June Quarter Prepared by KPMG Econtech July 2011images.jxt.net.au/clarius/pdf/2011 06 Clarius Skills... · 2017-11-02 · Lloyd Morgan, SouthTech and The One Umbrella businesses,

Clarius Skills IndexJune Quarter

Prepared by KPMG Econtech July 2011

Prepared by KPMG Econtech

Disclaimer

Inherent Limitations

This report has been prepared as outlined in the Engagement Letter between KPMG and the Clarius Group dated 1 July 2010. The services provided in connection with this engagement comprise an advisory engagement which is not subject to Australian Auditing Standards or Australian Standards on Review or Assurance Engagements, and consequently no opinions or conclusions intended to convey assurance have been expressed.

The authors have indicated within this report the sources of the information provided. The authors have not sought to independently verify those sources unless otherwise noted within the report.

The authors are under no obligation in any circumstance to update this report, in either oral or written form, for events occurring after the report has been issued in final form.

This report only takes into account information available to the authors up to the date of this report and so its findings may be affected by new information.

The findings in this report have been formed on the above basis.

Third Party Reliance

The report has been prepared in accordance with the terms of KPMG and Clarius Group’s Engagement Letter dated 1 July 2010. The report is solely for the purpose set out in the approach section of the Engagement Letter dated 1 July 2010 and is not to be used for any other purpose. The authors do not undertake responsibility arising in any way from reliance placed by a third party on this report. Any reliance placed is that party’s sole responsibility.

We understand that this report may be released into the public domain. Third parties who access the report are not a party to the Engagement Letter between KPMG and the Clarius Group and, accordingly, may not place reliance on this report. Any third party accessing the report acknowledges that it may not place reliance on the results and findings contained in the report. The authors shall not be liable for any losses, claims, expenses, actions, demands, damages, liabilities or any other proceedings arising out of any reliance by a third party on this report.

Economic Modelling Disclaimer

The findings in this report are subject to unavoidable statistical variation. While all care has been taken to ensure that the statistical variation is kept to a minimum, care should be taken whenever using this information. This report only takes into account information available to the authors up to the date of this report and so its findings may be affected by new information. Should you require clarification of any material, please contact us.

ForewordWelcome to the twelfth quarterly Clarius Skills Index analysing and reporting on the shortages and over-supply of skilled labour in 20 employment categories.

The Clarius Skills Index is the only national index which provides a clear picture of current and future availability of skilled labour against demand.

Labour market conditions eased slightly in the June quarter, reflecting the lagged effect of a temporary downturn in economic activity due to natural disasters leading to caution in hiring decisions.

A slowdown in employment growth can also be partially attributed to a recent dip in business confidence, due to financial concerns for some external economies and anticipated changes to Government policies.

This has led to a reduction in the skills indices for most occupations over the last quarter. However, the overall index remains balanced.

Clarius Group has again combined the knowledge of the Australian employment market from its Alliance, Candle, Lloyd Morgan, SouthTech and The One Umbrella businesses, with the informed and technical advice of the respected economists KPMG Econtech, to analyse, index and forecast the labour skills shortage or oversupply.

This report will help you to make informed decisions about current and projected labour market conditions. Although times are tough in some industries, certain areas of skilled labour are still in high demand.

Clarius Group is once again proud to be partnering with KPMG Econtech to deliver this breakthrough Index.

Geoff Moles, Chief Executive Officer, Clarius Group

Corporate Services

Information Technology

Accounting, Banking and Finance

IT Services

Contractor Management Services

Aligned Services

Specialist White-Collar Recruitment for Permanent, Contract & Temporary Staff

Architecture, Construction, Consulting Engineers and Manufacturing

Library and Records Management

Sydney

Melbourne

Canberra

Perth

Hong Kong

Shanghai

Beijing

Adelaide

BrisbaneAuckland

Wellington

Clarius Group is represented throughout the Asia Pacific region

by a network of over 20 offices

About Clarius GroupClarius Group (ASX: CND) is a specialist in the employment services market providing recruitment, contractor and staffing services in the Accounting, Administration, Banking, Finance, Information Management, Information Technology, Library, Marketing, Records, Sales and Senior Management markets to governments and corporations across the Asia Pacific region.

Established over twenty seven years ago and listed on the Australian Securities Exchange in 1997, Clarius Group has a reputation for high-quality delivery and remains one of the largest, longest standing and best performing recruitment suppliers in the region.

Clarius Group operates through a number of quality specialist brands including:

• Alliance Recruitment Corporate Services

• Candle Information Technology

• Lloyd Morgan Accounting, Banking and Finance

• SouthTech Architecture, Construction, Consulting Engineers and Manufacturing

• The One Umbrella Library and Records Management

• Ignite Contractor Management Services

• Jav IT Managed IT Services and Professional IT

Clarius Group employs over 300 staff through a network of offices located in Sydney, Melbourne, Brisbane, Perth, Adelaide and Canberra in Australia; Auckland and Wellington in New Zealand; Hong Kong, Beijing and Shanghai in China.

About KPMG EcontechKPMG Econtech is one of Australia’s leading independent economic consultancies specialising in economic modelling. Its work covers the key areas of industry economics, social policy, tax policy and economic forecasting in Australia and Asia.

Established over twenty seven years ago and listed on the Australian Securities Exchange in 1997, Clarius Group has a reputation for high-quality delivery and remains one of the largest, longest standing and best performing recruitment suppliers in the region.

How the Clarius Group KPMG-Econtech Labour Skills Index works Clarius Group commissioned KPMG Econtech to analyse, index and forecast labour demand against labour supply across 20 occupation categories as defined by the Department of Education, Employment and Workplace Relations, using Australian Bureau of Statistics labour force data.

While other reports detail the level of unemployment data and highlight areas of skill demand, the Clarius Skills Index is the only index that examines the shortage or oversupply of skilled labour compared to demand.

The methodology used to determine the index is based on the premise that where skilled labour demand (employment plus vacancies) equals supply (employment plus unemployment), the index is equal to 100.

During times of labour market tightness, when employers experience difficulty finding appropriately skilled employees, the index is greater than 100. Conversely, at times when skilled employees are easier to find (in a loose labour market), the index is less than 100.

The Index has also been interpreted into a skills shortage barometer to highlight the levels of risks to employers in relation to the availability of skilled labour. The barometer has five readings that are based on the following ranges for the index.

Low – index is less than 95

Moderate – index is between 95 and 98

Balanced – index is between 99 and 101

High – index is between 102 and 105

Extreme – index is greater than 105

Low

Moderate

BalancedHigh

Extreme

ContentsClarius Skills Index – June Quarter 2011 ......................................................................................................... 1

Clarius Skills Index by Occupation June Quarter 2011 .................................................................................... 4

At the Coalface ............................................................................................................................................... 5

Skill Shortages at the Occupation Group Level ............................................................................................. 14

Emerging Occupation Trends from the Clarius Skills Index ............................................................................ 18

The Impact of the Australian Government Climate Change Plan ................................................................... 23

Impact of the May 2011 Federal Budget on Skills and Jobs .......................................................................... 27

Labour Market Forecasts – Gross Domestic Product (GDP) and Wages ....................................................... 31

State Comparisons ....................................................................................................................................... 35

Top Ten Occupations with the Highest Levels of Skills Shortages.................................................................. 37

Generational Comparisons ........................................................................................................................... 38

Methodology, Definitions and References ..................................................................................................... 39

Clarius Skills Index by Occupation March Quarter 2011 ................................................................................ 46

Clarius Skills Index by Occupation December Quarter 2010 ......................................................................... 47

Labour market conditions slight easing in the June quarter reflected the lagged effect of a temporary downturn in economic activity due also to the natural disasters that hit a number of regions across Australia.

The slowdown in employment growth can also be partially attributed to a recent dip in business confidence, due to financial concerns for some external economies and anticipated changes to Government policies.

Clarius Skills Index June Quarter | 1

Clarius Skills Index – June Quarter 2011

The uncertainty about Australia’s current and future economic conditions and the resulting cautionary approach to recruitment plans and decisions has seen the latest Clarius Skills Index reach the closest tension between supply and demand of skilled labour in a decade.

The June Quarter Clarius Skills Index reports that supply and demand of skilled labour tightened across the majority of 20 occupation categories and was at a perfectly balanced 100.0, despite there being significant shortages in some trades occupations.

This resulted in a net shortage of just 1,000 skilled people across all categories in the quarter compared with the March Index (100.3) which reported a shortfall of 11,000 skilled workers across all occupation categories.

Overall demand for skilled labour fell by 56,800 people (1.6 per cent) while supply fell 44,700 people (1.3 per cent).

Labour market conditions slight easing in the June quarter reflected the lagged effect of a temporary downturn in economic activity due also to the natural disasters that hit a number of regions across Australia.

The slowdown in employment growth can also be partially attributed to a recent dip in business confidence, due to financial concerns for some external economies and anticipated changes to Government policies.

This has led to the reduction in the skills indices for most occupations over the last quarter.

Labour demand and supply overall both eased during the quarter as the economic recovery endured something of a rough patch with several unexpected factors coming together to dampen activity.

The March quarter National Accounts (released in June 2011) confirmed the impacts of the summer of natural disasters and the negative impact of a high AUD on some major industry sectors (e.g. Manufacturing and Tourism).

ABS data showed the economy backtracked in the March quarter, with real GDP declining by 1.2 per cent in seasonally adjusted terms. Mining and Agriculture, star performers in recent years, were hard-hit by the major La Niña event and record rainfall in many jurisdictions.

While the flood re-build has started, the effort was not enough to offset the effects of cautious hiring in other areas of the economy.

In addition, developments in the world economy have had an impact on growth expectations, and hence, labour demand.

This has been felt via a series of natural disasters (in Japan and New Zealand) and by ongoing public finance/debt issues in a number of major European and North American economies.

This has come at a period where households remain cautious, with consumer confidence subdued and where there is reluctance to hire on the part of some employers.

It is anticipated that a carbon tax will create a number of opportunities and not just in those sectors directly related to climate change.

That is, accountants, auditors and IT professionals will likely benefit from an increased need for those skills as a direct result of an introduction of a Carbon Tax.


Carbon plan and infrastructure projects to create opportunities

The uncertainty that was associated with a carbon tax, has now been somewhat ameliorated with the Government’s recent announcements.

It is anticipated that a carbon tax will create a number of opportunities and not just in those sectors directly related to climate change.

That is, accountants, auditors and IT professionals will likely benefit from an increased need for those skills as a direct result of an introduction of a Carbon Tax.

The re-build from natural disasters in Queensland is still getting underway and as such has not yet translated into major shifts in labour demand or supply.

However, as recovery gathers pace, it is expected that demand for specific labour may increase, particularly Construction tradespersons.

Over the remainder of 2011, but probably more so into 2012, 2013 and beyond, the flood re-build effort will be joined by increasing activity on the $42 billion National Broadband Network (NBN) project, the next phase of massive Mining sector projects (mostly in coal, iron ore and LNG) as well as investment related to the introduction of the carbon tax.

As a result, it is expected that current skills shortages in a number of sectors will become much more intense over the next few years.

A strong medium term outlook, and a near record participation rate (65.6 per cent in June 20111) led the Federal Government to announce a number of measures to address prospective skills shortages in the recent budget.

These include measures aimed at increasing the participation rate, making it easier for skilled migration to adjust to the needs of industry (especially in regional areas) and fulfilling labour requirements for large-scale resource projects (e.g. massive LNG train investments).

Nationally, the unemployment rate remained steady at 4.9 per cent, as a slight moderation in labour demand (year-on-year employment growth declined to 2 per cent in June) was offset by an equivalent softening in supply.

The Territories continue to enjoy the lowest unemployment rate, whilst New South Wales, Queensland and Tasmania have relatively high unemployment rates.

