December 2009 survey of morethan 2000 engineering professionalsshowed that 60% of respondentsidentified an engineering skills shortagein their work section. 54% of respondentsidentified a loss of capability in theirworkplace, which was identified byrespondents as impacting on their abilityto undertake core work. 9Combined with systemic workforceretention issues, an ageing professionalengineering workforce and a changedrole for the public sector in providinggeneralist skills and training for youngengineers, decreased capacity hasmeant that engineers are pressed harderand have seen their roles grow morenarrow. Over time, overall professionalcapacity is correspondingly degraded.One engineer neatly summed up theproblem at their workplace:The few remaining knowledgeableand skilled engineers have to takeon increasing responsibilities oftenresulting in single points of knowledge.There is no one to pass knowledgeto as no succession planning exists.Severe loss of corporate knowledge isimminent as many engineers will retirein the next 5 years.The engineering profession is integrallyinvolved in the growth and developmentof the Australian economy, drivinginfrastructure design, constructionand maintenance. As we move intothe second decade of the 21 st century,Australia faces a certainty that withoutaction on this issue, our capacity to buildand maintain vital community and industryinfrastructure will be affected. Over thenext two decades, with Governmentpolicy settings supporting the resourcesboom driving Australia’s strengthenedeconomic growth, skills shortages inengineering will continue to affect thegrowth of the Australian economy as theskills drain from the resources sectoradds to the already apparent constraintson skills and capacity.Australia also faces the challengeof climate change, which will requiresignificant adaptation of existinginfrastructure and systems and thedevelopment of new technologiesto address a new set of communityissues. Engineering, design andproblem solving skills are a base levelcommunity capacity required to addressthese challenges. However, currentlyplanning for the increased demand for‘green’ workers is limited. Discussion of7 Cited in Engineers Australia (2008) TheEngineering Profession: A Statistical OverviewFifth Edition.8 APESMA (2010) 2009-10 Women in theProfessions: The State of Play Survey Report,APESMA, September.9 Australian National Engineering Taskforce (2010)ANET Engineers Survey.

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 7the role of engineers in the preventionand mitigation of climate change andin the “green” economy more broadlyrequires a new focus on education andthe potential up-skilling of the existingworkforce. A workforce developmentplan for engineering is required toensure that new and emerging areas ofcommunity infrastructure are properlyscoped and planned, ensuring thatAustralia has the requisite national skillscapacity to face the coming challenge ofclimate change adaptation.Systemic interventions into the educationsystem and graduate supply, addressingrecruitment and retention of womenand skills transfer issues in an ageingworkforce, and investing in betterarticulation between industry needs andsupply infrastructure are vital policy areasthat must be addressed to ensure thatour national skills and innovative capacityis enhanced, to support growth anddevelopment, and to address the comingchallenges of climate change adaptation.ANET is working with Government andindustry to develop sustainable solutionsto the capacity crisis. ANET’s first projectis to model capacity and skills shortagesin two key community infrastructuresectors, roads and rail. The researchwork on these two industries will alsoproduce a model to examine other keyindustries, as part of ANET’s plan todevelop a national picture of engineeringskills shortages to support evidencebasedpolicy development and improvedcapacity in industry, workplaces and inthe education sector.Both of these industries are currentlysuffering key skills shortages inengineering. The Australasian RailwayAssociation has estimated that demandfor rail engineers in Australia outstrippedcurrent employment by around 40%. 10According to projections from BISShrapnel, around $2.7 billion worthof potential road construction andmaintenance work will be foregonebetween 2012-14 if labour supply is notincreased to meet demand. 11ANET’s second project investigatescurrent pathways between differentstages of engineering education andthe effectiveness of existing modelsto ameliorate the skills blockage. It willprovide an overview and participativeevaluation of the current articulationmodels between VET and HigherEducation providers. ANET, with the criticalinput of education providers, will examinethe effectiveness and usefulness of currentmodels through stakeholder evaluation,identifying best practice. Both of theseresearch projects have been fundedthrough the Commonwealth Departmentof Education, Employment and WorkplaceRelations and will report in 2011.10 Australasian Railway Association (2008) A RailRevolution: Future Capability Identification andSkills Development for the Australasian RailIndustry.11 BIS Shrapnel (2006) Australia and NewZealand Roads Capability Analysis, 2006-2016Austroads Research Report.

8 | Scoping Our Future Addressing Australia’s Engineering Skills ShortagePart 1:Industry needsengineers

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 9Defining a SkillsShortage?Skills shortages occur when thesupply of skills in a particularprofession or area is outstrippedby demand from industry.Skills shortages typically affect segmentsof industry relying on specialist orexperienced workers. Skills shortageshave a range of effects, constrainingproductivity and business growth,increasing costs to business, andputting new strains on the structure ofoccupations and professions.In 2001, the National Skills InitiativeWorking Group reported that skillsshortages in engineering trades andprofessions were a priority national skillsproblem. 12 A decade later, and littlehas changed for the profession. Thereis a well-recognised skills shortagein engineering, affecting both genericengineering skills and also concentratedin areas of specialisation. The shortagesaffect industry unevenly, particularly inareas like rail engineering, where signalengineers are an ageing specialistworkforce in crucially short supply.The National Centre for VocationalEducation has developed a typologyof skills shortages, mapping thedifferent levels and types of skillsshortage. Skills shortages can becharacterised as either:Level 1 shortage - few workers havethe essential technical skills who arenot already using them and there is along training time to develop the skills;Level 2 shortage—there are a fewpeople who have the essential skillswho are not already using thembut there is a short training time todevelop the skills;Skills mismatch—there are sufficientpeople who have the essentialtechnical skills who are not alreadyusing them, but they are not willingto apply for vacancies under currentconditions; andQuality gap—there are sufficientpeople who have the essentialtechnical skills who are not alreadyusing them, who are willing to applyfor vacancies, but they lack somequalities that employers consider areimportant. 13The National Resources SectorEmployment taskforce has suggestedthat in-demand engineering professionsin the natural resources sector are likelyto be the subject of a Level 1 Shortage. 14This kind of shortage occurs when thereare few workers with essential skills anda relatively long lead-time to developthese skills. Other areas of industry arelikely to experience different types of skillsshortage, with a range of industry-specificsolutions required to address the overallshortfall in engineering skills. Given thetype and scope of the skills shortage inthe booming resources sector, it is likelythat industries employing engineers withtransferable skills will experience someknock-on effect from the resources sector.The shortage of engineers across theeconomy may become more acute andfocussed in areas where vital communityinfrastructure is built and maintained.12 DEST (2002) Nature and Causes OfSkill Shortages Reflections: From TheCommonwealth National Industry Skills InitiativeWorking Groups, DEST, Canberra.13 Richardson S (2007) What is a Skills Shortage?National Centre for Vocational Education andTraining, National Indstitute of Labour Statistics,Adelaide.14 NRSET (2010) Resourcing the Future Discussionpaper, Australian Government, March, p17.

