If the predictions relating to Australia’s talent-poor future are even close to true, employers will need to start thinking beyond home grown labour to help fill the skills shortage. 
 
Story Melissa Wilkinson 
 
Australia has been experiencing strong economic growth over the last 15 years which has been a boon for homeowners in every state. However, one of the downsides of this stellar performance is now a severe labour shortage which is already threatening the country’s level of innovation, productivity and investment. Businesses are struggling to find skilled and unskilled workers and the experts predict that Australia’s chronic shortage in human capital is set to continue. This tightness in the labour market is despite significant technological advances which have resulted in a marked rise in the marginal product of labour. The amount of output produced in one hour by a typical Australianworker doubled between 1969 and 2001. 
 
Researchers and policy makers now agree that Australia’s labour supply is in longer-term decline as baby boomers retire and workforce participation plateaus. The growth in the number of young workers is also set to fall. These predictions paint a grim picture for our labour supply outlook and, in particular, the impact on the Reserve Bank’s current battle to rein in inflation caused by an overheating economy. 
 
It’s All In The Numbers  
Over the 25-year period 1980 to 2005, Australia’s labour supply grew by 1.9 per cent per annum on average. However, by 2006, labour force growth had fallen to 1.2 per cent per annum. According to the Academy of Social Sciences, if labour force participation rates stay constant at July 2007 levels and net migration remains at the high annual level of 160,000 people per annum, our labour force growth will still plummet to 0.7 per cent by 2021 and less than 0.5 per cent by 2051. These sobering figures highlight that Australia’s only potential sources of increases in the labour supply over the next 20 years are increased labour force participation and immigration. While the Government and the business sector are making efforts toincrease workforce participation, particularly around the retention of older workers, the experts predict that the impacts are likely to be small relative to the amount of labour still required. 
 
Given our standard of living is directly related to our ability to produce goods and services, it seems inevitable that Australia will need to turn offshore to meet its future requirements for labour. Policy makers are already moving in this direction and preliminary net overseas migration for the year ended 30 June 2007 was 177,600 persons, the highest annual level reported. 
 
Borrowed From Abroad  
Three days after figures showed that unemployment had fallen to a 33-year low of 4.1 per cent, the Minister for Immigration and Citizenship, Senator Chris Evans, announced in February this year a package of migration measures designed to address Australia’s skills and labour shortages. 
 
The Skilled Migration program was increased by 6000 places in 2007-08 and is made up of permanent employer-sponsored visas and General Skilled Migration visas, which includes the 457 sub-class of visas. These extra places are being created as one way to quickly address the nationwide skills shortage and will bring the total number of permanent visas granted under the Skill Stream of the migration program to 108,500 in 2007-08. 
 
According to Senator Evans, employer sponsored visas are the highest priority because they put workers directly into a skilled job. The General Skilled Migration program selects people with the right skills and qualifications to work in industries where labour is in demand. 
 
In addition, Senator Evans says that negotiations are under way with other countries to expand the reciprocal Working Holiday visa program for young people. Although the Australian government has doubled the skilled migrant intake since 2001 to fill jobs in accounting, IT and health, the response to the additional places from some quarters in the industry has been mixed. Some believe that the scheme simply doesn’t go far enough or is not really working. Plus, requests to launch a review of the vis application and processing procedures have been rising. 
 
Senator Evans’ announcement follows the passing of the Skills Australia 2008 Bill in Parliament earlier in the year. Skills Australia is an initiative designed to tackle the skills shortage directly by offering 450,000 new training places across all vocations over the next four years and 820,000 over the next decade. 
 
The Temporary Business (Long Stay) visa program (subclass 457) allows Australian businesses to recruit skilled labour from overseas for temporary entry to Australia for between three months and four years. These visas are significantly easier to obtain than Permanent Residence visas and a popular means of filling short-term skills gaps in the local market. 
 