1 ABS Labour Force, Australia, Catalogue Number 6202.0, Table 1, June 2011.

Unemployment rate by state

At the occupation group level, all of the group level indices fell back in the June quarter: Professionals by 0.2 per cent; Associate Professionals by 0.4 per cent; and Tradespersons by 0.6 per cent.

The Professionals index remained in the balanced range at 99.1, while the indices for Associate Professionals and Tradespersons (both 101.2) fell back into the balanced range.

In the June quarter 2011, a number of the skilled occupations covered in this report recorded skilled labour shortages, two of which are in the extreme range.

The occupations currently experiencing shortages of skilled labour are listed below.

• Metal Tradespersons (108.9 in Jun/Mar qtrs)

• Chefs (105.3 in the Jun qtr; 106.6 in the Mar qtr)

• Automotive Tradespersons (103.8 in the Jun qtr; 106.1 in the Dec qtr)

• Wood Tradespersons (102.6 in the Jun qtr; 103.2 in the Mar qtr)

• Food Tradespersons (101.8 in the Jun qtr; 102.2 in the Mar qtr)

• Hairdressers (101.1 in the Jun qtr; 101.6 in the Mar qtr)

• Computing Professionals (100.5 in the Jun qtr; 101.1 in the Mar qtr)

• Building and Engineering Professionals (100.3 in the Jun qtr; 99.9 in the Mar qtr)

The Metal Tradespersons category currently has a shortage of approximately 10,900 workers in this sector and demand is expected to further rise due to rebuilding efforts and possibly investment related to the next leg of resources investment boom.

NSW VIC QLD SA WA TAS NT ACT AUST

June 2011 5.2 4.6 5.3 5.1 4.2 5.5 3.7 4.0 4.9

Australian Bureau of Statistics, Labour Force, Australia, Catalogue Number 6202.0, June 2011


It is expected that current skills shortages in a number of sectors will become much more intense over the next few years.

A strong medium term outlook, and a near record participation rate (65.6 per cent in June 20111) led the Federal Government to announce a number of measures to address prospective skills shortages in the recent budget.

The June Quarter Clarius Skills Index reports that supply and demand of skilled labour tightened across the majority of 20 occupation categories and was at a perfectly balanced 100.0, despite there being significant shortages in some trades occupations.

This resulted in a net shortage of just 1,000 skilled people across all categories in the quarter.


Clarius Skills Index by Occupation June Quarter 2011*

Source: Clarius Group - KPMG Econtech Skills Index Model

Skills Index% change

Mar 11 - Jun 11Labour Demand

‘000 personsLabour Supply

‘000 personsDifference (supply

less demand)

Jun 04 Jun 08 Jun 10 Mar-11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11

Professionals 99.1 102.1 98.9 99.3 99.1 -0.2% 1,971.1 1,989.0 17.9

Science 98.8 102.1 99.1 98.9 99.4 0.4% 98.7 99.4 0.6

Building and Engineering 100.6 104.2 100.1 99.9 100.3 0.4% 195.6 194.9 -0.7

Accountants 99.8 101.2 98.3 98.6 98.6 0.0% 164.4 166.7 2.3

Auditors 159.1 124.8 103.3 99.4 98.7 -0.7% 18.0 18.3 0.2

Marketing & Advertising 97.6 98.5 98.1 98.3 98.1 -0.2% 114.9 117.1 2.2

Computing 100.1 104.1 100.4 101.1 100.5 -0.6% 213.1 212.0 -1.1

Business & Information 98.0 99.5 98.2 98.7 98.5 -0.3% 212.4 215.7 3.3

Health 99.7 104.6 99.2 99.6 99.3 -0.3% 502.7 506.2 3.5

Social 98.0 100.1 98.2 98.6 98.4 -0.2% 451.6 459.0 7.4

Associate Professionals 101.5 105.1 101.6 101.6 101.2 -0.4% 235.7 232.8 -2.8

Medical & Science 98.4 100.5 97.5 97.3 97.9 0.6% 43.9 44.9 1.0

Building and Engineering 99.8 102.7 100.9 100.3 99.9 -0.4% 113.6 113.7 0.1

Chefs 107.6 112.0 105.5 106.6 105.3 -1.2% 78.1 74.2 -3.9

Tradespersons 99.9 105.2 100.8 101.8 101.2 -0.6% 1,189.9 1,176.3 -13.6

Metal 104.2 115.5 105.8 108.9 108.9 0.0% 133.4 122.5 -10.9

Automotive 99.7 106.2 101.3 106.1 103.8 -2.2% 161.8 156.0 -5.9

Electrical & Electronics 98.1 101.3 97.6 98.5 98.3 -0.2% 281.3 286.1 4.8

Construction 99.3 103.9 101.8 100.7 99.8 -0.8% 410.4 411.2 0.8

Food 99.5 105.5 100.2 102.2 101.8 -0.4% 93.8 92.2 -1.6

Printing 99.1 102.7 97.7 97.9 98.3 0.4% 24.9 25.4 0.4

Wood 100.7 109.5 102.8 103.2 102.6 -0.6% 35.5 34.7 -0.9

Hairdressers 102.0 105.7 99.6 101.6 101.1 -0.5% 49.3 48.8 -0.5

All 99.6 103.4 99.8 100.3 100.0 -0.3% 3,396.4 3,397.5 1.0

Clarius Skills Index

* Note that the skills index figures have been seasonally adjusted, whereas the Labour Demand and Supply figures are in original terms. For further information on how the index is calculated, please refer to “Methodology, Definitions and References” on page 39.

At the Coalface

Even in areas where demand was moderate, employers are finding it hard to find specific skill sets. This is particularly the case in some IT related sectors, engineering and project management.

At the Coalface Clarius Group Ltd

Uncertainty about future economic conditions is weighing on the minds of employers. This is causing some caution in future hiring plans.

The labour market is expected to remain tight over the next two quarters.

Given widespread uncertainty about global economic conditions, employers are expected to err on the side of conservatism in their hiring intentions.

This is expected to see an increased demand for contract employment instead of permanent staff across most occupation areas.

While employers consider the Carbon Plan to be an important factor in future hiring patterns, they do not consider its impacts to be immediate. Rather, it is one of a range of issues they are balancing in their hiring intentions.

Wage pressures are being driven by geographic location as opposed to specific skills, particularly in Western Australia and Queensland where wage pressures are extremely high.

During the June quarter, there was no major change in supply and demand conditions across all jurisdictions according to Clarius Group clients.

A slight softening in demand for permanent staff was offset by an increase in the demand for contract staff. This may be attributable to the higher degree of uncertainty in the economy compared to this time last year.

Most skills were reported to be in short supply due to tight labour market conditions.

But even in areas where demand was moderate, employers are finding it hard to find specific skill sets. This is particularly the case in some IT related sectors, engineering and project management.

Wage pressures have generally moderated since the second half of last year. However, wage pressures remain in skill categories which are experiencing labour supply shortages, particularly the IT sector.

An increased corporate focus on due diligence and compliance may lead to an increase in demand for workers with those skill sets over the next two quarters.

The Australian Government’s Climate Change Plan may also add further urgency to addressing compliance shortfalls. Over the next 12 months, specific skills in ‘climate change accounting’ are expected to be in very high demand.

Major business decisions are being put on hold due to the potential domestic and international headwinds in the economy. Conservatism rules the market with many employers taking a ‘wait and see’ approach before making major business decisions. This is expected to continue over the next 3 to 6 months.


There is uncertainty amongst employers about the restrictions in place for 457 Visa holders. The building, engineering, IT and trade sectors would benefit from a review and relaxation of the visa rules, to help address skill shortages, particularly in some regional areas.

At the Coalface continued... Clarius Group Ltd

The Federal Budget is not impacting on hiring intentions, despite many employers remaining uncertain about where government funds will be directed in relation to skills and training initiatives.

Both the ongoing labour shortages and the recent floods have increased the demand for skilled migrants.

However, there is uncertainty amongst employers about the restrictions in place for 457 Visa holders. The building, engineering, IT and trade sectors would benefit from a review and relaxation of the visa rules, to help address skill shortages, particularly in some regional areas.

(Employers in regional areas were previously granted concessions in meeting minimum salary and skill level requirements under the 457 Visa program. Regional employer concessions have now been removed; however, applications under the Regional Sponsored Migration Scheme are currently prioritised, along with skilled migration applicants that are sponsored by a state or territory government.)

The Carbon Plan is expected to drive a need for audit and accounting skills (already in undersupply) and will create new sources of demand, such as demand for those with an understanding of the changes to accounting principles in relation to the Carbon Plan.

Employment in renewable energy innovation is likely to also benefit from the Carbon Plan. However, there is likely to be more transparency around the issue over the next quarter.


At the Coalface Corporate and Financial Services

Skills supply in the banking sector remains very tight, with client-facing and revenue-generating employees in high demand. In particular, there is a shortage of wealth management and superannuation skills.

But for the June quarter we have seen a fall of around 20 per cent in demand for administrative and non revenue generating roles across all jurisdictions for Corporate and Financial services.

This is largely due to candidate behaviour changing, with most reluctant to move to new jobs due to uncertain economic conditions.

Nationally, there is a notable shortage of sales professionals selling to all corporate sectors and a large undersupply of financial planners. In addition, there is also an undersupply of insurance professionals in states affected by natural disaster.

The next 3 to 6 months is expected to be turbulent as employers of administrative staff will be looking to consolidate their expenditure in light of uncertain economic conditions.

As a result demand for new staff is expected to weaken over the next 3 months. Over the final quarter of the year, demand is expected to be inconsistent because of seasonal factors.

Recent reforms made to the financial planning industry have reduced the rate of commissions previously paid. This has seen the industry demand higher base salaries in the order of 8 to 10 per cent.

Challenging sales market conditions has seen sales professionals demand higher commissions, some in the order of 40 per cent – up from 20 per cent.

These wage pressures have been most prevalent in Sydney and Melbourne, and in Perth to a lesser extent.

Overall, skill shortages in the industry are driving wage expectations across the board and particularly in Western Australia.

Many employers in small to medium enterprise markets are uncertain about the state of the economy over the next 3 to 6 months, due to concerns about a weaker financial market and lack of clarity surrounding domestic tax reform.

Employers are using training to retain quality staff as well as add value. Training efforts are expected to increase significantly over the next 6 months, particularly in the provision of PS146 compliance courses.

Across the board there are calls from employers for the Government to soften visa rules in regional areas to address skill shortages in the finance and administration sectors.

The Carbon Tax Plan is not yet affecting hiring patterns amongst small to medium sized enterprises in the corporate and financial services sector.

Employers are using training to retain quality staff as well as add value. Training efforts are expected to increase significantly over the next 6 months, particularly in the provision of PS146 compliance courses.


At the Coalface Computing

In the IT sector over the June quarter there was increased demand across most jurisdictions, with the exception of South Australia, for project management and business analyst skills.

In NSW and Victoria, the shortage is being driven by the recruitment drive for the NBN network. In Western Australia, there is a shortage of mid-level to senior business and desktop support skills as resource sector projects ramp up.

And the Federal Government’s Carbon Tax Plan is expected to have a large impact on demand for data centres, particularly in NSW and Victoria as IT consulting companies will develop systems to measure and manage carbon consumption.

As part of the Carbon Tax package to invest in cleaner energy, the Government will provide $3.2 billion in research grants to bring new technology to market. Victoria expects strong demand for clean car technology.

As the commodities boom continues, IT professionals continue to be in high demand for resource projects, particularly in Western Australia.

Data warehousing skill sets are in short supply across the country: architects, project managers and test analysts were all in short supply during the quarter. Demand for these skill sets was particularly high in Victoria and Queensland.

Employers in ACT are concerned there will be a lack of candidates to fill their positions with the NBN roll out stepping up recruitment.