10 | Scoping Our Future Addressing Australia’s Engineering Skills ShortageDeveloping the EngineeringWorkforceIn March 2010, Skills Australia released itsWorkforce Futures report recommendingthat the Australian Government adopt aworkforce development approach in itsskills agenda. Workforce developmentmodels incorporate both structuraland workplace initiatives to ensure anappropriate fit between skills developmentand demand. In the 2010-11 Budget, theAustralian Government announced a VETskills development package stemmingfrom this report.Workforce Futures recognises that someparts of the labour force producing strongcommunity benefits require Governmentand industry-led intervention to achieveand increase an appropriate level oflabour supply. Occupations designatedas ‘high risk’, or requiring intervention, areoccupations where:• Skills are specialised with a long leadtime for development;• There is a good fit between skills andindustry needs;• There is significant economic or policydisruption if the skills are in short supply;• There is sufficient information to assessthe future demand for a skill.The engineering profession performs apivotal role in planning, risk managementand delivery of key communityinfrastructure, driving innovation andcommunity adaptation to emerging issuessuch as climate change. Engineering hasbeen designated an area of ‘high risk’,requiring intervention from Governmentand industry to ensure that the futuresupply of skilled engineering labourmeets demand. This ‘high risk’ categorycarries the recognition that withoutsufficient fostering of the skills base inthis instrumental profession, there willcontinue to be a mismatch between theskills and needs of the community.Why are engineersimportant?Engineers design, build and maintaininfrastructure routinely used bythe community – roads, railways,ports, water, electricity and gas.They perform key roles in feasibilityscoping, structural design, damagecontrol and maintenance – monitoringand addressing safety and qualitythroughout systems. Engineersdevelop and test practical solutions toeveryday and extraordinary problems.This capacity to create innovativesolutions is at the core of engineeringwork. As the community faces newand more complex problems – mostnotably the emerging challenge ofclimate change adaptation – thecapacity to test new ideas and findcreative solutions must be nurturedas a national asset. Engineeringwork underpins our economicgrowth, business innovation and ourcapacity for community life. Investingin engineers means investing in ourcapacity for the future.In ANET’s experience, Skills Australia’sanalysis is correct. In recent years theimpact of skills shortages have been welldocumented through surveys of managersand executives, two state parliamentaryinquiries 15 16 and mention in Auditor-General reports. 17 Consistent themesemerge, with much of the availableliterature indicating cost increases anddelays for individual employers, lowerproductivity and an impact on profits.15 Public Accounts Committee, LegislativeAssembly of Queensland (2008) Review ofAuditor-General Report 7 for 2007 – AddressingSkills Shortages in Queensland December,Report no. 81, p18.16 NSW Standing Committee on State Development(2006) Report 31: Inquiry into Skills Shortages inRural and Regional NSW May, p41.17 NSW Auditor General (2007) Auditor-General’sReport to Parliament Vol. 4, Audit Office of NSWGovernment. See also Ralston N (2007) “SkillsShortage to hit CityRail Upgrades” SMH Nov 14.

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 11Key Industry ShortfallsPrivate sector and public sector projects have experienced severe engineering skillsshortages over the past decade. The capacity shortfall has had differentiated impactsacross a range of sectors, with industry reporting financial and opportunity loss due toinability to attract engineering professionals.Construction• Consult Australia’s 2009 skills surveyshows that civil and structural engineeringfirms were worst hit by the skills crisis.• Industry has made the point thattendering costs are often a barrier toparticipation, with industry claiming up to$200 million in reimbursements followingthe recent axing of the NSW GovernmentCBD Metro project. 18 Scoping workis highly technical, and costs areexacerbated by key skills shortages. 19According to Blake Dawson’s reportScope for Improvement, 45 per centof respondents stated that a lackof skilled personnel was a majorcontributor to inadequate scoping.83 per cent of the respondents alsostated that the current skill crisishad made it difficult for them tofind expertise to develop adequatescoping documents.Inadequate scoping has adverseconsequences to the overall costof the projects. 61 per cent ofrespondents reported that inadequatescoping resulted in cost overrun,with more than half of those overrunscosting more than 10 per cent of thevalue of the project and a third morethan 20 per cent.For projects surveyed with a valueof more than $1 billion, around onequarter experienced a cost overrun ofmore than 20 per cent of the projectvalue (which is around $200 million ormore over the budget). Furthermore,58 per cent of respondents reporteda delay to the project, with morethan half of those delays lasting fourmonths or more.18 ‘Axed Metro to cost $500m’ (2010) AFR 19 March.19 Blake Dawson Waldron (2006) Scope forImprovement: A survey of pressure points inAustralian construction and infrastructure projectsReport for the Australian Constructors Association.Roads• According to projections from BISShrapnel, around $2.7 billion worthof potential road construction andmaintenance work will be foregonebetween 2012-14 if labour supply isnot increased to meet demand. 20 Thisreport indicates a chronic shortfall inengineering capacity in the road sector ofmore than 3000 engineering roles. Thisis predicted to significantly undermineother productivity improvements thatmight occur in the sector.Rail• The Australasian Railway Associationestimated that demand for railengineers in Australia outstrippedcurrent employment by around 40%. 21Rail competes with other industries forskilled staff, with a particular drain fromthe mining industry.• Competition for rail engineers is global,with a number of large rail constructionprojects in Asia and Europe drainingAustralian capacity. 22• Major projects affected by the lackof qualified staff include Epping toChatswood Rail Line and the RailClearways program, two projects ofwhich were cancelled in 2009 followinga skills shortages review. 2320 BIS Shrapnel (2006) Australia and New ZealandRoads Capability Analysis, 2006-2016 AustroadsResearch Report.21 Australasian Railway Association (2008) A RailRevolution: Future Capability Identification andSkills Development for the Australasian RailIndustry.22 Engineers Australia (2007) Skills Shortages in theEngineering Profession Background Paper, June.23 NSW Auditor General (2009) Auditor-General’sReport to Parliament Vol. 10, Audit Office ofNSW Government.

12 | Scoping Our Future Addressing Australia’s Engineering Skills Shortage• In 2007, the NSW Auditor-Generalreleased a financial auditing reportshowing that a shortage of signalengineers in the rail industry had led toproject delays and cost blowouts, puttingat risk large projects including the nowdefunctRailway Clearways project. 24Water• Research by the Water ServicesAssociation found that the nationalshortage of generic science andengineering skills impacted on industryability to recruit and retain staff. Turnoverof civil engineers, a critical role in water,was very high at 20.7%. 25• Demand for civil engineers outstrippedsupply by 40%, with any future majorcapital works requiring an increase inlabour supply.Consulting• Australian consulting firms arecompeting in a tight global skillsmarket, with strong demand for skilledengineering professionals. ConsultAustralia’s 2009 Skills Survey reportedthat despite the global economicdownturn, 63% of firms were havingdifficulty attracting and retainingexperienced staff at mid- and seniorlevel.Growth of demand for engineeringskills in remote and regional areas withthe resources boom places additionalpressures on employers seeking toattract and retain the best staff. 26 The2010 Skills Survey shows that threequarters of firms face critical skillsshortages, with two-thirds of consultingfirms face shortages of civil engineers. 2724 “Overview of Rail Service” and “TransportInfrastructure Development Corporation” bothwere from Auditor-General’s report to Parliament2007”, Volume four. See also (2007) “Skillsshortage to hit CityRail upgrades”, Nick Ralston,State political reporter, SMH, November 14.25 Barrett, K (2008) An assessment of the skillsshortage in the urban water industry WSAAOccasional Paper 13, March.26 Consult Australia (2010) Skills Survey July 2009,Issue 4. See also: ANET/ACEA ConsultingEmployers Survey, February.27 Consult Australia, (2010) Australia ACEA SkillsSurvey 2010, Issue 5.

