Skills shortage comes back to bite

by 14 Nov 2006

By Craig Donaldson

The Federal Government recently announced its ‘Skills for the Future’ program. This $837 million package is designed to help individuals become qualified for jobs in demand in the local workforce. As part of the program, up to 30,000 vouchers – valued at up to $3,000 – will be made available to unskilled individuals aged 25 years and over. The package will also provide wage subsidies for mid-career apprenticeships, 500 new Commonwealth-supported engineering places at universities, as well as additional employer incentives for apprentices in the engineering field to complete diplomas and advanced diplomas.

The Federal Government made a song and dance about Skills for the Future. However, it’s probably too little, too late – and the Government had a fair hand in contributing to the skills shortage in the first place. In its own short-sightedness, the Government has slashed TAFE funding by more than $1 billion since 1997. In this time, more than 300,000 Australians have been turned away from TAFE colleges as a result of funding cuts. TAFE colleges have traditionally provided Australians with a strong foundation in the trades, particularly some of those that are currently experiencing chronic skills shortages.

The Government’s response to this neglect has been to ramp up the importation of temporary overseas workers. More than 70,000 temporary workers will be issued with visas this year alone. Had the Government not been so short-sighted, this stopgap measure would not be necessary.

Recent surveys are also pointing to wage inflation as a result of skills shortages in certain sectors. On our front page, we report that 38 per cent of Australian employers are offering higher compensation to attract and retain qualified candidates. While inflation comes about due to many reasons, the Reserve Bank has mentioned a number of times that wage inflation has contributed to a number of recent interest rate rises –something that the Federal Government has often promised to keep under control.

It is a sad state of affairs when, due to its own neglect, the Federal Government contributes significantly to skills shortages over almost ten years. But it has come back to bite the Government in one of its most vulnerable areas, and it would appear there is little it can do to fix it at this late stage.