Obtaining security clearance is of particular concern for the Canberra market because of the time it takes to obtain security clearance which can take up to several months.

Expected economic conditions over the next 3 to 6 months are mixed across the jurisdictions, but underlying industry fundamentals remain strong. In NSW uncertainty is increasing the demand for contract workers, but less so for permanent staff.

Demand in Victoria is expected to be strong over the next 3 to 6 months, but stronger still in Queensland. South Australia will see more post budget spending over next 3 months, particularly for test analysts. In the ACT there is some concern about budget cuts affecting head counts.

The Federal Government’s Carbon Tax Plan is expected to have a large impact on demand for data centres, particularly in NSW and Victoria as IT consulting companies will develop systems to measure and manage carbon consumption.



At the Coalface continued... Computing

Salary pressures are being experienced across the board, with wage increases being seen in the order of 10 to 20 per cent and in some jurisdictions, such as Queensland, as high as 30 per cent.

Some specific skills affected, by State:• NSW, wages for SAP staff have increased by 10 per cent • Victoria wages are up by 10 per cent for architects and test staff • Queensland, business analysts, test analysts and Java staff wages are up by 25 per cent • Western Australia, shortages of share point and project managers are driving wages expectations higher

International economic conditions are causing uncertainty about future hiring plans in NSW and South Australia. Major enterprise companies are pursuing offshore opportunities in these jurisdictions.

In Victoria, hiring plans are driven by overseas factors and expectations about skills shortages. Western Australian firms are concerned about up-skilling causing gaps at the entry level.

The skills shortage has meant that employers are hiring less qualified staff, and as result spending more time and resources training existing and junior staff.

The Federal Government Budget announcements to boost training programs were seen as a positive amongst employers.

The growing trend of declining numbers of university placements in IT courses is seen as a major area of concern, particularly in NSW, Victoria and Western Australia.

Employers believe that a greater supply of IT workers would allow the industry to better compete with the resource sector.

South Australia is more dependent on skilled migrants than other jurisdictions and would strongly benefit from the increased skilled intake announced in the Budget.

The skills shortage has meant that employers are hiring less qualified staff, and as result spending more time and resources training existing and junior staff.

The Federal Government Budget announcements to boost training programs were seen as a positive amongst employers.

At the Coalface Accounting & Auditing

The introduction of a Carbon Tax, and significant tax reform, is likely to lead to an increase in demand for auditors, particularly for auditors and risk analysts from the energy sector.

However, this growth might be delayed until the Carbon Tax’s passage through both houses of Parliament is certain.

Additionally, the demand on organisations to comply with certain accounting standards, along with reporting guidelines from the ASX and ASIC, will continue to place demand on this occupation group.

Within the broad Accounting profession auditors will be amongst the highest sought over the next 5-10 year period.

And in the area of Tax, particularly Tax Law, we have seen an increase in demand across many sectors as clients continue to seek high level talent from a diverse background.

This quarter, our clients have seen a 25 per cent increase in the demand for accountants compared to last quarter and demand is particularly strong in Queensland.

Uncertainties about Government spending have led to a slight pullback in recruitment plans as the National Broadband Network (NBN) tender process is undertaken.

Existing shortages in the sector are increasing pressure on the Federal Government to make changes to the Visa rules, especially to deal with the big undersupply of accountants.

Wages haven’t changed dramatically since the Global Financial Crisis. However, multiple offers for experienced candidates are causing a tightening of wage pressure.

The stringent reporting requirements that most organisations are subject to, given global events will continue to increase and therefore put an even greater strain on this occupation group.

There has been a strong demand within global and Australian publically listed organisations for this occupation group over the past 6 months, and with financial year end requirements still prevalent we are expecting further demand in the coming 12 months.

Auditors are now becoming more engaged with the operational function of an organisation, and therefore have an even broader view of audit risks which may exist within the framework of organisations.

This exposure is placing greater pressure on experienced personnel confirming the view that people with a diverse background or industries are highly regarded by clients.

Additionally, Corporate Tax has increased in demand, along with financial accountants being in higher demand across many industries, but with particular emphasis on banking, commerce and FMCG.

Within the accounting world, there has been very moderate growth within the retail sector over this period which may explain the “balanced” reading for accountants generally.

Within the broad Accounting profession, auditors will be amongst the highest sought over the next 5-10 year period.

Within the accounting world, there has been very moderate growth within the retail sector over this period which may explain the “balanced” reading for accountants generally.


Candidates are relocating interstate to take advantage of higher salaries. Many tradespersons are relocating to Queensland in search of higher wages as a result of the post flood building and repair efforts.


At the Coalface Building and Engineering

Compared to last quarter, there has been an improvement in demand across the sector, particularly for mechanical skills, according to our clients.

The buoyant resources sector has led to a sustained demand for engineering skills in Queensland and Western Australia. All jurisdictions with mining sector exposure are benefiting from this demand.

Over the June 2011 quarter, acute labour shortages were reported amongst the blue collar trades. There is a shortage of civil, mechanical and electrical engineers and the shortage is particularly acute in Queensland and Western Australia.

The architectural sector is one of the few areas of over-supply within this occupation category; a lack of projects in the pipeline has caused the weakening.

Wage pressures are increasing in Western Australia and Queensland across building and engineering occupations driven by the resources boom and re-construction programs in flood affected areas.

Mining companies (in the coal, oil and gas sectors) with deep pockets are willing to pay premiums for local talent and this is adding to wage pressures in the sector. Remuneration across mining sectors in Western Australia has increased by up to 25 per cent since December 2010.

In New South Wales, many business decisions were placed on hold due to the recent Government election.

Employers are expecting a number of infrastructure projects to be announced under the new Government, which will increase demand for engineering and project management skills in NSW over the long-term.

Overall general uncertainty in economic conditions is driving a trend for employers to hire on a contractual basis, rather than on a permanent basis.

Employers in the engineering and building sector have welcomed the Federal Budget initiatives to boost certain training programs and trades.

The increase in the number of permanent migration visa allowances will help to address labour shortage in the sector, but employers still believe more should be done to increase flexibility.

Candidates are relocating interstate to take advantage of higher salaries. Many tradespersons are relocating to Queensland in search of higher wages as a result of the post flood building and repair efforts.

While employers consider the Carbon Plan to be an important factor in future hiring patterns, they do not consider its impacts to be immediate.

The implementation of the Plan is expected to increase the demand for various skilled occupations in the sector including wind farm design, management and installation.

At the Coalface Business and Information

There has been increased demand for highly skilled groups, especially project management and consulting space in records areas, as compliance accountabilities drives a need for increased electronic record keeping management.

While there is a shortage of business and information administrators, generally industry employers are not seeing widespread shortages of candidates in the market.

Training and retraining of employees remains important, with libraries particularly focused on improving systems training for staff.

The short-term outlook for the sector is expected to remain stable, with a slight increase in demand expected in the long run.


While there is a shortage of business and information administrators, generally industry employers are not seeing widespread shortages of candidates in the market.


Continued softening of house prices and de-leveraging by households, Carbon Tax uncertainty and overseas public-finance-related economic jitters were also factors in weaker economic conditions and hence demand for some occupations.

Skill Shortages at the Occupation Group LevelThe continued impact of the summer’s natural disasters and patchy conditions across much of the rest of the economy was still being felt in the June quarter Clarius Skills Index.

This was despite major investment phases in the technology (NBN) and mining sectors (next leg of the resource investment boom) about to occur.

In addition to the floods across many states and Cyclone Yasi in Queensland, major disasters in New Zealand and Japan combined to impact some sectors/states (especially those linked to tourism) and will continue to do so.

Continued softening of house prices and de-leveraging by households, Carbon Tax uncertainty and overseas public-finance-related economic jitters were also factors in weaker economic conditions and hence demand for some occupations.

Still, the overall Clarius Skills Index remained firmly in the balanced range – a slight fall in the June quarter to a touch under 100.0.

The overall Clarius Skills Index remained firmly in the balanced range – a slight fall in the June quarter to a touch under 100.0.

At the occupation group level, all indices fell in the June quarter: Professionals by 0.2 per cent; Associate Professionals by 0.4 per cent; and Tradespersons by 0.6 per cent.

At the occupation group level, all indices fell in the June quarter: Professionals by 0.2 per cent; Associate Professionals by 0.4 per cent; and Tradespersons by 0.6 per cent.

The Professionals index has remained in the balanced range at 99.1, while the indices for Associate Professionals and Tradespersons both fell back to 101.2 and into the balanced range.

This softness is also apparent in ABS data. Employee pessimism, the view that the likelihood of gaining employment is somewhat less, saw a fall in the supply of workers relative to demand.

While the unemployment rate remained stable at 4.9 per cent, the participation rate changed, from 65.8 to 65.6 per cent during the June quarter. This is roughly in line with the change in the Clarius Skills Index.

The chart below shows the historical indexes for each group. Following this is an explanation of the index for each occupational group.

Source: Clarius - KPMG Econtech Skills Index Model, June 2011

108

106

104

102

100

98

96

94

92

Jun-

03

Jun-

04

Jun-

05

Jun-

06

Jun-

07

Jun-

08

Jun-

09

Jun-

10

Professionals

Trades

Associate ProfessionalsExtreme

High

Balanced

Moderate

Low


Analysis of the index for each occupation group reveals the following results for the quarter.

Professionals

The Clarius Skills Index for Professionals has been in the balanced range for the last two years, and remained in that range in the June quarter, with an index reading of 99.1.

The index this quarter is marginally lower (0.2 per cent) than in the March quarter, which reversed the 0.2 per cent increase seen in the March quarter 2011.

There are approximately 17,900 more unemployed skilled Professionals than there are vacant skilled jobs being advertised, indicating a small oversupply of Professionals. This is a jump from March, which reported an oversupply of 13,700 professionals.

In total, there are 1.97 million jobs and vacancies (i.e. total labour demand) in the nine Professional occupations, a fall of around 24,500 from the March quarter.

Six of the indices for the professional occupations fell back, compared to the March quarter, with solid rebounds in the index for Natural and Physical Science, and Building and Engineering Professionals (with the index for Accountants effectively unchanged).

With its rebound, the index for Building and Engineering Professionals moved back above the 100 benchmark, joining the Computing Professional index.

This index recorded the second largest fall amongst the Professional occupations in the June quarter, but remains at the high end of the balanced range. Demand for Computing Professionals is expected to increase significantly as the NBN is rolled out.

Associate Professionals

The Clarius Skills Index for Associate Professionals fell by 0.4 per cent to 101.2 in the March quarter moving the index back to the balanced range.

But in the June quarter, there was an increase in the Medical and Science Technical Officers index while the Building and Engineering Associate Professionals and Chefs indices both fell back.

The index for Building and Engineering Associate Professionals remains firmly in the balanced range (at 99.9) for the June quarter as it has for the past 2 years.

The effects of the construction rebuilding effort following the natural disasters in Queensland (and other states) during summer 2010 has not yet impacted the Index.

But as the re-building efforts gather pace over the remainder of 2011 (and possibly for a few years after this) we expect this index to rise quite strongly.

The index for Medical and Science Associate Professionals jumped 0.6 per cent during the quarter. The index now sits on the edge of the balanced range at 97.9.

Low

Moderate

BalancedHigh

Extreme

Professionals

This index recorded the second largest fall amongst the Professional occupations in the June quarter, but remains at the high end of the balanced range.

The effects of the construction rebuilding effort following the natural disasters in Queensland (and other States) during summer 2010 has not yet impacted the Index.

Low

Moderate

BalancedHigh

Extreme

Associate Professionals


There are approximately 1,000 Medical and Science Associate Professionals seeking work, a fall of approximately 400 from last quarter.

The index for Chefs fell back quite strongly but remained in the extreme range at 105.3 for the June quarter. This index fell back 1.2 per cent over the quarter but there remains a significant shortage of over 3,900 people in this area.