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 13Is the skills crisiseasing?Initially the global financial crisis of 2008-09 appeared to have an expected rippleeffect on the employment of engineers,with large international and Australianemployers cutting workforce costs. 28In January 2009, the Olivier Job Indexshowed that online job advertisementsfor engineering positions in Australia fellby 17.8% over a period of one month.A variety of mining and infrastructureprojects were delayed, notably theQueensland Rail Link. However, with theinjection of Government infrastructurefunding and the resurgence of theminerals market, this shedding of staffhas been short-lived.As the resources boom drives economicgrowth across the economy, demand forskilled engineers is predicted to rise.There is evidence that the labour marketis consolidating and that these chronicshortages are re-emerging. By late 2009,analysts and industry stakeholders withthe mining sector were warning thatwithout action the sector again facesthe constraint of a skills shortage in thefuture. 29 SkillsDMC, the national industryskills council for the resources sector,stated that constraints emanating fromskills shortages could, in around twoyear’s time, threaten billions of dollars ofmining exports. 30The National Resources SectorEmployment Taskforce has heardthat while by late 2009, the globalfinancial cycle had meant that thelabour market for engineers easedsomewhat compared to the shortagesexperienced in mid-2009, members ofthe Australian Constructors Associationwere experiencing difficulty recruitingengineers across the states. 31 TheAustralian Industry Group 2010 NationalCEO survey identified a key shortageof engineers, with nearly 50% ofbusinesses giving the management ofskills shortages high or top priority. 32And Consult Australia’s 2010 SkillsSurvey has shown that three quartersof engineering consulting firms areexperiencing critical shortages aspipeline work provides a significantamount of buoyancy to the industry. 33The skills drain from the resources sectorhas knock-on effects to other sectors asskilled specialist engineers are siphonedout of other sectors. The roads and railsectors in particular have documentedkey engineering shortfalls affecting thecapacity of the public and private sectorsto provide and maintain key communityinfrastructure. A submission from theVictorian Government to the recent Inquiryinto Skills Shortages in the Rail Industrysuggested that skills shortages in railmoved with overall economic conditions,occurring primarily during times of strongeconomic growth and easing whereeconomic conditions weakened. However,it pointed to an ageing workforce andincreased competition for skilled personnelas issues affecting skills availability in thesector above and beyond the economiccycle. 34While the measures outlined in the2010-11 Commonwealth budget to boostparticipation in VET training provide somewelcome incentive to skills development,a comprehensive national skills plan inengineering remains elusive. Consideringthe increased pull of skilled personneltowards the resources boom, vital sectorslike roads and rail face a real problemof recruiting and retaining skilled seniorand mid-level personnel. With an ageingworkforce, existing skills shortages andattendant capacity drains, how can weensure that vital community infrastructurecontinues to be built and maintained to anappropriate standard?Engineering skills shortagesare not cyclical. They arechronic and systemic, linkedto identifiable, cross-sectoralsupply-side issues.28 Ayesha de Kretser (2009) “Steeled for toughconditions” AFR 18 February.29 BIS Shrapnel (2009) Media Release: “Mininginvestment to return to record levels by 2012/13”5 November, and Garvey et. Al (2009) “Skillsshortage risk to recovery” Australian FinancialReview 13 October.30 Hannaford. S (2009) “Mining skills deficit to‘threaten exports’ Canberra Times 26 November.31 NRSET (2010) Resourcing the Future: Nationalresources sector employment taskforce discussionpaper, Commonwealth of Australia, March.32 AiGroup and Deloitte (2010) Skills Shortages:A High-Risk Business, National CEO Survey,AiGroup.33 Consult Australia, (2010) Australia ACEA SkillsSurvey 2010, Issue 5.34 Victorian Government, (2010) Submission to theInquiry into Skills Shortages in the Rail Industry,May.

14 | Scoping Our Future Addressing Australia’s Engineering Skills ShortageANET’s December2009-January 2010 survey ofengineers gauged engineers’experience of the engineeringskills shortage at theirworkplace, the local andbroader effects of any capabilityshortage, and the utilisationof their skills as professionalengineers. The survey revealedthat respondents had a firstrateunderstanding of the localand broader quality, cost andproductivity effects that skillsand capacity shortages continueto have on industry and theprofession. Respondents camefrom across all industries,both public and private sector.Professional engineers are ahighly educated workforce, andare well aware of the issuesfacing their organisations.Market rates,market problemsA recent ANET survey of consultingengineer employers found that the singlelargest obstacle to recruitment, retentionand growth in consultancies is theshortage of engineers. Australian firms arecompeting in a tight global skills market,with strong demand for skilled engineeringprofessionals; growth of demand forengineering skills in remote and regionalareas places additional pressures onemployers seeking to attract and retain thebest staff. One firm reported:The largest obstacle is the shortageof skilled graduates and engineeringprofessionals; in addition, much of ourwork is in remote areas, and it is difficultto get highly skilled engineers to take onthese roles.Despite a fluctuation of demand followingthe global financial crisis, long-termlabour market problems have not beenalleviated. Consulting firms reporteddifficulty in attracting qualified labourdue to competitive salary stress. Onerespondent noted:Prior to the GFC, the market wasextremely restricted in terms of availableprofessional engineering. This wasexacerbated by ever increasing salariesin an attempt to attract the best talent.In certain skills set this created anenvironment where candidates werebeyond the reach of consultancies.Post GFC has created a new setof conditions, where top talent areremaining where they are and in somecases proving difficult to recruit. 35Consult Australia’s 2009 Skills Surveyshowed that respondent firms had themost trouble recruiting skilled personnelat mid and senior level. While the 2009financial downturn slackened skillsshortage pressures in some areasof industry such as the resourcessector, evidence from ANET partnerorganisations and their members hasshown that overall the downturn inengineering related industries hasnot proven to be long-term. Smallerorganisations particularly are struggling toretain capacity as the economy picks up.Skills shortages,workforce impactsThe shortage of skilled engineers hasspecific workplace consequences forindividual engineers and the professionas a whole. Anecdotal evidence suggeststhat many employers, faced with financialimperatives, structure work aroundcapacity constraints rather than seekingto build capacity among the existing andstretched workforce. For instance, lackof workplace capacity leads to relianceon contractors and external expertisein larger organisations, including publicsector infrastructure providers. Thisreliance is to the detriment of generalistworkforce training; contractors developspecialist expertise rather than generalistengineering capacity, with knock-on effectsto professional standards and structures.Responses to the ANET engineerssurvey showed that engineers arealready experiencing the professionaland industrial consequences of capacityshortages at their workplace. Acrossindustries and sectors, engineersidentified that their work was sufferingfrom skills and capacity shortages, with54% of respondents identifying a loss ofcapability in their workplace. Commentsrevealed that this was having impacts oncosts, quality and safety. 36Engineers comments on skillsand capacity shortages wererevealing. A strong theme of ANET’sconsultation with the engineeringworkforce has been the dismay ofengineers about the effects of theskills shortage, not only on theircapacity to perform their jobs, butalso on the status of their professionin their workplaces and on the qualityof their work overall. Engineersare highly educated professionals,with a strong understanding of therelationship between their work, theiremployer’s capacity, and the effectson the broader community, and thiscame across strongly in responses tothe survey.35 ANET (2010) Consulting Employers Survey,unpublished results.36 Australian National Engineering Taskforce (2010)ANET Engineers Survey.

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 15Skilled personnel shortagesEngineers overwhelmingly expresseddismay at capacity shortages, withan astounding 61% of the 2400responses identifying an engineeringskills shortage in their work section.More than half of comments identifieda specific discipline or area in shortsupply in their workplace. One engineeridentified the structural impact of thisskills shortage on the workplace:A number of specialist vacancieshave been very difficult to fill, despitenational and international searches.In some cases we have compromisedby appointing relatively inexperiencedengineers, with a view to an intensiveskills development program. In theinterim, we have a greater relianceon consultants to fill the gap. Thechallenge will be to keep the employeesonce trained up, particularly given themarket environment. (Age 47; industry:Electricity, Gas and Water)Public sector engineers are increasinglyaffected as work is outsourced tocontractors and the overall capacity ofthe public service is reduced. Structuralchanges have significantly changedthe way that engineers work across thepublic sector. One engineer noted thatthis had resulted in a severe capacityshortfall in his organisation:As a Government department, wemoved from having a large in-houseengineering workforce, to outsourcingmost functions. We are now largely anadministrative/management agency.However with that outsourcing we losta lot of institutional knowledge andcapability. We struggle to remain aninformed client and are desperatelytrying to build technical expertise in keyareas that cannot be met through theprivate sector. The current situation isinadequate to meet current demands,let alone provide a sustainable model tomeet future demands. The organisationhas not successfully tackled the issueof attraction and retention of engineersand allied technical personnel.Another engineer described the personalimpact of workplace skills shortageson their work-life balance and industrialconditions. The impact of capacityshortages on employees’ caringresponsibilities emerged as a themeaffecting retention:Experienced geotechnical engineers(like me) are in short supply. As there ismore work than my team can do in thestandard working day, there is pressureto work excessive overtime (and hasbeen for the better part of 5 years).No-one enjoys this for prolongedperiods, especially when it affects work/home balance, particularly for me asI have a small child to care for. In mycase, with a small child, I am supposedlyonly working part time 3days/week,but for the last 6 months I have workedan average of 50% extra hours thanI should. Whilst acknowledging thatovertime is a part of consultancy…if my employer COULD get anothergeotechnical engineer on staff, I wouldinstantly request to work fewer hours.(Age: 42, industry: Resources)ProfessionalismA number of comments also highlightedthat cost cuts in key support staff, bothwithin public sector organisations and theprivate sector, had resulted in engineeringstaff devoting more time to administrativetasks with a concurrent reduction in thequantity and scope of professional work.54% of respondents identified a loss ofcapacity in their workplace with attendanteffects on professional standards. Oneengineer in the private sector commented:While most of my skills and capabilitiesare used, far too much of my time iscommitted to administrative work ratherthan value-adding engineering work.Both organisations I have worked within my career reduced administrativestaff as a cost-cutting measure, shiftingthe admin burden onto specialist staffwithout adequately recognising thereduction in productivity this brings. I’msure my experience is not unique! (Age45; industry: Manufacturing)