Matthew Cook, director of Michael Page Finance, says that some of the requirements associated with the 457 visa still make it more difficult than it needs to be 
 
“This type of visa is perceived by accounting and finance candidates as an impediment to working in Australia. It’s associated with lengthy delays and it’s just administratively cumbersome,” he says. 
 
International Students 
In addition to attracting experienced and skilled workers to fill Aussie jobs, some experts believe that international students have a significant role to play in addressing the skills shortage. 
 
Vice-Chancellor of Swinburne University of Technology, Professor Ian Young, believes that while no single measure will solve Australia’s skills shortage, migration by Australia’s large numbers of highly educated international students should play a major role in the mix of solutions. 
 
“International students represent an ideal source of future migrants. They are young, well educated, speak English, understand Australian culture and are highly motivated to improve themselves. The United States clearly demonstrates the impact such highly skilled migrants can play. Much of the technological development of the United States has been built on the entrepreneurial endeavours of a host of Asian PhD graduates. Australia could follow this trend with a liberalisation of migration rules for this group,” says Young. 
 
Attracting international students to Australia is big business and the value of Australia’s education exports grew 21 per cent in 2007. Education has bumped tourism off the podium as the top services export and is now Australia’s third largest export overall. Education was worth more than all other Australian export industries in 2007 except coal ($20.8 billion) and iron ore ($16.0 billion). Figures released by the Australian Bureau of Statistics in February this year valued education exports in 2007 at $12.5 billion compared to $11.5 billion for tourism. 
 
Australia’s top five source countries are China, India, South Korea, Malaysia and Hong Kong and higher education represents the largest sector of international students. New South Wales and Victoria are the key study destinations, representing about two thirds of higher education enrolments. 
 
Data from Australian Education International shows that almost three quarters of enrolments in 2007 were in the top five fields of study: business administration and management, computer science and information systems. engineering and surveying, arts, humanities and the social sciences and economics. 
 
The Language Barrier  
While the idea of using migrants and international students to help fill much needed jobs sounds like a good solution, new research on migrant employment outcomes from Monash University suggests otherwise. 
 
Bob Birrell, director of the Centre for Population and Urban Research at Monash University, believes that the migration program is flawed. 
 
“Australia has been recruiting professional people with degree qualifications from non-English-speaking countries (NESC) but only a small minority of this group have actually been able to obtain professional or managerial positions in Australia. In contrast, migrants with degrees from mainly English speaking countries (MESC) are putting their credentials to use,” he says. 
 
In a recent report on migrant outcomes, Birrell found that like Australian-born residents with degree qualifications, most MESC migrants were employed in professional or managerial positions by 2006. But according to the 2006 census, migrants from non-English-speaking countries are struggling to find professional employment in Australia. Only 22 per cent of 20 to 29-year-olds and only 36 per cent of those aged 30 to 64 were employed in professional or managerial positions. 
 
“This poor outcome has occurred despite shortages of professionals in some of the fields in which these migrants are qualified. For example, by far the largest group of skilled migrants are those with accounting qualifications. There is a chronic shortage of accountants in Australia. Yet, among recently arrived migrants from non-English-speaking countries with degrees in accounting, only 25 per cent of 20 to 29-year-olds and 43 per cent of those aged from 30 to 64 had professional or managerial jobs by 2006,” he says. 
 
According to the study, the group that recorded the poorest results were the younger NESC migrants. This is despite the fact that most of this group studied at Australian universities and were assessed by Australian accrediting authorities as meeting the professional standards in their field before gaining their permanent residence visa. Birrell says that the main problem is the limited English language ability of former overseas students. 
 
“Universities do not have the resources to bring overseas students who begin with poor English to the standards required for professional practice. Nearly half of overseas students enter Australian universities via pathways such as foundation years. This allows them to avoid meeting the IELTS or International English Language Testing System level six standard. It is also the English proficiency standard required before the Department of Immigration and Citizenship will issue a higher education student visa for someone living overseas to attend an Australian university. 
 