Tradespersons

In the June quarter, the Clarius Skills Index for Tradespersons fell back to the balanced range at 101.2.

Despite the fall in the index, there remains a shortage of approximately 13,600 tradespersons throughout Australia; this continues the reporting of shortages by the Clarius Skills Index since March 2010.

While workers have begun to re-build and repair damaged buildings and infrastructure in Queensland (and other States), this work has not yet ramped up (especially on the housing side).

As a result we have not yet seen demand start to spike for construction workers in this regard – this index fell back below 100 (99.8) during June.

However, the expected future solid residential building activity and the continued recovery effort following the floods, should result in strong demand for construction trades workers over several years, especially if mining investment starts drawing on this pool of labour supply.

Of the eight tradesperson occupations, five occupations are facing shortages and three of those are facing labour shortages in the high range, while one has an extreme shortage.

This extreme shortage of skilled labour exists for Metal Tradespersons, where a shortage of around 10,900 people (Index of 108.9). However, this Index eased back slightly during the June quarter.

The Automotive Tradesperson index was in the extreme range, but fell back to the high range in the June quarter, falling 2.2 per cent to 103.8. This index can be quite volatile from quarter to quarter.

The indices for Hairdressers, and Wood and Food Tradespersons are the other tradesperson occupations facing shortages.


Despite the fall in the index, there remains a shortage of approximately 13,600 tradespersons throughout Australia.

Tradespersons

Low

Moderate

BalancedHigh

Extreme

Emerging Occupation Trends from the Clarius Skills IndexIn the June quarter 2011, labour market conditions for the following occupations are of particular interest.

Computing Professionals: balanced

The skills index for Computing Professionals fell by 0.6 in the June quarter to 100.5, down from 101.1 in the March quarter 2011.

The June quarter Clarius Skills Index shows that there is currently a shortage of approximately 1,100 Computing Professionals.

Whilst both the demand and supply for Computing professionals increased during the June quarter, the increase in supply was greater, causing the index to fall. At 100.5, the Computing Professionals index is just above the middle of the balanced range.

Specifically, demand for Computing Professionals increased by 8.2 per cent in the June quarter to 213,100 professionals.

The reasons include the growth of production on the most recent phase of new commodities projects (where IT professionals are required for the operation of complex production systems) and the continuing rollout of the National Broadband Network (NBN), which is likely to gather momentum towards the middle of the decade.

Demand is likely to continue to outpace supply as these factors gain importance.

The pace of major resource investment projects coming on stream has been constrained by bottlenecks and congestion in supply chains but is slowly increasing as key investments in supporting infrastructure conclude.

Also, NBN Co., the company charged with rolling out the NBN project, is likely to continue to increase its labour requirement as the project moves beyond initial rollouts and into its main phase.

Meanwhile, supply of Computing Professionals increased by 8.9 per cent in the June quarter to 212,000.

The domestic supply of computing professionals is expected to slow in the coming years, as current enrolments in IT courses have started to decline.

It is anticipated that supply will not be able to keep pace with demand in the short term, and other solutions (e.g. bringing qualified migrant workers into Australia) will need to be considered.


The June quarter Clarius Skills Index shows that there is currently a shortage of approximately 1,100 Computing Professionals.

It is anticipated that supply will not be able to keep pace with demand in the short term, and other solutions (e.g. bringing qualified migrant workers into Australia) will need to be considered.

Auditors: balanced

The skills index for Auditors fell 0.7 per cent in the June quarter. The demand for Auditors increased significantly in the June quarter, up by 9.7 per cent to 18,000 workers.

However, the supply of Auditors also increased substantially by 11 per cent to 18,300 workers. This has led to the net decrease in the index for this occupation.

Whilst the index has fallen, the individual large increases in demand and supply indicate strong activity in this occupation.

Moving forward, the introduction of a Carbon Tax (and significant tax reform) is likely to lead to an increase in demand for this occupation, particularly for auditors and risk analysts from the energy sector.

However, this growth might be delayed until the Carbon Tax’s passage through both houses of Parliament is certain.

Accountants: balanced

The skills index for Accountants remains constant at 98.6 in the June quarter.

The individual changes in demand and supply have been substantial although the decrease in demand has been met by a decrease in supply.

The demand for Accountants fell markedly in the June quarter, by 7 per cent to 164,400. However, the supply of Accountants also fell 7 per cent to 166,700 workers, leaving the index stable over the June quarter.

As is the case with Auditors, the index should move forward strongly in the short to medium term in line with the introduction of the Carbon Tax (as well as significant tax reform).

However, as with Auditors, this growth may be delayed until the Carbon Tax’s passage through both houses of Parliament is certain.

Whilst the index for Auditors has fallen, the individual large increases in demand and supply indicate strong activity in this occupation.

Moving forward, the introduction of a Carbon Tax (and significant tax reform) is likely to lead to an increase in demand for this occupation, particularly for auditors and risk analysts from the energy sector.


Building and Engineering Associate Professionals: balanced

The skills index for Building and Engineering Associate Professionals is 99.9, down from 100.3 in the March quarter.

In the June quarter, demand for Building and Engineering Associate Professionals fell for the second consecutive quarter to 113,600 people — the lowest level since March 2007.

Weak activity in non-mining-related residential and non-residential construction has persisted in recent quarters, while the shift of resources to the flood re-build effort in several states has also affected demand for these workers.

In addition, the winding down of much of what was a massive phase of State and Federal Government investment in infrastructure (especially transport infrastructure) has also impacted on demand in this sector.

This has been exacerbated by the possible backfilling of positions after the worst of the GFC passed, as well as recent natural disasters, elections and major Government policies (e.g. the Carbon Tax).

The federal budget may have a significant impact on the sector, with decisions on funding for new and planned infrastructure projects having a direct impact on demand for Building and Engineering Associate Professionals.

As the construction rebuilding effort following the floods picks up pace, as well as the next round of massive resource investment projects, we expect this index to rise further over the short to medium term.

Construction Tradespersons: balanced

The skills index for Construction Tradespersons fell to 99.8, down from 100.7 in the March quarter.

Some sectors of the construction industry are slowing, with the Building Education Revolution stimulus spending nearing an end and the social housing initiative nearing completion.

However, still-robust infrastructure investment is in the process of being boosted by re-build work related to the summer of natural disasters, as well as the resumption of some projects put on hold due to weather reasons.

In all, this led to demand for Construction Tradespersons to edge upwards in the June quarter (after two quarters of decline) by 0.6 per cent.

Supply, on the other hand, recorded stronger growth during the June quarter. This caused the index to fall back to 99.8, right in the middle of the balanced range.

Demand for Construction Tradespersons will be supported over the remainder of 2011 and into 2012 and 2013 as the speed of work increases on the flood-related re-build across Queensland and other states, although persistent weakness in non-flood-related residential and non-residential work may ultimately see this index fall.

As the construction rebuilding effort following the floods picks up pace, as well as the next round of massive resource investment projects, we expect the index for Building and Engineering Associate Professionals to rise further over the short to medium term.


Chefs: extreme

The index for Chefs fell 1.2 per cent during the June quarter to 105.3 (following the March quarter reading of 106.6).

Demand for Chefs edged higher (0.3 per cent) to 78,100 workers in the June quarter.

However, the supply of chefs increased 1.5 per cent to 74,200 workers, resulting in a shortage of 3,900 Chefs.

The index remains in the extreme range and highlights the tight labour market for Chefs compared to other skilled occupations.

While not at the acute levels of the pre-GFC days, the labour market for chefs remains very tight and is consistently tighter than other skilled occupations. This indicates a systemic shortage of chefs in Australia.

Metal Tradespersons: extreme

There is an extreme shortage of approximately 10,900 Metal Tradespersons, according to the June quarter Clarius Skills Index.

The index for Metal Tradespersons remained steady in the June quarter, easing less than 0.1 of an index point.

The Metal Tradespersons index remains in the extreme range, where it has been since the start of 2010 and from 2005 to 2008. This is the occupation with the highest skill shortage of all of the indices reported.

The supply of Metal Tradespersons fell for the second straight quarter in June, following from four quarters of growth.

Specifically, the supply of workers fell by 3,300 (2.6 per cent) to 122,500 workers, while demand fell by 3,600 (2.7 per cent) to 133,400 workers.

Despite demand falling for the third consecutive quarter, it remains well above labour supply. Hence, the shortage of these tradespersons is persisting.

After stabilising in the June quarter, the shortage is expected to become more acute in the quarters and years to come, as demand is expected to rise due to rebuilding efforts and possibly investment related to the next leg of resources investment boom. Hence, the index for Metal Tradespersons is expected to remain in the extreme range for some time yet.


The demand for Accountants fell markedly in the June quarter, by 7 per cent to 164,400. However, the supply of Accountants also fell 7 per cent to 166,700 workers, leaving the index stable over the June quarter.

As is the case with Auditors, the index should move forward strongly in the short to medium term in line with the introduction of the Carbon Tax (as well as significant tax reform).

Automotive Tradespersons: high

There is a shortage of approximately 5,900 Automotive Tradespersons, according to the June quarter Clarius Skills Index.

The index fell 2.2 per cent over the June quarter to 103.8 from 106.1 in March, as the index moved back to a high shortage from an extreme shortage.

This index has been quite volatile in recent years. This may reflect the more short-term nature of work in this sector, but is also influenced by announcements by the major manufacturers.

Over the June quarter, both the supply and demand for Automotive Tradespersons jumped, the increase in supply outweighed that seen in demand, which led to the shortage of Automotive Tradespersons falling back to high.

Supply of these workers increased 14.8 per cent during the June quarter to 156,000 workers, while demand jumped 12.0 per cent over the quarter to 161,800 workers.

Demand is expected to come under pressure in the near term, as the Carbon Tax announcement puts further pressure on the automotive manufacturing sector already saddled by the impact of weak demand and a high AUD.

Ford recently announced some job losses at Geelong due to weak demand for large cars.

Demand is expected to come under pressure in the near term, as the Carbon Tax announcement puts further pressure on the automotive manufacturing sector already saddled by the impact of weak demand and a high AUD.


The Impact of the Australian Government Climate Change Plan

Tackling the effects of climate change (via a carbon price) has been on the policy agenda for some time.

The National Emissions Trading Taskforce was established in 2004 to look at the issue.

Seven years on, public debate on the issue of carbon pricing has led to the development of the Clean Energy Future – the Australian Government Climate Change Plan.

This article explains the details of the Plan and its potential employment benefits.


New Opportunities from a workforce planning perspective

Although media reports have focused on the potential job losses associated with pricing carbon, the Federal Government’s Climate Change Plan (the Plan) has the potential to create employment opportunities across a variety of sectors.

Businesses will require support in adjusting to the policy and implementing appropriate carbon measurement and accounting systems.

Investment and funding through the newly established Clean Energy Finance Corporation will also create opportunities for businesses and entrepreneurs who are working to develop renewable energy technologies.

Consequently, the Plan is expected to boost demand for a range of skilled occupations in accounting, auditing, IT development/administration, management consulting, research and development.

Details of the Plan

From the 1 July 2012, the Australian Government will implement its Climate Change Plan.

The key objective of the Plan is to reduce carbon emissions in Australia, by introducing a price on the carbon emitted through commercial processes. The idea is that businesses purchase permits for each unit of carbon they emit.

With the exception of the Forestry and Agricultural sectors, all business sectors are included in the Plan. The current threshold for inclusion in this program is set at 25,000 tonnes of carbon, capturing approximately 500 Australian businesses.

In the first three years of operation, the value of the permits would be fixed. Starting at $23 per tonne, the price of carbon increases to $24.15 per tonne in 2013-14, to $24.50 per tonne in 2014-15, based on a 2.5 per cent increase in the real price (i.e. above inflation) each year.