16 | Scoping Our Future Addressing Australia’s Engineering Skills ShortageQualityEngineers were concerned that overallcapacity in their organisation wasaffected negatively by key engineeringshortages. One public sector engineerindicated that a shortfall of engineersmeant that non-engineering employeeswere undertaking the complianceassessment roles that have traditionallybeen the purview of engineers:Not enough personnel in auditing,quality and compliance with engineeringand/or technical skills. Non-technicalpeople are assessing engineeringmanagement systems for complianceand not properly comprehendingtechnical aspects and risks. (Age: 28,industry: Electricity, Gas and Water)Another public sector engineer identifiedthat key personnel shortfalls werecosting his organisation money andaffecting the quality of communityinfrastructure delivery:Technical expertise... the organisationis no longer an informed purchaser. Myemployer doesn’t value my technicalskills and capabilities and is now anuninformed purchaser of engineeringgoods and services. This results inpoor quality roads and bridges... whichthen impacts on road safety. (Age 49;industry: Roads)Skills transitionA fundamental preoccupation ofengineers was the ageing of theirworkplaces and the fact that keypersonnel would be imminently retiringwithout the opportunity to pass onaccumulated expertise and knowledge.The shortfall of graduates and a lack ofstructured traineeships were highlightedas key concerns. One engineer in thepublic sector expressed typical concerns:The most highly skilled engineers in ourorganisation are all now in their 50s andwill exit the workforce in the next 5 to15 years. These are not being replaceddue to a shortage of engineers in themarket. (Age 58; industry: Electricity,Gas and Water Supply)Another engineer noted that olderengineers were becoming morespecialised as particular tasks devolvedon the most experienced members ofthe organisation; however, a lack ofworkforce and workplace planning meantthat with the loss of these personnel,specialist capacities of the organisationwould be wiped out:The few remaining knowledgeableand skilled engineers have to takeon increasing responsibilities oftenresulting in single points of knowledge.No one to pass knowledge to as nosuccession planning exists. Severe lossof corporate knowledge is imminentas many engineers will retire in next 5years. (Age 56; industry: Electricity, Gasand Water Supply)One engineer told of the effects ofthis specialisation on their own worksatisfaction and career prospects:Having been pigeon-holed as a technicalspecialist for years, I get little exposureto the more generalist skills which theorganisation favours when looking to fillsenior positions. Also, it’s difficult to finda similarly experienced specialist in thisfield and, of course, the organisationwont consider parallel paths to retain/attract quality staff. So we get aprocession of inexperienced, overseasqualified engineers who are looking toget a foot in the door, then they move on.This is a temporary, band-aid solution tothe skills shortage. (Age 52; GovernmentAdministration and Defence)Engineers often raised the idea thata lack of formalised traineeships atindividual workplaces was having broadercapacity effects, and raised the idea thata workforce intervention was needed toensure that graduates were able to fullyrealise their potential as engineers:My experience is that most graduatesneed a significant amount of supportbeyond their undergraduate trainingin order to become world-standardengineers. The amount of supportrequired is very difficult to providewith on-the-job training alone and Ibelieve that some formalised systemto address this shortfall is necessaryto arrest the degradation of skills in theworkplace. (Age 31; industry: Water andEnvironment)As the survey reveals, engineers areplaced under enormous pressure atthe workplace to continue deliveringquality infrastructure with a skeletonstaff. A 2008 survey of employers in theconsulting engineering sector asked

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 17about the impact of skills shortages onthe respondent firm in the previous twoyears; 100% of larger firms and 94% ofmedium sized firms (which employ agreater number of engineers than smallerfirms) answered that the skills shortagehad increased pressure on existing staff. 37In a recent APESMA member survey atRail Corp in NSW, 65% of respondentsanswered that there were unfilledvacancies in their area and 49% that theywere working extra hours as a result ofskill shortages. 38Skills Australia has identified whatengineers and employers already know– that the skills crisis will not abatewithout strategic intervention to developthe engineering workforce to meetcapacity demands. Over the past threedecades there has been a fundamentalrearticulation of the engineeringprofession and its development throughthe public and private sector and theuniversity sector, resulting in an overallloss of capacity and degradation ofprofessional structures. Unchecked,skills shortages will continue to affectworkplace capacity, workplace conditionsand professional structures, and will affectthe ability of Government and its publicservice to deliver key infrastructure.37 Consult Australia, (2008) Australia ACEA SkillsSurvey 2008, Issue 3.38 Unpublished APESMA Member Survey.

18 | Scoping Our Future Addressing Australia’s Engineering Skills ShortagePart 2:An issue of supply

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 19Education and supply:higher educationOne of the key areas for interventionin the supply process is Australia’shigher education system. Australianinstitutions are not currently producingenough qualified engineering graduatesto fill long-term community demand.Government efforts to produce higherenrolments have resulted in a moderateincrease in the number of studentsstudying undergraduate engineeringover the past several years, with a 7 percent increase in commencing domesticstudents in Bachelors of Engineering in2007 and about a 10 per cent increase in2008 and 2009. 39However, low completion rates inBachelors of Engineering continueto exacerbate the supply problem.While the overall average highereducation completion rate is around72%, the completion rate for domesticundergraduate engineering students was52% for men and 58% for women. 40 Thishas differentiated impacts on differentindustry and discipline groupings. 41 Lowerthan average national completion ratesfor engineering are partially due to issuesof longer duration and higher intensity ofcontact hours. The university engineeringschools are currently examining reasonsfor attrition and non-completion to identifyareas of intervention to the attrition rate.The problem of attraction and retentionof students in tertiary education as awhole begins in primary and secondaryeducation, with a declining uptake of keymathematics and science prerequisitecourses affecting the number ofsecondary students eligible to apply fortertiary engineering courses, includinghigher level mathematics, physics andchemistry. 42The statistics are not much different forstudents taking physics and chemistry.Only 18% of Year Twelve students studiedchemistry, a significant reduction over thepast thirty years. 43Women in engineeringhigher educationIn 2006, women were 56 per cent ofall domestic undergraduate studentcommencements but just 13.4 percent of engineering undergraduatecommencements. This increased to 14.1per cent of engineering undergraduatecommencements in 2008.Attracting and retaining more womenstudents to engineering is an issue ofboth equity and practical supply. In ademand-driven system, measures toincrease engineering commencements forwomen up to average higher educationparticipation rates for women wouldcreate an additional 5,958 engineeringundergraduate commencements per yearif male rates remained static.Available information about the studychoices of women engineering studentsshows us that:• Women are more likely to make thechoice to become an engineer muchlater and are less likely than men toagree that they “always wanted to be anengineer.” 44• Women are slightly more likely thanmales to choose engineering becausetheir “TER” was in the right range. 45• A qualitative study of female universitystudents found that 90% cited beinggood at maths for their reason forundertaking engineering and that “mostof these students did not even thinkabout doing engineering until after highschool when they obtained their HigherSchool Certificate (HSC) results. 46In 2007, the number of YearTwelve students studyingadvanced mathematics was22,999, a 12.3% reduction of the2001 level.Women make up only 9.5% ofthose with tertiary qualificationsin engineering workingin engineering or relatedoccupations. 47 While this hasgrown over the past threedecades, this figure remainsunacceptably low. 4839 DEEWR figures, supplied by the AustralianCouncil of Engineering Deans, March 2009.40 Robin King, (2008) Engineers for the Future:addressing the supply and quality of Australianengineering graduates for the 21st century.Australian Council of Engineering Deans,October.41 DEEWR figures, supplied by the AustralianCouncil of Engineering Deans, March 2009.42 ABS, Schools Australia, cat. No. 4221.0, variousyears; Schools Australia, 1997, Preliminary, cat.No. 4220.0 Jan 1998. See also (1998) Supplyand Demand for Scientists and Engineers,Department of Employment, Education, Trainingand Youth Affairs, March, p. 20.43 “Participation in Science, Mathematics andTechnology in Australian Education”, JohnAinley, Julie Kos and Marina Nicholas, ACERResearch Monograph No. 63, August 2008.44 Department of Education, Employmentand Workplace Relations (2008) Views ofEngineering Students: Report of a survey of finalyear university engineering students in Australia,April 2008, p1945 ibid46 Mburu, W. and Hu, X., (2005) “Female EngineeringStudents: Career Motivation and Their LearningExperience” ASSE/AaeE 4th Global Colloquium onEngineering Education.47 Cited in Engineers Australia (2008) TheEngineering Profession: A StatisticalOverview Fifth Edition.48 Beder, S., (2004) The New Engineer:Management and ProfessionalResponsibility in a Changing World,Macmillan Publishers, Australia p11.

