Skills shortage set to drive salaries upwards

Average annual earnings are set to rise by $8,200 within the next three years as the Australian economy continues to recover and acute skills shortages start to appear, according to the quarterly Clarius Skills Index* released earlier this week.

The June quarter Clarius Skills Index - prepared by KPMG Econtech - shows that already there is an emerging skills shortage across several occupations and the availability of skilled workers may become an issue for Australia in the near future.

The release of the report comes amid talk about interest rates and the Federal election debate about population policy, and puts Australia's skills shortage on the agenda.  The skilled labour shortage is expected to drive a 5.4% annual increase in earnings over the next three years, and see unemployment rates drop below five per cent by early 2011.

Clarius Group COO, Kym Quick, said that the findings of the Skills Index and the implications it will have on wages and unemployment presented significant challenges ahead for not only employers, but policy makers. "The developments have some implications on interest rates, the population growth debate and decisions about temporary skilled worker visas,"  said Quick.

"Currently there is a shortage in eight of the 20 skilled Professional, Associate Professional and Trades occupations measured in the Index and a further two are on the cusp of a shortfall.

"The availability of skilled workers is particularly an issue in the Construction, Engineering and Building Professions and Trade occupations - for instance there is currently a shortage of 6,300 Construction tradespersons," she Quick.

Quick said while most other occupations are in the balanced range, several are approaching the high range of acute skills shortages.

"The clear message for the employer from the Index is that they need to be prepared for a war for talent by ensuring they have the right skills now for their future demand and ensuring they have retention strategies in place to keep them there," she said.

"We also need policy makers to develop and implement initiatives that will address the potential skills shortages immediately and not wait for it to happen before taking action," she said.

In the June quarter, the eight categories where there were shortages were:

• Building and Engineering Professionals (101.1)
• Computing Professionals (100.2)
• Building and Engineering Associate Professionals (100.8)
• Chefs (105.3)
• Metal Tradespersons (104.5)
• Automotive Tradespersons (101.5)
• Construction Tradespersons (101.7)
• Wood Tradespersons (101.8)

A score of 100 indicates equal tension between labour supply and demand. Anything greater than 100 indicates a skills shortage.

The overall Index for 20 categories in the 2010 June quarter was 99.6, compared with 98.5 at the same time last year.

* The Clarius Skills Index analyses labour demand and supply, using labour force data supplied by the Australian Bureau of Statistics and the Department of Employment and Workplace Relations. The results are reflected in a skills barometer which applies a ranking to specific occupation categories.  The index is updated and released quarterly.

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