From the 1 of July 2015, the supply of permits will be fixed and a flexible price on carbon will be implemented as part of an internationally linked carbon trading scheme.

The revenue generated from the Plan will be used to compensate businesses and households for higher costs (typically energy related) that occur due to the carbon price.

The compensation component is expected to assist in moderating any economic fallout during the adjustment phase.

Importantly, the Plan also establishes two new bodies to administer government funding in support of clean energy initiatives.

The Australian Renewable Energy Agency (ARENA) will administer $3.2 billion on existing government funding in research and development, demonstration and commercialisation of renewable energy.

The Clean Energy Finance Corporation will manage and invest $10 billion of new funds in the commercialisation and deployment of clean energy initiatives.

Investment and funding through the newly established Clean Energy Finance Corporation will also create opportunities for businesses and entrepreneurs who are working to develop renewable energy technologies.

The Plan is expected to boost demand for a range of skilled occupations in accounting, auditing, IT development/administration, management consulting, research and development.

Labour Market Implications

To date, media reports on the labour market implications of the Plan have focused on concerns around potential job losses in energy intensive industries despite Treasury modelling suggests that the job losses would be negligible.

However, the implementation of a Carbon Tax and later carbon-trading scheme will create a number of opportunities in renewable energy, and is expected to boost demand for accountants, auditors and other professional service providers.

An immediate concern for businesses will be the development of an appropriate strategy to respond to the costs and opportunities posed by the Plan.

This is expected to boost demand for professional advice (accountants, lawyers and other professional advisers), as businesses seek to understand their obligations under the Plan and develop strategies to minimise costs and capitalise on available government assistance.

Another obvious impact of the Plan is that it will require the development of appropriate measurement systems and accounting policies, so that businesses can ensure they are compliant with reporting requirements under the new regulations.

This should create ongoing opportunities in accounting, financial reporting and tax, as businesses engage accountants to prepare and audit their annual carbon reports, and as the public sector prepares to administer the Plan and enforce carbon reporting requirements.

Accurate measurement and reporting of carbon emissions will also necessitate the development of appropriate data collection processes and IT systems, boosting demand for IT professionals in the private and public sector.

Potential employment opportunities will occur in some manufacturing sectors.

This is because the Plan includes support for low emitting manufacturing businesses, and provides funds to help existing manufacturers to refocus their business on developing materials/inputs for clean energy generation, such as wind turbines and solar voltaic panels.


Immediate concern for businesses will be the development of an appropriate strategy to respond to the costs and opportunities posed by the Plan.

This is expected to boost demand for professional advice (accountants, lawyers and other professional advisers), as businesses seek to understand their obligations under the Plan and develop strategies to minimise costs and capitalise on available government assistance.


The Clean Technology Innovation Program offers funding for research and development of clean technology and efficiency improving innovations.

This is likely to support jobs for researchers/scientists, and potentially, boost demand for engineers and construction workers as successful clean energy initiatives are commercialised.

Over the long run, the move towards a carbon-trading scheme will create a new market in carbon permits, generating opportunities for trading institutions, banks and financial advisors.

Banks and trading institutions will participate directly in carbon trading, as carbon permits themselves are essentially a financial asset that can be traded and held by traditional market participants.

In addition, banks are expected to develop a range of new financial products to assist businesses in hedging their carbon price exposure, e.g. financial derivatives such as forward contracts and options that are based on carbon permits.

This should support strong demand for skilled professionals with experience in finance and banking.

Over the long run, the move towards a carbon-trading scheme will create a new market in carbon permits, generating opportunities for trading institutions, banks and financial advisors.

Banks and trading institutions will participate directly in carbon trading, as carbon permits themselves are essentially a financial asset that can be traded and held by traditional market participants.

Impact of the May 2011 Federal Budget on Skills and Jobs

Workforce skills and growth has received close attention in this year’s Federal Budget.

Investment in the mining and resources sector is squeezing labour supply in other sectors of the economy.

Infrastructure requirements in disaster affected states are causing further labour shortages.

Employers believe the increased focus on training and retraining is a way of addressing the problem of skills shortages.

The Clarius Skills Index looks at the implications for employers and the Australian economy

The Federal Government is expecting 500,000 new jobs to be created in the next two years driven largely by resource sector investment.

This reflects an underlying forecast of employment growth of 1.75 per cent in 2011/12 and 2012/13, which would represent a moderation from the strong employment growth seen over the past 12 months (2.9 per cent in 2010/11).

The government is hoping that the national participation rate remains at an elevated level of around 66 per cent over the next two years (the participation rate reached an all time high of 66 per cent in November 2010), before commencing a long-run, gradual decline associated with the ageing of the population.2

Given that the participation rate is expected to decline over the next few years, finding those 500,000 workers to fill the jobs target outlined in the Budget will be challenging, as the size of Australia’s pool of available workers is stretched to its limits.

The Australian labour force has grown remarkably well over the past few years.

The Australian unemployment rate is one of the lowest amongst its group of OECD counterparts, many of whom are facing much weaker medium to long run economic fundamentals than Australia.

The overall economic position owes much to demand for Australian mineral resources.

This demand has driven the mining and construction investment which has occurred in Australia over the past 10 years, as mining companies have invested in capacity to meet overseas demand.

Over the year to June 2011, national employment grew by 2 per cent to reach 11,455,000 and the number of unemployed people decreased by 2.6 per cent to 590,000.3

Total unemployment was only 4.9 per cent in June, which most commentators would consider to be close to full employment.4

The urgent need to rebuild in disaster affected areas of the country will draw in labour across the nation as a huge number of tradespersons and engineers are required for a massive reconstruction program in 2011.

Given current shortages of skills in these areas, Australia is likely to see labour market conditions tighten as the year progresses.


The Federal Government is expecting 500,000 new jobs to be created in the next two years driven largely by resource sector investment.

Given that the participation rate is expected to decline over the next few years, finding those 500,000 workers to fill the jobs target outlined in the Budget will be challenging, as the size of Australia’s pool of available workers is stretched to its limits.

2 Commonwealth Government Budget, Statement 4: Opportunities and Challenges of an Economy in Transition May 2011.3 Australian Bureau of Statistics, Catalogue Number 6202.0 - Labour Force Australia, June 2011.4 Economists consider the economy to be at full employment when the unemployment rate falls to a sustainable level, commonly referred

to as the non-accelerating inflation rate of unemployment (NAIRU). KPMG Econtech estimates the NAIRU to be around 5 per cent.

The Federal Budget outlines a continual tightening in labour market conditions over the next two years.

Overall, the Budget predicts the Australian unemployment rate to fall to 4.75 per cent in the June quarter of 2012; with the rate of unemployment expected to fall further to 4.5 per cent by the June quarter of 2013.

Longer term, as older workers enter retirement, the proportion of working age people will fall, with only 2.7 people of working age to support each Australian aged 65 years and over by 2050 (compared to 5 working aged people per aged person today and 7.5 in 1970) according to the Australian Government in its 2010 Intergenerational Report.5

The challenge will be to keep wage inflation in check as the labour market tightens

As the mining investment boom continues to draw in labour resources and as the baby boomer generation retires, the Australian labour force will need to rely more heavily on skilled migration than ever before.

Wages6 in Queensland and Western Australia reflect the pressures associated with the scarcity of labour resources in those jurisdictions.

To give an indication of the patchy nature of average wage across sectors, the figure below shows the average weekly earnings across 10 industries.

Mining leads all other sectors by at least 35 per cent. The mining boom presents a risk of wage blow outs and further wage inflationary pressures.

As the mining investment boom continues to draw in labour resources and as the baby boomer generation retires, the Australian labour force will need to rely more heavily on skilled migration than ever before.

History Forecast

Jun-11 Jun-12 Jun-13

Unemployment Rate 4.9 4.75 4.5

Source: ABS, Average Weekly Earnings, Australia, Catalogue Number 6302.0, Table 10G

Average Weekly Earnings ($) – Top Ten Industries

0

500

2,099

1,549 1,544 1,539 1,5071,381 1,372 1,337

1,239 1,2191,000

2,000

2,500

1,500

Mining

Finan

cial a

nd

Insur

ance

Serv

ices

Profes

siona

l, Scie

ntific

and

Tech

nical

Service

s

Infor

mation

Med

ia an

d

Telec

ommun

icatio

ns

Electric

ity, G

as, W

ater a

nd

Was

te Serv

ices

Educa

tions

and

Traini

ng

Public

Adm

inistr

ation

and

Safety

Constr

uctio

n

Trans

port,

Pos

tal

and

Ware

hous

ing

Health

Care

&

Social

Ass

istan

ce

5 ibid.6 Australian Bureau of Statistics, Catalogue Number 6302.0 – Average Weekly Earnings, Feb 2011. Clarius Skills Index June Quarter | 29

The 2011 Budget attempts to address these challenges by increasing skills training and introduces measures to increase workforce participation

Boosting the productivity and the skills base of existing workers will be needed to partly offset the problems associated with tight labour supply, lower population growth than in the past, and an ageing society.

From 2012, age pensioners who work will be able to earn further $250 per fortnight above the income threshold before their pension is affected. This will assist to keep older Australians in the workforce for longer.

While overall workforce participation is near record highs of 66 per cent, some groups of the working age population are at low levels of employment.

Furthermore, in some regions, unemployment rates are well above the national average.

The Government seeks – through its Budget – to address this patchiness and provide opportunities for more people to enter the workforce. Tax reforms as part of its Carbon Plan also seek to get more people into work through increasing the tax free threshold.

The Government will increase its migration intake and increase the number of employment based visas available in the 2011/12 General Skills Migration Program (GSM).

Overall, the GSM will increase by 16,000 to 185,000 over 2011/12. Further, the Government will seek to address skills shortages in regional areas by increasing the number of visas available for regional places.

The introduction of enterprise Migration Agreements (MGAs) will be used for resource investment projects for work on projects with a total value of over $2 billion and that require over 1,500 workers.

This help will enable LNG projects in Western Australia and Queensland to proceed more smoothly over the next few years.

In addition, the Government will develop an electronic matching program for foreign workers and Australian employers to better match visa applicants with places available in the GSM.

The National Workforce Development Fund7 is one of the main programs in the Budget to address skills shortages

The key aim of the Fund is to deliver 130,000 training places over 4 years, and will provide industry assistance including:

• $100 million for accelerated apprenticeships over four years to assist industry in developing strategies to support competency-based progression; and

• $101.4 million in support services for apprenticeship mentoring.

The National Workforce Development Fund focuses on skills that are in demand in the economy, and includes enterprises front and centre, in partnership with the training system. The programs will focus on industries with the greatest skills shortage (such as resources and construction) as well as critical industries impacted by demographic change, such as the aged care and education sectors.

Boosting the productivity and the skills base of existing workers will be needed to partly offset the problems associated with tight labour supply, lower population growth than in the past, and an ageing society.

7 The Australian Government, Building Australia’s Future Workforce: trained up and ready for work, May 2011. Clarius Skills Index June Quarter | 30

Labour Market Forecasts – Gross Domestic Product (GDP) and WagesThe most recent national accounts data released in June 2011 showed that the Australian economy contracted by 1.2 per cent in the March 2011 quarter, reflecting the negative impact of natural disasters on Mining and Agricultural production throughout early 2011.

Value added, which is an economic accounting measure that is defined as the total revenue for a given business, minus the cost of intermediate inputs, for both sectors fell significantly.

Mining was down by 6.1 per cent and Agriculture down by 8.9 per cent. Coal production in particular was hampered by delays in the removal of floodwaters from mine pits in Queensland, resulting in a marked fall in exports over the March quarter.

Combined with ongoing growth in imports — due to the strong AUD — net exports detracted 2.4 percentage points from GDP growth.

A weak trade performance was partially offset by growing domestic demand. Private consumption grew by 0.6 per cent, boosted to some degree by flood/cyclone affected households replacing household goods.