20 | Scoping Our Future Addressing Australia’s Engineering Skills ShortageOne key area for educationpolicy makers is the relationshipof secondary students’ subjectchoices to their ability toparticipate in engineeringhigher education. Simply put,the number of students withprerequisites in mathematicsand science subjects is too lowto sustain growth in studentnumbers.This area of education policyrequires long-term nationaleducation planning to enlargethe pool of candidatesfor engineering degrees,maximising the potential of astudent demand-driven systemin higher education.One study found that the femalestudents chose engineering because of“excellence in maths or physics, influencefrom parents, friends and teachers, thepresence of an engineer in the family, andfor the challenge of doing the course” 49however does not compare this to themotivations of men, or those that did notchose engineering.A recent report by the Australian Councilof Engineering Deans found that women’sarea of study in engineering correspondsto school-level study. There are highernumbers of female participation inenvironmental and chemical engineering,corresponding to higher high-schoolparticipation rates in chemistry subjects.Conversely, lower rates of femaleparticipation in school-level physics iscorrespondent to lower participation ratesin electronic and mechanical engineeringcourses. 50Student demanddriven modelIn June 2009 the Bradley review ofHigher Education recommended that amore explicitly demand-driven systembe implemented in higher education toboost the numbers of qualified Australianworkers. In 2009, the AustralianGovernment announced a fundingoverhaul and a managed transition todemand-driven enrolment, with theaim that by 2025, 40% of Australiansaged 25-34 will have a Bachelor-leveleducational attainment.Moving to a student demand drivensystem raises questions about howstudent demand will be maintained andincreased in areas of skills shortage.Where there is apparent unmet demand,a student demand driven system couldincrease the number of undergraduateengineering enrolments. In 2008,92.2 per cent of eligible applicants forundergraduate engineering receivedan offer, meaning that there is someexisting unmet demand for undergraduateengineering and an additional 1096students could have been offered a placein engineering in 2008. 51However, there are two key problems inengineering education which must beredressed. In ANET’s view, these willrequire supporting mechanisms to ensurethat a student-demand driven systemcreates effective outcomes and highernumbers of graduates.The first problem is the overall number ofgraduates. Most key stakeholders in thesector accept that Australia’s engineeringskills shortage reflects a degree of marketfailure in engineering higher education,with insufficient graduates to meetindustry needs; a demand-driven systemmay not solve this problem. Australiacannot rely on student preferencesalone to ensure the flow of engineeringgraduates that industry requires, giventhat in many cases the problem stemsback to undersupply of likely candidatesfrom secondary and even primaryleveleducation. Engineering coursescurrently have an attrition rate of around40%; demand-driven funding potentiallyaddresses some part of the problem ofboosting intake numbers, but graduatenumbers require strong attention giventhis disparity.This is a systemic problem with theeducation system as a whole. Policymakers should explore the relationshipbetween the responsiveness ofthe tertiary education sector andparticipation in mathematics andscience subjects in the secondary andprimary school systems. To ensurethat a demand-driven system is able tomaximise intake numbers longer-term,there must be investment in seniorsecondary participation in engineeringprerequisite subjects in the sciencesand mathematics.The second major problem is the issueof mismatch between discipline choiceand skills demands; with long lead-timesto produce specialised graduates, whileproject demand for skills is variable. TheBradley Review into Higher Educationacknowledged this, and noted that “to49 ibid50 King, R., for the Australian Council ofEngineering Deans (2008) Addressing theSupply and Quality of Engineering Graduates forthe New Century, p77.51 It is important to note that this unmet demandlikely reflects a lack of student mobility, withunused place capacity likely to be centred inrural and regional rather than Go8 universities.While lifting student caps could see this unmetdemand taken up, this is likely to occur at theexpense of regional universities and potentiallyregional students.

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 21address occupations with labour supplyshortages, incentives may be required toencourage students to enrol in relevantcourses and institutions to providecourses which are aimed at addressingspecific and localised skills shortages.” 52A workforce development approachaims to better articulate the relationshipbetween the education sector andemployers in both the public and privatesector, to begin to address some of themismatches between graduate supplyand demand. Potentially, a greater role forinternships and other structured employerinterventions would better support astudent demand driven system.Currently, most engineeringundergraduates must undertake aninternship as part of their accrediteddegree plan. However, industry supplyof these opportunities can be variable,and programmes for matching employerswith candidates remain dependent onindividual universities. Internationalstudents in particular have some difficultyin attracting opportunities, where thereis a perception among employers thatvisa requirements may interact negativelywith developing an ongoing relationshipwith the student. The role of the privatesector in both pre- and post-graduatework-based learning, and its interactionwith the immigration system, should beexamined with an eye to any potential toboost engineering graduate numbers andreducing attrition rates.Policy makers should also examinethe use of funding models and othermechanisms, such as university fundingcompacts, to ensure ongoing supportfor industry to increase internships andmentor relationships with universities.This is important in ensuring betterarticulation of student demand foreducation and industry demand for skills,and better ensuring that engineeringgraduates have a work-ready skills set.There are naturally also considerationsaround individual universities’ capacity toprovide academic staffing and laboratoryinfrastructure for high levels of extrademand. Infrastructure constraints withinuniversities must be considered in anydemand-driven system.52 Australian Government (2008) Review of HigherEducation: Final Report, December p17.Boosting graduate numbers is aboutensuring cultural fit and attracting qualitycandidates. There is a real need toencourage a longer-term approach toskills development and a longer-termindustry investment model, with mutuallybeneficial results for employers andnational skills base.Vocational educationand trainingEngineering para-professionals,technicians and tradespeople trainedthrough the Vocational Education andTraining sector form a significant areaof capacity shortage. Again, this is not anew phenomenon; a 2001 report of theEngineering Industry Taskforce foundthat technical skills and engineering tradeskills were in short supply across theboard, with particular difficulties in themanufacturing sector. 53 More recently,a 2008 report commissioned by theNational Centre for Vocational EducationResearch (NCVER) showed that scienceand engineering associate professionalshave a rapidly ageing labour force profile,presenting a looming issue of laboursupply and capacity retention in thelonger term. 54The Bradley review of higher educationrecommended that the AustralianGovernment extend incentives tostudents to undertake VET education.This recommendation echoes thefindings of the NCVER report, whichidentified removing structural, economicand institutional barriers to participationas a key precondition to boosting VETparticipation rates and producing aresponsive labour market. 55In its 2010-11 Budget announcements,the Commonwealth Government pickedup these recommendations and thoseof Skills Australia’s Workforce Futuresdocument, focussing on the relationshipbetween VET and skills development.The budget introduced a suite of fundingmeasures to coordinate national VET,encourage VET participation and boost53 Engineering Skills Shortages Working Groupand AIG (2008) Skills Shortages in Engineering,Australian Government, June.54 Tan, Y and Richardson, S (2008) DemographicImpacts on the Future Supply of Vocational SkillsNCVER/NILS, .55 Richardson, S and Teese. R (2008) A WellSkilled Future NCVER/NILS.