“The issue is that there is no requirement on behalf of the Australian government that they meet the IELTS six standard before they move off the pathway program. This is a problem which has been looked at by the education industry and has since been rejected. The industry is reluctant to establish this standard and bite the bullet on this issue as it would impede the recruitment process, and, in turn, impact revenue. I believe that IELTS level six is still not high enough. 
 
“The government should acknowledge that turning the immigration tap on is not the answer to our skills crisis in Australia. 
 
They shouldn’t continue to increase the migration intake until we’ve established that the initiative actually works. Instead, we need a sharp increase in the number of Commonwealth-subsidised places in accounting at universities. The Labor Government would be better advised to focus on increasing domestic training and also the numbers of NESC professionals who are living in Australia who are unable to gain professional employment. 
 
Michael Page’s Cook agrees that when recruiting accounting candidates, there is definitely a need for adequate communication skills. 
 
“The level of communication skills required is still high but not as demanding as it once was. In the past, employers have been relatively unforgiving about any candidates that had stilted English or who were not as articulate as someone who had grown up in Australia. These days, organisations are now more open to interviewing people who are technically capable even if their communication skills are not strong,” he says. 
 
Getting Good At English 
In response to the gap in English language skills in the professional sector, Owen Firth set up training company Performance English in 2007. 
 
“I had a recruitment business in finance and noticed that there were a lot of candidates with great skills who we just couldn’t get across the line because of their communication skills. I was sick of turning these people away without being able to give them any constructive assistance. 
 
“The problem is that when these candidates come out of university they’re simply not equipped with the language skills to get a good job. Universities are under pressure to bring in full fee paying students even if their spoken English language skills are not great. 
 
“The reality is that overseas graduates and migrants need to be able to interact with all parts of the firm and its clients. 
 
There are no true background accounting jobs any more. One of the results from the current system is that there are some really intelligent and capable people getting jobs well below where they should or not even in their chosen profession, simply because their English language skills are not up to scratch. Organisations also need employees who can understand Australian business culture, which is an issue for people from overseas,” he says. 
 
Accounting firm Pitcher Partners is one organisation reaping the benefits of investing in employees from non-English-speaking backgrounds. 
 
Kristie Barton, HR adviser at Pitcher Partners, says that the firm made a decision o open the recruitment funnel to more international candidates. 
 
“We’ve provided English tuition for two candidates who needed some assistance in this area. One candidate with an Asian background did not have strong enough verbal communication skills. After the training, this person’s performance improved and they are now in a client-facing role. 
 
We really want them to get ahead and we imagine that we’re likely to do more of this type of training with other candidates. The biggest issue is making sure that there is a fit around culture and values. A candidate can have the technical skills but they also need to be able to fit within the Pitcher Partners mould,” she says. 
 
Internship Program  
In an effort to try to ease some of the accounting skills shortage, Australia’s major accounting bodies have joined forces and established a skilled migration internship program or SMIPA. 
 
The Institute of Chartered Accountants in Australia, CPA Australia and the National Institute of Accountants worked together to design the internship program which is designed for overseas accounting graduates who are holders of Skilled Graduate (Temporary) visa (subclass 485) and who want permanent residency. These 485 visas give them an 18-month period after graduating from an Australian university to either get a job, do relevant work experience or demonstrate an appropriate level of English language skills. The program was approved by the Federal Government at the end of March 2008. 
 
According to Sheena Frenkel, general manager, Chartered Accountants Program & Admissions, the idea for SMIPA was the result of the Department of Immigration and Citizenship and the Department of Education approaching the three professional bodies with a request to provide a professional year. “They said that the migration system needed to function for the benefit of business and that employers were not recruiting international students. It was clear that some overseas students were being allowed to graduate but were essentially not employable. 
 
“This new program will run over 12 months and involve about 600 hours. Half of which will be classroom study to build business and language skills and the other half will be work experience. The skills shortage is a burning issue and, in this case, has also been a positive impetus for change. SMIPA is about helping universities to make sure that they’re delivering work-ready graduates.”