In year-on-year terms, private consumption growth is running at 3.4 per cent in the year to March, which is around its long run average (3.6 per cent).

The largest positive contribution came from rising business investment, which grew 3.1 per cent over the quarter. Growth in business investment is being fuelled by the Mining sector, with resource-based businesses rushing to increase production in order to capitalise on high commodity prices.

Going forward, exports, business investment and consumption are expected to support growth.

As coal production resumes in flood-hit areas and the Agricultural sector recovers, we expect to see a bounce in commodity exports over the next year.

The large level of investment in capacity by the Mining industry will also be translated into higher levels of production over the medium term, particularly for the overseas market.

Business investment is set to recover further as credit conditions continue to normalise. In addition, as labour market conditions continue to improve, consumption is expected to grow at an above trend pace over the short to medium term.

By industry, the strongest contributor was the Arts and Recreation Services industry, which expanded by 2.9 per cent in the March quarter.

This was followed by the Rental, Hiring and Real Estate Services industry (2.0 per cent), although its output fell 2 per cent in the year to March.

Most other key service sectors (including Construction, Information, Media and Telecommunications, and Health Care and Social Assistance) recorded solid performances in a tough quarter.

Amidst weakness in output growth, labour demand has remained resilient, with the unemployment rate remaining at 4.9 per cent in June.


Business investment is set to recover further as credit conditions continue to normalise. In addition, as labour market conditions continue to improve, consumption is expected to grow at an above trend pace over the short to medium term.


More generally, national consumption growth is expected to pick up in line with continued growth in household incomes, although the consumer has tightened the purse strings somewhat in recent months due to financial concerns for major overseas economies, rising utilities prices and carbon tax uncertainty.

Following a temporary lift in the unemployment rate in October 2010, when favourable conditions encouraged a large influx of job seekers into the labour market, the unemployment rate has continued to trend downwards and remained below 5 per cent since March 2011.

However the pace of employment growth has slackened, with year-on-year growth falling to 2 per cent8 to June, the lowest level since April 2010.

After hitting 3.6 per cent in November 2010, growth has been patchy and limited. Hence, for unemployment to have remained steady, this means the participation rate has fallen. After hitting 66 per cent in November, participation fell back to 65.6 per cent by June.

The future of economic growth

After the disruption to activity in the March quarter, Australia’s economic growth should return to a more normal pace, supported by ongoing strength in external commodities demand, recovering business investment, and in the interim, the flood rebuild, which is taking place mostly in Queensland but also in several other states.

The disruptive effects of the summer’s natural disasters in Queensland, NSW and Victoria appear to have passed.

There have been recent reports about the flood rebuild in Queensland happening more quickly than expected for infrastructure but more slowly than expected for housing. This may impact on consumption in Queensland for the remainder of 2011, but it should also mean a stronger boost in housing construction.

More generally, national consumption growth is expected to pick up in line with continued growth in household incomes, although the consumer has tightened the purse strings somewhat in recent months due to financial concerns for major overseas economies, rising utilities prices and carbon tax uncertainty.

However, ongoing wage growth should support growth in household incomes over the next few years, allowing for stronger consumer spending in the short to medium term.

One of the major developments over the past few years has been a sharp upturn in Australia’s terms of trade, driven by very strong demand for energy and mineral commodities within developing economies.

8 The Australian Government, Building Australia’s Future Workforce: trained up and ready for work, May 2011.


In all, we expect the broader economic outlook to improve over the second half of 2011 and into 2012, with the flood re-build, mining investment and the NBN to play important roles.

But we note the re-emergence of several risk factors.

With many commodities still trading at or near record prices and weakness in the prices of many manufactured goods, Australia’s terms-of-trade are up by 22.4 per cent in the year to March 2011. This has provided a strong boost to the domestic economy, with domestic incomes recording very strong growth.

These high commodity prices are encouraging significant investment in the Mining sector.

Current plans include the next phase of projects by the big players, including BHP, Rio Tinto and Xstrata, but also investments by relatively new firms, especially in the LNG (CSG) sector and in coal on Greenfield projects and regions in Queensland and, to a lesser extent, New South Wales.

As a result, the investment outlook over the short to medium term is very optimistic, with the most recent ABS survey of planned capital expenditure showing that companies expect total investment to rise by 14 per cent in 2010/11 and 31 per cent in 2011/12.

Beyond 2011/12, investment in LNG will be a major contributor to investment growth, with large developments off the north-west of WA, at Gladstone and in Darwin (Inpex’s Ichthys LNG project).

Major phases of coal and iron ore investment are also expected, both in new and Greenfield areas (e.g. Mid-west of WA, Galilee Basin in Qld and Gunnedah in NSW). These projects will support non-dwelling construction activity for some years to come.

In all, we expect the broader economic outlook to improve over the second half of 2011 and into 2012, with the flood re-build, mining investment and the NBN to play important roles.

But we note the re-emergence of several risk factors.

These include public finance/debt concerns in major European and North American economies, weakness in several prominent industry sectors (especially those impacted by the strong Australian dollar) and ongoing weakness with the consumer - exacerbated by carbon tax uncertainty, rising utilities prices and the weak housing market.

In line with the expected strong growth in output, the outlook for the labour market is positive; the unemployment rate is expected to fall to 4.75 per cent by the end of 2011/12.

Employment growth is expected to continue at a relatively fast pace over 2011 before slowing to a more normal pace of around 1 per cent in the medium term.

Forward indicators suggest that hiring intentions amongst employers remain relatively strong. The most recent ANZ Job Advertisement series estimates total job ads rose by 3.7 per cent in June; a solid quarter but this was expected after the 6.5 per cent fall in May. Year-on-year job advertisements are higher by 9.8 per cent.

Following a slowing over the December quarter, wages growth picked up in the March quarter, rising by 1.1 per cent.9 In year-on-year terms, growth is now at 4.3 per cent, roughly on par with average growth over the period 1994 to 2010.

9 ABS, Average Weekly Earnings, Australia, Catalogue Number 6302.0, Table 2, February 2011..

Source: KPMG Econtech MM2 model, June 2011.

8

12

11

10

9

Jun-

03

Jun-

04

Jun-

05

Jun-

06

Jun-

07

Jun-

08

Jun-

09

Jun-

10

Jun-

11

Jun-

12

Jun-

13

Employment (millions of persons)



2

7

8

9

6

5

4

3

Jun-

03

Jun-

04

Jun-

05

Jun-

06

Jun-

07

Jun-

08

Jun-

09

Jun-

10

Jun-

11

Jun-

12

Jun-

13

Unemployment Rate (%)

History

History

HistoryForecast

Forecast

Forecast


Average Weekly Earnings ($’000 per quarter)

10

20

18

16

14

12

Jun-

03

Jun-

04

Jun-

05

Jun-

06

Jun-

07

Jun-

08

Jun-

09

Jun-

10

Jun-

11

Jun-

12

Jun-

13

Source: ABS, Average Weekly Earnings, Australia, Catalogue Number 6302.0, Table 10G

Average Weekly Earnings ($) – Top Ten Industries

0

500

2,099

1,549 1,544 1,539 1,5071,381 1,372 1,337

1,239 1,2191,000

2,000

2,500

1,500

Mining

Finan

cial a

nd

Insur

ance

Serv

ices

Profes

siona

l, Scie

ntific

and

Tech

nical

Service

s

Infor

mation

Med

ia an

d

Telec

ommun

icatio

ns

Electric

ity, G

as, W

ater a

nd

Was

te Serv

ices

Educa

tions

and

Traini

ng

Public

Adm

inistr

ation

and

Safety

Constr

uctio

n

Trans

port,

Pos

tal

and

Ware

hous

ing

Health

Care

&

Social

Ass

istan

ce

Average weekly earnings

As illustrated in the chart above, average weekly earnings are highest in the Mining industry, at $2,077 per week.

This is followed by the Financial and Insurance Services industry ($1,549), which overtook the Professional, Scientific and Technical Services wages which are now the third highest ($1,538).

Over the quarter, wage growth was strongest for the Health Care and Social Assistance sector, reflecting rising consumer demand for health services.

By sector, the falls in employment have been hardest felt in the Manufacturing, Health Care, Wholesale Trade and Transport sectors.

These falls were partially offset by rising employment in Construction, Education and Mining. The overall impact was a loss of 38,700 jobs in New South Wales (compared with a decline of 5,400 jobs nationwide).


State ComparisonsThe apparent economic stability masked softness in both the participation rate and employment growth, both of which eased during the June quarter across various states.

Despite a recent dip in business confidence due to rising anxiety over much-publicised overseas public debt concerns, ongoing weakness in some industry sectors and the announcement around Carbon Tax, the national unemployment rate remained relatively steady in the June quarter (at 4.9 per cent).

For much of the year to February 2011, employment growth in New South Wales had been surprisingly strong, especially since the state does not rely as heavily on its mining sector.

However since February, overall employment has fallen reflecting weak economic prospects in a handful of sectors.

By sector, the falls in employment have been hardest felt in the Manufacturing, Health Care, Wholesale Trade and Transport sectors.

These falls were partially offset by rising employment in Construction, Education and Mining. The overall impact was a loss of 38,700 jobs in New South Wales (compared with a decline of 5,400 jobs nationwide).

As a result, the NSW unemployment rate climbed to 5.2 per cent in June.

In Victoria, unemployment also edged higher in the June quarter (to 4.6 per cent), but there was a boost to total employment during this time (21,000 jobs).

So the weaker unemployment number is due to a strong jump in the participation rate (bouncing from 65.5 per cent in April to 66.1 per cent in May and June), which is a positive sign for the state’s labour market.

Although it is now starting to tail off, persistently high population growth in recent years supported economic growth in Victoria, underpinning strong labour demand.

But employment in Victoria’s largest export industry – Education – continues to stagnate, as negative publicity and the persistently high Australian dollar encourages international students to shift their preferences away from Australia and places negative pressure on the export industry.

Furthermore, the labour market in Victoria has not directly benefited from the mining boom. Given its reliance on the Manufacturing and Retail industries, and the continuing weak outlook for these sectors, the labour market outlook for Victoria is not as optimistic as other states.

Despite a summer of natural disasters, the labour market in Queensland improved somewhat in the June quarter. Unemployment fell to 5.3 per cent and there was an increase in the number of total employed (13,000).

Queensland’s economy — and therefore labour market — incorporates sectors with vastly differing fortunes and prospects. Despite the likely implementation of a Carbon Tax, investment in the mining sector (and related sectors / regions) is likely to surge in the years to come.

The outlook for Queensland’s labour market will likely remain discrepant for some time. It is possible that steady indicators at the total level will mask a situation where the two broad sectors experience vastly differing fortunes.


Also, the massive re-build/repair job of regions that were damaged during the summer is underway and will continue for some time yet, providing economic impetus.

On the negative side, some sectors/regions face difficult conditions going forward. These include regions traditionally aligned with the tourism sector, sub-sectors of manufacturing with an external (non-mining) focus and much of South-East Queensland (where the massive program of infrastructure investment is winding down and population growth is slowing).

Hence, the outlook for Queensland’s labour market will likely remain discrepant for some time. It is possible that steady indicators at the total level will mask a situation where the two broad sectors experience vastly differing fortunes.

The unemployment rate in Western Australia remains low, dropping further to 4.2 per cent in the June quarter, reflecting the state’s robust economy, driven primarily by growth in the mining sector.

In addition to lower unemployment, improvements were also seen in total employment (almost 14,000 jobs added) and the participation rate (a very healthy 68.7 per cent).

While the mining and construction sectors continue to drive employment growth in WA, other sectors including retail trade and education also made strong contributions to the June quarter result.

However, continued growth in sectors such as these could become difficult to achieve in the years to come.