22 | Scoping Our Future Addressing Australia’s Engineering Skills Shortage

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 23quality standards, with direct funding toensure that employer skills requirementsare met. This is a positive policy directionpromoting a workforce developmentapproach and linking skills developmentto industry and community outcomes,with potential flow-on to supply of suitablehigher education candidates.VET/Higher EducationArticulation and PathwaysOne key structural impediment to a moreefficient cross-sectoral engineering labourmarket is the relationship between theVET sector and the Higher Educationsector. Ensuring varied pathways intoengineering at university is a key wayof maximising graduate numbers in theshort term. VET courses may providean alternative entry point for tertiaryeducation, attracting skilled candidateswith a demonstrated aptitude for andinterest in a professional engineeringcareer. This is one area where candidatesupply to higher education degrees maybe boosted in the short-term, althoughconcerns about skills shortages in paraprofessionaland technician occupationswould need to be considered.Ensuring clear articulation pathwaysbetween VET and the university sectoris also important to maximising low SESstudents university participation, asoverall, the VET sector attracts more low-SES students than universities. Promotingpathways between VET and universitiesmay increase VET participation inengineering, promoting an ‘open door’between technical and higher education.ANET is conducting research to identifyand map existing VET and HigherEducation pathways into the engineeringprofession nationally. This will involve aclose look at transitions between school,VET and higher education. ANET willidentify areas for improvement throughoutthe system with the aim of informingskills development and workforceplanning. This process may be madeeasier by the fact that engineering hasexisting competency standards, whichmay be used to structure and measureprofessional development articulationsbetween technical and professionalworkers.

24 | Scoping Our Future Addressing Australia’s Engineering Skills ShortagePart 3:Systemic workforce issues

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 25RecruitmentEmployers of engineers face significantretention issues, with employerscompeting in a global skills marketto attract qualified candidates. Morethan half of respondents to the recentAPESMA graduate survey expressedinterest in working overseas in the nextfive years. 56 Consult Australia identifiesthat its members had most troubleattracting and retaining mid-career andsenior level engineers, with 63% ofrespondents to its recent skills surveyidentifying difficulties in attracting staffwith more than five years’ experience. 57There is strong competition betweenindustries for professional engineeringskills, with the resources boom creatinga critical shortage in other areas such asrail and roads. 58In a recent survey of the consultingengineering sector by Consult Australia,average staff turnover was found to be14%. 59 The three main reasons givenfor the loss of their engineers wereperceptions of higher salaries elsewhere,aggressive headhunting from other firmsor industries and staff seeking alternativeswith greater work/life balance.RetentionThe competitive market for engineersis reflected in retention difficultiesexperienced across industries. Whilerecruitment and retention issues arenot uniform, particular retention issuesbroadly apply to specific demographicgroupings and merit furtherconsideration. Chief among thesegroups are women and older engineers.There is evidence that both groupshave specific needs which fall into thecategory of non-traditional industrialissues, including specific workforceflexibilities for caring or lifestyle needsand transition to retirement.56 APESMA (2008) Graduate engineeringemployment survey.57 Consult Australia (2009) Skills Survey Issue 4, July.58 Australasian Railway Association (2006) TheChanging Face of Rail: A journey to the employerof choice by Price Waterhouse Coopers, fundedby Transport and Logistics Centre.59 Consult Australia (2009) Skills Survey Issue 4, July.RetirementThe most highly skilled engineers in ourorganisation are all now in their 50s andwill exit the workforce in the next 5 to15 years. These are not being replaceddue to a shortage of engineers in themarket. – Engineer, age 58. 60Professional engineers are an ageingworkforce. Data gathered over a decadefrom APESMA’s remuneration surveyssuggests that the workforce is ageing,particularly in the public sector. In 199727.4% of respondents to the survey wereaged 50 years and over, in 2009 this hadincreased to 36.2%. 61One of the key issues picked up inANET’s 2009-10 Engineers Survey wasthat engineers are concerned aboutintergenerational transfer of knowledge.Older engineers often voiced the concernthat their workplace was ageing, withlittle opportunity to pass on corporateand specialist knowledge to youngerprofessionals due to low graduate numbersand time pressures. One engineer notedthat they were concerned about:Losing engineering skills with olderengineers retiring. Rather than spendtime and money investing in the youngerengineers, [the company] would ratherengage consulting engineers to make upthe shortfall in skills.The ageing of the engineering workforceis a looming issue for industry. A varietyof industry sources have raised concernsthat retirements will result in insufficientsupply of experienced engineers to fillprojected demand.60 ANET (2010) Engineers Survey, March.Available at www.anet.org.au.61 Unpublished data from APESMA RemunerationSurveys.Attracting and retaining womenstudents and engineers isan issue of both equity andpractical supply. In a tight labourmarket, industry must investin best-practice workplacepractices to ensure that allavailable sources of skilledlabour are utilised.

26 | Scoping Our Future Addressing Australia’s Engineering Skills ShortageAustralia is supplying only justover half of its labour forcethrough the education system,arguably an unsustainable levelof reliance on immigration.Consulting Engineering:Consulting firms were surveyed by theConsult Australia in July 2009 on whatproportion of their staff would reachretirement age in the next 12 months, theaverage was 4%. While larger firms weremore likely to indicate smaller proportions(around 1-3 percent), a number of smallerfirms were facing 14 and 15 per cent oftheir staff reaching retirement age withinthe next 12 months. 62Local Government:The Institute of Public WorksEngineering Australia (IPWEA) hasstated that in the next 10-15 years over50% of currently employed engineerswill retire. 63Urban Water Utilities:A 2008 report of a survey of 18 urbanwater utilities commissioned by theWater Services Association of Australiafound that by 2009 5-6% of theworkforce (not only engineers) werelikely to have retired, increasing to 25-27% by 2017. 64Power Engineers:A 2004 survey of employers of powerengineers (jointly commissioned by theElectric Energy Supply Association andEngineers Australia) found that 27%of the power engineer employee andin contractors of the respondents wereaged over 50. 65With an ageing workforce and a stiltedsupply of graduates, this is an issueof immediate concern. An EngineersAustralia survey of found that flexibilityof working conditions was a key issue62 Consult Australia, (2009) Australia ACEA SkillsSurvey 2009, July, Issue 4, p17.63 Champion, C., Robinson, M, Buchan, N. (2008)“Global issues in public works and municipalengineering” Municipal Engineer 161 Issue ME4,December, pp215-221, p216.64 Kathleen Barrett, Infohrm Pty Ltd. (2008) Anassessment of the skills shortage in the urbanwater industry Water Services Association ofAustralia. WSAA Occasional Paper No. 21, March.65 Gosbell, V., and Robinson, D. (2004) Assessingthe Future of Electrical Power Engineering: AReport on Electrical Power Engineering ManpowerRequirements In Australia for Engineers Australia,The Electric Energy Society of Australia andElectrical Supply Association of Australia Limited.affecting retirement intentions. 66 It alsofound that the intended retirement age ofsurvey respondents increased as theircurrent age increased. If the objectiveis to encourage engineers to deferretirement, there is some sense thatbest-practice programmes for flexibleretention and other workplace solutionscould be targeted to encourage engineersnearing the age of conventional retirementto remain in full time employment.More research is needed into initiativesto support the transfer of skills andensure that specialist shortages are notexacerbated by workforce ageing issues.Retaining women engineersWomen make up only 9.5% of thosewith tertiary qualifications in engineeringworking in engineering or relatedoccupations. 67 While this has grownsomewhat over the past three decades,this figure remains very low comparedto overall female workforce participationfigures. 68 Women engineers as a groupexhibit more disruption in their careersand prove more difficult to retain throughtraditional industrial means. However,the training, recruitment and retentionof female engineers is a fundamentalimperative to boost numbers of engineers.The literature around retention of womentends to focus on provision of workplaceflexibilities to enable women to balancea disproportionate caring role. A 2007Engineers Australia survey askedrespondents about their employmentintentions in the next twelve months.Around one quarter of both men andwomen indicated their intention to moveon from their job within the next year.However, women were one third lesslikely than men to state an intentionto remain in the profession followingresignation. 69 Men were much morelikely than women to leave in order togain experience, for more pay or for apromotion. Common reasons for women66 Hurford, K. and Kaspura, (2010) A Engineers andRetirement: the Engineers Australia RetirementIntentions Survey Engineers Australia.67 Cited in Engineers Australia (2008) TheEngineering Profession: A Statistical OverviewFifth Edition.68 Beder, S., (2004) The New Engineer: Managementand Professional Responsibility in a ChangingWorld, Macmillan Publishers, Australia p11.69 Engineers Australia (2008) Valuing theDifference: An update on the progress of womenin the engineering profession.

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 27respondents in the 20-29 year age groupto leave their position were related totravel or further study, and in the 30-39year age group were maternity leave andfamily responsibilities. 70However, the study notes that reasonsfor lower attraction to and retention ofwomen in the engineering professionswere complex and varied, requiring widerangingsolutions. The report warns againstattributing family responsibilities as the onlyreason, citing a variety of workplace cultureissues such as discrimination, sexualharassment and bullying evidenced in theirmost recent survey. 71This is an issue of workplace culture thatrequires attention, and is reinforced by theresults of APESMA’s 2009-10 Women inthe Professions Survey. Of engineeringrespondents, three quarters felt thatworking part-time in their current job hashad or would have detrimental impacts ontheir career. Of respondents working parttime,60% felt that this had affected theiraccess to development opportunities andone third felt that they were unnecessarilyrefused access to training. Disturbingly,around 70% of engineering respondentsthought that taking maternity leave wouldbe detrimental to their career. Mostrespondents noted a lack of access tosenior roles for women, and issues withwork-life balance. 72Further research is required into theretention of women in the engineeringprofession, including around reasonsfor leaving, typical life cycle points atwhich the profession is abandoned,and best practice retention strategies,and the interaction between structuralprofessional issues and workplace culturein promoting female retention. Addressingsystemic workplace and cultural issuesin the engineering profession and tradesis key to successfully attracting andretaining female engineers, and strategiesto improve female graduate levels andworkforce participation must underpin anynational workforce development plan forengineering skills.Migration and the globalskills shortageImmigration is a key aspect of any strategyto alleviate labour supply issues. However,Australia’s current level of reliance onskilled migration, and on internationalstudents to fill local engineering universitycourses, is not a sustainable strategy tomeet gaping capacity shortages acrossindustries into the future.Currently, skilled migrant engineersaccount for more than half of the supplyof newly qualified engineers. The graphbelow, created by Engineers Australia,shows that this has grown proportionallyfrom around 40% to around 60% of newengineers over a five year period, astaggering level of growth. 73% OF NEW ENGINEERS120100806040200DOMESTIC GRADUATESMIGRANT ENGINEERS2003-04 2004-05 2005-06 2006-07 2007-08Traditionally permanent off-shore skilledmigration has been the main avenue forskilled workforce to migrate to Australia.Recent changes have seen the rise inpermanent on-shore migration by 30%per annum between 2003-2008. 74 Since2003-2004, the number of engineersworking in Australia on s.457 visas hasmore than tripled. 75This movement of labourprovides experience and buildsexpertise, and is desirable forboth engineers and employers.However, the global market inengineers brings new challengesfor workforce planning in thishigh risk skills area.70 Ibid, p19 & 20.71 Ibid, p2.72 APESMA (2010) Women in the Professions:The State of Play Survey Report, APESMA,September.73 Engineers Australia (2009) “The Engineeringprofession: a statistical overview”, sixth edition,Engineers Australia.74 Engineers Australia (2009) “The Engineeringprofession: a statistical overview”, sixth edition,Engineers Australia.75 Engineers Australia (2009) “The Engineeringprofession: a statistical overview”, sixth edition,Engineers Australia.

28 | Scoping Our Future Addressing Australia’s Engineering Skills ShortageThe total intake of permanent on-shoreand off-shore programs in 2007 was theequivalent of around 80% of domesticgraduates produced that year. 76However, relying on overseas studentsto stay and work in Australia willbecome riskier in the future. Futurecompetition for international students willbe unprecedented, as they become acritical source of skilled migrants for allindustrialised countries. 77Australian projects compete in a globalmarket for engineers, whose skills arein short supply worldwide. Around halfof respondents to ANET’s engineeringsurvey indicated that they had workedoverseas during their career. Time spentworking overseas has become a rite ofpassage, particularly for engineers atthe beginning of their career. More thanhalf of the APESMA graduate surveyrespondents expressed interest inworking overseas in the next five years. 78A global skills shortageaffects Australian capacityThe United States and the UnitedKingdom have both identified thatengineering is a key area of skillsshortfall. In the USA, the currentgraduation rate from university electricpower engineering programs is notsufficient to meet the nation’s currentand future needs, particularly duringa policy shift promoting green energysolutions. There have been movementsfrom the US Government to promoteScience, Engineering, Technologyand Mathematics (STEM) educationand boost engineering enrolments inresponse to this need. A 2008 surveyby the Centre for Energy WorkforceDevelopment estimated that by 2013,45% of engineers in the US electricalutilities would be eligible for retirementor will leave for other reasons. 79 In theUK, Doosan Babcock, a leading energyservice company, recently surveyed76 Engineers Australia (2009) The Engineeringprofession: a statistical overview, sixth edition,Engineers Australia.77 (2009) The Australian, Battle for foreignstudents, March 25.78 APESMA (2008) Graduate engineeringemployment survey Report, APESMA.79 Fischbach, A (2009) ‘Engineer shortageputs green economy and smart grid at risk’,Transmission and Distribution World, 21 April.over 500 energy stakeholders and 250engineering students on the issuesaffecting the energy industry, includingskills shortages. Some 87 per cent ofsurvey participants believed that theUK energy sector is facing a seriousskills shortage, 80 a phenomenonacknowledged in a 2009 UK Governmentconsultation on STEM skills. 81Other nations, including China andIndia, are suffering labour supply issuesexacerbated by inadequate educationinfrastructure. 82 As part of the projectcalled “The Evolving Global Talent Pool”coordinated by the State University ofNew York’s Levin Institute in New YorkCity, demographers from Brazil, China,India and Singapore released severalreports at different times over the pastfour years suggesting that mismatchesbetween talent supply (universitygraduates) and demand in Government,industry and academic sectors couldbecome acute within a decade. 83Other nations are taking action to addressthis issue, which again has some notwholly positive impacts on the localskills market. There is considerableconcern amongst heads of engineeringschools that international demand forengineering studies in Australia is variableand perhaps softening, due to a higherAustralian dollar exchange rate than adecade ago and the development of moreengineering schools in many countriesin Asia. Given the large proportion ofinternational students filling Australianundergraduate courses, this has thepotential to affect both education incomeand the number of local accreditedgraduates in the labour force.80 Mike Farley, Engineering skills shortage: Londoncalling for power engineers, Power EngineeringInternational.81 (2009) “The Demand for Science, Technology,Engineering and Mathematics (STEM) skills”,Department for Innovations, Universities andSkills, January at p. 14.82 Gene Russo (2009) “Emerging shortages”Nature, November.83 Gene Russo (2009) “Emerging shortages”Nature, November. See also “The EvolvingGlobal Talent Pool: Issues, Challenges andStrategic Implications”, The Levin Institute, TheState University of New York 2005.