There is also the possibility of skills shortages in these sectors. The main factors here are the already-very-high participation rate, hesitancy from many ‘east’ Australians to ‘follow the jobs’ to WA as well as the likely continuance of very strong economic growth in India and China, both countries which rely on commodities from WA for their ongoing development.

NSW VIC QLD WA AUST

June 2004 5.4 5.3 5.6 5.1 5.5

June 2005 5.0 5.2 4.7 4.7 5.0

June 2006 5.3 5.0 4.5 3.4 4.8

June 2007 4.6 4.6 3.6 3.7 4.3

June 2008 4.6 4.6 3.8 3.2 4.2

June 2009 6.4 6.1 5.5 5.4 5.8

June 2010 5.2 5.4 5.3 4.1 5.1

June 2011 5.2 4.6 5.3 4.2 4.9

Unemployment Rates by State (per cent)

Source: ABS, Labour Force Australia, Tables 2, 4, 5, 6 and 8, Labour force status by State, seasonally adjusted, June 2011.


1. Metal Tradespersons 108.9

2. Chefs 106.6

3. Automotive Tradespersons 106.1

4. Wood Tradespersons 103.2

5. Food Tradespersons 102.2

6. Hairdressers 101.6

7. Computing Professionals 101.1

8. Construction Tradespersons 100.7

9. Building and Engineering 100.3Associate Professionals

10. Building and Engineering 99.9Professionals


2. Chefs 105.5

3. Auditors 103.3







10. Building and Engineering 100.1 Professionals

Top Ten Occupations with the Highest Levels of Skills Shortages

March 2011 June 2010


2. Chefs 105.3




6. Hairdressers 101.1


8. Building and Engineering 100.3 Professionals



June 2011


Generational ComparisonsThe major generational movement in the June quarter was a fall of 68,000 in the 15-24 age bracket.

In terms of movements, the labour force in the 25-54 age bracket fell slightly (14,000) in the June quarter, while an increase of 18,000 in mature-aged workers just offset this.

The breakdown showed that 66 per cent of those employed in Australia were aged between 25 and 54 years.

Those in the younger 15-24 age bracket made up a smaller proportion of the labour force (18 per cent) followed closely by mature-aged workers aged 55 and over (17 per cent).

The share of the 55+ age group has increased over the last two quarters and is still significantly larger than its share of the labour force 20 years ago, despite the first ‘Baby Boomer’ retirements.

Retaining matured aged employees in the workforce continues to be an important priority for employers, as these workers bring significant skills, knowledge and experience to their organisations.

Source: ABS, Labour Force Australia, Table 01, Labour force status by Social marital status, Age and Sex, Catalogue Number 6291.0.55.001, June 2011.

15-24

25-54

55+

7907, 66%

2119, 18%2000, 17%

Labour Force by Age Group, June Quarter 2011 (‘000 persons, %)

Retaining matured aged employees in the workforce continues to be an important priority for employers, as these workers bring significant skills, knowledge and experience to their organisations.


Methodology, Definitions and References

Methodology

The Clarius Group – KPMG Econtech Labour Skills is calculated as: Labour Demand

Labour Supply

Where:

Labour demand = number of skilled employed persons + number of skilled job vacancies

Labour supply = number of skilled employed persons + number of skilled unemployed persons

The number of skilled employed persons is based on ABS employment by occupation data (catalogue number 6291.0.55.003, Labour Force, Australia, Detailed, Quarterly, August 2009).

The number of skilled unemployed persons is based on ABS unemployment by occupation data (catalogue number 6291.0.55.003, Labour Force, Australia, Detailed, Quarterly, August 2009). Those included in the ‘worked more than two years ago’ and ‘never worked for 2 weeks or more’ categories are separated into occupations, using the same profile as the unemployed persons who are assigned occupations.

The number of skilled job vacancies is based on DEEWR job vacancy data (State Occupation Counts data). The DEEWR data is based on job vacancies that are advertised in newspapers. To account for vacancies that are advertised on the internet, the vacancy data is adjusted by a coverage factor. Job vacancies for computing professionals are dominated by internet advertising and so are treated differently.

The original index is seasonally adjusted using seasonal factors that are estimated over the time period 2001 to 2009.

Forecasting the Skills Index

This report and methodology is an expansion of the Clarius Group – KPMG Econtech Labour Skills index.

The Clarius Skills Index uses the latest data from the ABS and DEEWR to provide a detailed analysis of current and past labour market conditions. Using KPMG Econtech’s economic forecasting expertise, we have developed a methodology to consider future labour market conditions, taking into account the latest economic developments.

KPMG Econtech’s macroeconomic model, MM2 provides us with detailed forecasts of the Australian economy, broken down into 19 different industries of production. From the ABS, we also have a detailed picture of how employment of accountants and auditors is distributed across those 19 industries. Combining these two allows us to forecast the levels of future employment for accountants and auditors.

Labour demand is defined as employment plus unfilled job vacancies. To forecast the number of job vacancies, KPMG Econtech have used statistical regression methods to examine which economic variables have a strong underlying relationship with the number of job vacancies. The economic variables which were found to best explain movements in the number of job vacancies are:

• The change in the level of employment from one period to the next;• The growth rate in the industry-weighted level of production for accountants and auditors; and • The number of job vacancies in the previous period.

KPMG Econtech’s MM2 model provides us with the necessary economic forecasts to derive forecasts for job vacancy figures, and thus forecast total labour demand.

Labour supply is defined in the skills index methodology as employment plus the number of skilled unemployed persons. The major underlying drivers for growth in the labour supply are the participation rate, population growth and education levels. MM2 forecasts the labour force, split into employed and unemployed persons, using a sophisticated methodology which takes into account these underlying economic drivers.

The ABS labour force data gives us information on the last known occupation for unemployed persons. A proportion of the unemployed persons in the ABS labour force statistics have no known last occupation. This group is assumed to have a similar occupational breakdown to those for whom the last occupation is known.

Putting the ABS data on unemployment together with the MM2 forecasts of unemployed persons allows us to derive forecasts of the number of unemployed accountants and auditors.

Together with the employment forecasts, the unemployment figures provide a forecast of the future labour supply for accountants and auditors. The labour supply and demand forecasts are compared using the same methodology as the Clarius Skills Index, thus providing us forecasts of the skills index for accountants and auditors.

For more detailed information on KPMG Econtech’s MM2 economic forecasting model, please refer to appendix 2.

The Clarius Skills Index uses the latest data from the ABS and DEEWR to provide a detailed analysis of current and past labour market conditions. Using KPMG Econtech’s economic forecasting expertise, we have developed a methodology to consider future labour market conditions, taking into account the latest economic developments.


Appendix 1 - The Murphy Model 2 (MM2)

Econtech’s forecasting tool, Murphy Model 2 (MM2), is Australia’s leading national, industry and state forecasting model. It has a highly respected forecasting track record and is used by Federal and State Governments, industry associations, financial institutions and major companies. Subscriptions to forecasting reports and Windows-based forecasting software are available.

Development

The original Murphy Model was developed by Chris Murphy, after ten years of experience in macroeconometric modelling at the Australian Treasury, Economic Planning Advisory Council, and the Australian National University. In 1988, Chris published the first version of the Murphy Model in Australian Economic Papers, and it was soon recognised as Australia’s leading macro model.

In 1994, the first major redevelopment of the model was undertaken to distinguish 12 industry sectors. This marked the introduction of the Murphy Model 2 (MM2), a fully integrated macro and industry model.

In 1995, under contract to two state treasuries, the MM2-States was developed as an extension to MM2. The MM2-States allocates a number of MM2’s key outputs across the eight Australian States and Territories.

In the same year, the current version of MM2-Demographic was developed under contract to the Australian Bureau of Immigration Research. Using assumptions for fertility, mortality, overseas and interstate migration, it generates consistent state and national population scenarios.

In 1996, the MM2 was further developed to expand the sectoral detail from 12 sectors to the 18 sectors corresponding to the Australian and New Zealand Standard Industrial Classification (ANZSIC) industry divisions. The linkages between the three models are illustrated below.


Demographic Assumptions:Fertility, Net Overseas Migration, Net Interstate Migration

National Population Projection

MM2-Core & Judgmental Adjustments

National & Industry Economic Projection

MM2-States & Judgmental Adjustments

Rest-of-World Assumptions; Government

Policy Assumptions

States Economic Projection

States Population Projections

MM2-Demographic

Features

MM2 is a state-of-the-art, fully-integrated macro-industry model with the following features:

• Produces quarter-by-quarter nine-year-ahead forecasts;

• Forward-looking financial sector for realism;

• Keynesian short-run for forecasting; and

• Neoclassical long-run for policy analysis.

Documentation

Powell, A.A. and Murphy, C.W. (1997), Inside a Modern Macroeconometric Model - A Guide to the Murphy Model, Springer, Berlin, 2nd ed., 455pp.


DefinitionsEmployed: This includes people aged 15 and over who are working full time or part time. Employment represents labour demand.

Unemployed: This includes people aged 15 and over who are looking for full-time work or part-time work, or waiting to start a new job.

Unemployment rate: The number of unemployed persons expressed as a percentage of the labour force.

Labour Force: This includes the total number of people employed and unemployed (see above). The labour force represents labour supply.

Participation Rate: The percentage of the population aged 15 and over that is in the labour force.

Average earnings: The average gross (before tax) earnings of employees. It is estimated by dividing quarterly total earnings by the number of employees.

Science Professionals perform analytical, conceptual and practical tasks in relation to the chemical and physical properties of the universe, life forms including the physiology and biochemistry of humans, animals and plants, environmental factors and agricultural production, disease prevention and the extraction and processing of mineral ores. (ASCO 211)

Building and Engineering Professionals perform analytical, conceptual and creative tasks in relation to the design and function of structures, machines, production systems and resources or products and develop plans for related environmental and organisational concerns. (ASCO 212)

Accountant and Auditor Professionals plan and provide accounting, auditing and treasury systems and services to individuals and enterprises. The “auditors” classification in this publication also includes corporate treasurers and company secretaries. (ASCO 221)

Marketing and Advertising Professionals plan, develop, coordinate and implement programs of information dissemination to promote a favourable view of an organisation, products and services and represent companies in selling a range of goods and services. (ASCO 222)

Computing Professionals design and prepare software to meet specific requirements in all aspects of the computing environment, and control and audit the operation of computing facilities within an organisation. (ASCO 223)

Business and Information Professionals refers to miscellaneous business and information professionals not elsewhere classified. It includes human resource professionals, librarians, mathematicians, business analysts, property professionals and other business and information professionals. (ASCO 229)

Health Professionals diagnose and treat physical and mental illnesses and conditions and recommend, administer, dispense and develop medications and treatment to promote or restore good health. (ASCO 23)


Social Professionals provide social, vocational, spiritual and legal advice to clients and the community, communicate ideas and facts in a wide range of media, command and navigate aircraft and ships, and develop and implement policies regarding occupational health and safety and the conservation of materials and objects in museums and galleries. (ASCO 25)

Medical and Science Associate Professionals perform laboratory tests and other technical support functions to assist health professionals engaged in the diagnosis, monitoring and treatment of disease, and in research, design and production in all areas of the natural and physical sciences. (ASCO 311)

Building and Engineering Associate Professionals assist engineers and building professionals in research, design, construction, operation and maintenance of equipment, distribution systems and installations, and resource estimation and site inspection. (ASCO 312)

Chefs plan and organise the preparation and cooking of food in dining or catering establishments. Apprentice Chefs are excluded from this unit group. (ASCO 3322)

Mechanical and Fabrication Tradespersons cut, shape, cast, join and finish metal and metal parts and sub-assemblies, aircraft systems and precision instruments, excluding motor vehicles. (ASCO 41)

Automotive Tradespersons repair and maintain motor vehicle engines, electrical and electronic systems and bodies, paint vehicles, construct specialised vehicle bodies, and fit or replace interior trim and upholstery in vehicles. (ASCO 42)

Electrical and Electronic Tradespersons assemble, install, test and repair electrical and electronic systems and equipment, telecommunications and transmission equipment, refrigeration and air conditioning equipment, and electrical distribution networks. (ASCO 43)

Construction Tradespersons construct and repair buildings and other structures, provide plumbing, drainage and mechanical services, and apply final finishes such as painting and flooring. (ASCO 44)

Food Tradespersons perform the more complex tasks at various stages of food preparation, applying technical expertise and knowledge of the properties of food. (ASCO 45)

Printing Tradespersons compose and set type prior to printing, set up and operate printing presses, bind and finish printed products, or prepare stencils and operate screen printers. (ASCO 491)

Wood Tradespersons set up and operate woodworking machines and wood turning lathes to shape wood stock, fabricate, repair or finish wooden furniture and fit and assemble prepared wooden parts to make furniture, picture frames and other wood products. (ASCO 492)

Hairdressers cut, style, colour and treat hair. (ASCO 493)


ReferencesDepartment of Education, Employment and Workplace Relations, Vacancy Report Data, December 2010.

Australian Bureau of Statistics, Average Weekly Earnings, Australia, Catalogue Number 6302.0, August 2010.

Australian Bureau of Statistics, Labour Force, Australia, Catalogue Number 6202.0, December 2010.

Australian Bureau of Statistics, Labour Force, Australia, Detailed, Monthly, Catalogue Number 6291.0.55.001, November 2010.

Australian Bureau of Statistics, Labour Force, Australia, Detailed, Quarterly, Catalogue Number 6291.0.55.003, November 2010.

Australian Bureau of Statistics, Australian Standard Classification of Occupations, Second Edition, Catalogue Number 1220.0, 1997.

Australian Bureau of Statistics, Australian and New Zealand Standard Classification of Occupations, First Edition, Catalogue Number 1220.0, 2006.

ANZ, ANZ Job Advertisement Series, January 2011.



* Note that the skills index figures have been seasonally adjusted, whereas the Labour Demand and Supply figures are in original terms. For further information on how the index is calculated, please refer to “Methodology, Definitions and References” on page 39.

Clarius Skills Index by Occupation March Quarter 2011*



Dec 10 - Mar 11Labour Demand



less demand)

Mar 04 Mar 08 Mar 10 Dec-10 Mar 11 Mar 11 Mar 11 Mar 11 Mar 11

Professionals 98.8 102.3 99.3 99.2 99.3 0.2% 1996 2009 13.7

Science 98.5 101.8 99.4 99.4 98.9 -0.4% 95 96 1.0

Building and Engineering 100.2 105.0 100.9 100.3 99.9 -0.4% 202 202 0.2

Accountants 99.3 102.0 99.1 99.3 99.3 0.0% 178 179 1.3

Auditors 99.5 102.0 98.7 100.3 100.1 -0.2% 17 17 0.0

Marketing & Advertising 97.3 98.8 98.2 97.9 98.3 0.4% 119 122 2.1

Computing 99.8 104.1 100.7 100.7 101.1 0.4% 197 195 -2.2

Business & Information 97.6 99.7 98.6 98.4 98.7 0.3% 213 215 2.7

Health 99.5 104.4 99.6 99.6 99.6 0.1% 505 506 1.8

Social 97.9 100.3 98.6 98.2 98.6 0.4% 471 478 6.8

Associate Professionals 101.4 104.0 101.0 101.2 101.6 0.4% 247 243 -3.9

Medical & Science 98.1 100.3 97.7 97.8 97.3 -0.5% 47 49 1.3

Building and Engineering 99.8 101.8 100.5 100.1 100.3 0.2% 122 122 -0.4

Chefs 107.0 110.5 104.3 104.9 106.6 0.6% 78 73 -4.8

Tradespersons 99.3 104.7 100.2 101.0 101.8 0.8% 1211 1190 -21.2

Metal 102.8 115.4 105.8 105.6 108.9 3.1% 137 126 -11.3

Automotive 99.3 104.7 101.8 103.4 106.1 2.6% 144 136 -8.3

Electrical & Electronics 97.7 101.5 97.2 97.4 98.5 1.1% 309 314 4.7

Construction 99.0 103.6 100.2 101.2 100.7 -0.6% 408 405 -2.6

Food 98.8 105.3 99.9 101.6 102.2 0.6% 89 87 -1.9

Printing 98.7 103.9 97.2 97.2 97.9 0.7% 26 26 0.6

Wood 100.0 107.5 101.8 101.4 103.2 1.8% 41 40 -1.3

Hairdressers 100.9 104.6 101.4 101.6 101.6 0.0% 58 57 -0.9

All 99.2 103.3 99.7 99.9 100.3 0.4% 3453 3442 -11.0


Clarius Skills Index by Occupation December Quarter 2010*



Sep – Dec 10Labour Demand



less demand)

Dec-03 Dec-07 Dec-09 Sep-10 Dec-10 Dec 10 Dec 10 Dec 10 Dec10

Professionals 98.8 101.6 99.0 99.4 99.2 -0.2% 1916 1932 16.2

Science 98.4 101.2 98.7 99.2 99.4 0.2% 92 93 0.6

Building and Engineering 100.2 104.1 100.2 100.5 100.3 -0.2% 196 196 -0.6

Accountants 99.1 101.4 98.7 98.9 99.3 0.3% 162 163 1.2

Auditors 99.0 98.8 98.4 98.6 100.3 1.7% 13 13 0.0

Marketing & Advertising 97.4 98.6 97.4 98.4 97.9 -0.6% 119 122 2.6

Computing 99.6 103.5 99.7 101.4 100.7 -0.7% 189 188 -1.4

Business & Information 97.9 99.3 97.7 98.8 98.4 -0.4% 209 212 3.4

Health 99.6 103.4 100.1 99.5 99.6 0.1% 481 483 2.1

Social 97.9 100.0 98.3 98.7 98.2 -0.5% 456 464 8.3

Associate Professionals 99.6 105.2 100.9 102.7 101.2 -1.4% 256 253 -3.0

Medical & Science 97.0 99.3 97.5 98.6 97.8 -0.8% 44 45 1.0

Building and Engineering 98.5 103.7 100.2 100.8 100.1 -0.8% 132 132 -0.1

Chefs 103.3 111.4 104.6 108.5 104.9 -3.3% 81 77 -3.8

Tradespersons 98.7 104.2 98.4 102.2 101.0 -1.2% 1217 1205 -11.6

Metal 102.2 113.2 100.3 108.0 105.6 -2.2% 139 131 -7.4

Automotive 98.7 103.7 100.0 104.5 103.4 -1.0% 153 148 -5.1

Electrical & Electronics 97.2 100.6 96.2 98.1 97.4 -0.7% 297 305 7.9

Construction 98.2 103.6 97.9 102.7 101.2 -1.5% 409 404 -4.9

Food 98.3 105.3 100.1 102.7 101.6 -1.1% 92 91 -1.5

Printing 98.0 104.0 96.7 98.0 97.2 -0.8% 28 29 0.8

Wood 99.0 106.6 101.1 103.6 101.4 -2.1% 36 35 -0.5

Hairdressers 101.0 104.7 99.9 102.7 101.6 -1.1% 63 62 -1.0

All 98.8 102.8 98.9 100.6 99.9 -0.7% 3389 3391 1.8


* Note that the skills index figures have been seasonally adjusted, whereas the Labour Demand and Supply figures are in original terms. For further information on how the index is calculated, please refer to “Methodology, Definitions and References” on page 39. Clarius Skills Index June Quarter | 47

Head Office Level 14, 1 York Street Sydney NSW 2000 T: +612 9250 8100 F: +612 9247 7930

Adelaide Level 12, 108 King William Street Adelaide SA 5000 T: +618 8223 3886 F: +618 8223 6466

Brisbane Ground Floor, 52 McDougall Street Milton QLD 4064 T: +617 3217 6966 F: +617 3217 6933

Canberra Suite 2G, 65 Canberra Avenue Griffith ACT 2603 T: +612 6260 7533 F: +612 6260 7545

Melbourne Level 14, 333 Collins Street Melbourne VIC 3000 T: +613 9832 8000 F: +613 9832 8008

PerthLevel 3, 191 St. Georges Terrace, Perth WA 6000 T: +618 9322 6200 F: +618 9418 5001

Sydney Level 14, 1 York Street Sydney NSW 2000 T: +612 9250 8100 F: +612 9247 7930

AucklandLevel 16, 1 Queen Street Auckland 1010 T: +649 309 6534 F: +649 309 3525

Wellington Level 9, 3-11 Hunter Street Wellington 6011 T: +644 473 9149 F: +644 460 8676

Hong Kong 2403A World Trade Centre 280 Gloucester Road Causeway Bay, Hong Kong T: +852 3187 8787 F: +852 2895 5311

Parramatta Level 7, 3 Horwood Place Parramatta NSW 2150 T: +612 8820 1100 F: +612 8820 1111

SydneyLevel 5, 1 York Street Sydney NSW 2000 T: +612 8295 3000 F: +612 9299 9676

MelbourneLevel 14, 333 Collins Street Melbourne VIC 3000 T: +613 8319 7800 F: +613 8319 7815

Mt Waverley Suite 32, 1 Ricketts Road Mount Waverley VIC 3149 T: +613 9543 4977 F: +613 9543 9255

BrisbaneLevel 4, 359 Queen Street Brisbane QLD 4000 T: +617 3051 3600 F: +617 3051 3699

PerthSuite 4, 1 Scarborough Beach Road North Perth WA 6006 T: +618 9201 7777 F: +618 9201 7778

Brisbane Level 14, 500 Queen Street Brisbane QLD 4000 T: +617 3121 5200 F: +617 3121 5222


Mt Waverley Suite 32, 1 Ricketts Road Mount Waverley VIC 3149 T: +613 9543 4999 F: +613 9543 9255

SydneyLevel 5, 1 York Street Sydney NSW 2000 T: +612 9225 3700 F: +612 9225 3766

Beijing Room 1707, 17/F, 19 North Road, East Third Ring Road, Chaoyang District, Beijing 10002 T: +86 10 6591 6531 F: +86 10 6461 4942

Hong Kong 2403A World Trade Centre 280 Gloucester Road Causeway Bay, Hong Kong T: +852 2895 5282 F: +852 2577 5902

Shanghai 501 Pacheer Commercial Centre 555 Nan Jing West Road Shanghai 200041 T: +86 21 5213 6808 F: +86 21 5213 6895

Sutherland862-868 Old Princes Highway (PO Box 142) Sutherland NSW 2232 T: +612 9542 3011 F: +612 9542 1977





Canberra Suite 2G, 65 Canberra Avenue Griffith ACT 2603 T: +612 6260 8741 F: +612 6295 9337

MelbourneLevel 14, 333 Collins Street Melbourne VIC 3000 T: +613 8319 7899 F: +613 8319 7877




Sydney Suite 1, 13 Sirius Road Lane Cove NSW 2066 T: +612 9422 6888 F: +612 9418 9955

www.clarius.com.auClarius Group incorporates:

As part of Clarius Group’s ongoing commitment to the environment, we aim to ensure that we conserve resources, use energy efficient equipment, recycle and

act to reduce our environmental impact wherever possible.

The Clarius Skills Index is printed on Monza Recycled stock which contains 55% recycled fibre (25% post consumer and 30% pre consumer) and 45% elemental

chlorine free pulp. All virgin pulp is derived from well-managed forests and controlled sources. It is manufactured by an ISO 14001 certified mill.

Documents

June Quarter Prepared by KPMG Econtech July 2011images.jxt.net.au/clarius/pdf/2011 06 Clarius Skills... · 2017-11-02 · Lloyd Morgan, SouthTech and The One Umbrella businesses,