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 29Recruitment of skilled migrant engineersand international students has a keyrole as part of an overall strategy toaddress the immediate and longertermskills crisis. However, recruitmentof international students and workersshould not replace wholesale investmentin local skills development and inthe development of the profession inAustralia. The case can be made forAustralian business to engage in moresustainable hiring and capacity buildingpractices, with Government support, tomaintain and develop the local skills baseas a long-term investment in nationalwelfare. With more durable capacity andless turnover, business will be betterequipped to compete for design andconstruction roles on Australian andinternational projects.Greening the economyThe CSIRO has identified a clearmismatch between current supplyand articulation of labour and therequirements of transitioning to a greeneconomy, stating:Achieving the transition to a low carbonsustainable economy will require amassive mobilisation of skills andtraining – both to equip new workersand to enable appropriate changes inpractices by the three million workersalready employed in these key sectorsinfluencing our environmental footprint.Current approaches do not appearsufficient for meeting these challenges.A report by the Australian Council ofTrade Unions and Australian ConservationFoundation identified six green industriesthat Australia is well placed to develop– renewable energy, energy efficiency,sustainable water systems, biomaterials,green buildings, waste and recycling. 84A 2009 survey of CEOs found thatimprovement in green skills was requiredin waste management, energy andwater usage, technology upskilling andimprovement of business practices. Theseare areas where engineers have a keyrole in scoping and project management,84 Australian Council of Trade Unions & AustralianConservation Foundation (2008) Green GoldRush: How Ambitious Environmental Policy CanMake Australia a Leader in the Global Race forGreen Jobs October 2008 http://www.actu.asn.au/Images/Dynamic/attachments/6211/Green_Gold%20_Rush_final.pdf.and where growth will be affected byengineering skills shortages. 85Discussion of the role of engineers inthe prevention and mitigation of climatechange and in the “green” economy morebroadly would require a new focus oneducation and the potential up-skilling ofthe existing workforce. There are existingshortages in the field. Consult Australia’s2010 Skills Survey identified that one thirdof firms faced a shortage of environmentalengineers. 86 The introduction of carbonauditing and moves towards a nationalcarbon trading scheme place extrapressure on the supply of environmentallyengineering professionals, paraprofessionalsand tradespeople. Howevercurrently planning for the increaseddemand for ‘green’ workers is limited.Some interventions have been suggested;ATSE has emphasised the need for allstudents to undertake studies in STEMto boost their potential to work across a“green” economy, advocating for HECSfees for science and engineering studentsto be reduced as a necessary communityadaptation measure. 87 A workforcedevelopment plan for engineering isrequired to ensure that new and emergingareas of community infrastructure areproperly scoped and planned.85 Australian Industry Group and Deloitte (2009)National CEO Survey: Skilling Business in ToughTimes October 2009, p38.86 Consult Australia, (2010) Australia ACEA SkillsSurvey 2010, Issue 5.87 Australian Academy of Technological Sciencesand Engineering (2008) Submission to theSenate Education, Employment and WorkplaceRelations Committee Inquiry into the Effects ofClimate Change on Training and EmploymentNeeds, p3.

30 | Scoping Our Future Addressing Australia’s Engineering Skills ShortagePart 4:A national engineeringskills strategy

Scoping Our Future Addressing Australia’s Engineering Skills Shortage | 31ANET was set up to develop anational workforce developmentplan for engineering, workingwith stakeholders, developingsolutions to labour supply,vocational and higher educationissues in engineering.With Government leadership, ANETis building capacity to address theskills shortages outlined in this paper,by engaging industry, academiaand the relevant professional andindustrial bodies to bring our jointresources to bear on this key issueof engineering labour supply. ANETpartner organisations represent keyprofessional, industrial and academicinterests in professional engineering,and are able to provide access to keyexpertise, resourcing and networks tobring our collective wisdom to bear onthis problem.ANET is supported by a broad groupof interested organisations who haveidentified that the current approachto skills development is not working.These include industry groups, publicservice asset owners and groupsinterested in furthering the status of theengineering profession. These groupswill be actively involved in ANET’sprojects as we progress our agenda tobuild policy solutions to the engineeringskills shortage with key support from theAustralian Government.ANET represents a new approach to anissue that is well-recognised as a keyconstraint on economic development andinnovation, and which has far-reachingeffects on job creation, climate changeadaptation and community wellbeing.ANET models innovative workforcedevelopment solutions, seeking to buildpolicy recommendations based on robustacademic research and developedthrough consultation with key industryand community stakeholders.ANET PROJECTSSkills Mapping for WorkforceDevelopmentIn recognition of the need for this work,ANET has received funding through theDepartment of Education, Employmentand Workplace Relations to undertakean initial modelling and scoping project,reporting in 2011. In its initial phase, theproject will investigate skills developmentand mobility in the engineeringworkforce across two key industries,road and rail. These are two identifiedindustries suffering a shortfall of bothspecialist engineering skills and generalengineering capacity.This project will:• provide analysis of supply/demand bykey sectors/industries;• detail issues/problems and recommendsolutions for sustainable employmentand improved engineering workforcedevelopment;• form the basis of ANET’s consultationand policy formulation to promoteworkforce development solutions to theengineering capacity crisis.This initial project will provide the evidencebase for policy and implementation in thisarea, including development of innovativeworkforce development processesfor industry collaboration. By buildingcapacity to respond to skills demand,ANET will build Australia’s capacity forjob-creation, nation building innovation,and creative responses to climate change.Capacity-building througheducation and trainingANET has also been funded to investigatehow Australia’s education and trainingsystem might assist in building engineeringcapacity to help alleviate skills shortages.This project will examine engineeringprograms in the vocational and highereducation sectors to assess how successfulthe current arrangements are in providingpathways for students from VET tohigher education and from educationto employment. The research will alsoinvestigate issues of student preparation,retention and attrition and industryengagement in VET and higher education.

32 | Scoping Our Future Addressing Australia’s Engineering Skills ShortageANET’s research in this area will beconducted with a view to identifying bestpractice, informing the design of strongerpathways for VET-qualified engineeringofficers into higher education, enhancingemployment and learning outcomes forstudents and industry, and increasing thesupply of qualified engineering personnelto meet national skills needs.Further projects:A national planANET aims to extend this labour marketanalysis and modelling to other key sectorsusing engineering labour. These wouldinclude electricity generation and supply,water supply, mining construction anddesign, and other key identified industries.The foundation skills mapping project willproduce a model that can be applied tothese other industries, creating a nationalpicture of the engineering skills andcapacity situation, as a basis for policyrecommendations and implementationof industry and education strategies toremedy the shortfall in supply.Future projects will:1. Model engineering demand acrossother key economic sectors todevelop a comprehensive picture ofAustralian engineering capacity.2. Model migration issues and capacityconstraints in an international skillsmarket.3. Model interventions into theeducation system at all levels toensure a better supply of high-qualityAustralian graduates and technicians.4. Investigate best-practice recruitmentand retention strategies foremployers.Engineering: The future?Reviewing the available information onfactors affecting the skills shortage, itbecomes clear that there are significantgaps in our knowledge. For instance, whilewe have excellent statistics on participationin higher education, we have no systematicunderstanding of how and where industriesrequire specific skills. While we knowthat engineering shortfall in Australiais part of a global problem, we have nounderstanding of how to ensure that ourreliance on immigration to fill our shortfallof both undergraduate candidates andskilled engineers is managed sustainably.And while we know that industryexperiences significant cost burdensarising from inability to fill skilled positionsand a lack of workplace capacity, withoutproper, systematic industry information onhow and where this is occurring we cannotaddress the problem.The engineering capacity shortfallcontinues to have a range of negativeoutcomes across sectors, with industrysources reporting financial andopportunity loss due to inability to attractand retain engineering professionals.Making systemic interventions intoeducation and graduate supply,addressing recruitment and retention ofwomen and skills transfer issues in anageing workforce, and investing in betterarticulation between industry needs andsupply infrastructure are vital policy areasthat must be to ensure that communityinfrastructure needs are met into thefuture and that the emerging challenge ofclimate change adaptation is addressed.Logically, the first step in acomprehensive workforce developmentplan is to remedy identified informationgaps. ANET’s initial projects will createa model to investigate current and futureengineering capacity shortages, industryby industry, eventually forming a nationalpicture of industry factors affectingengineering skills supply and demand.This information is fundamental toplanning for our future skills needs.Building Australia’s engineering capacityrequires commitment, cooperation and afocus on building knowledge and applyingrobust policy solutions to ensure thatlong-term, Australia is able to meet itsneed for skilled labour to provide criticalcommunity infrastructure.For more information about ANET and its projects, or to become involved withANET’s consultative process, please visit our website at www.anet.org.au

www.anet.org.au