A recent report documents how the Australian Federal Government has deliberately oversupplied the engineering labour market since 2012-13. Despite a huge fall in the number of job vacancies for engineers since then, the Government has maintained engineering immigration at close to resource boom levels. This has been damaging to both Australian and recent migrant engineers.
A comprehensive analysis of demand and supply for the Australian engineering labour market is now available.
Summary
Background
Over the last five years, the Australian Federal Government has deliberately created a major oversupply in the engineering labour market. The evidence to demonstrate this, the reasons driving the strategy, and the means to bring the market back into balance are discussed in a recent report released in 2017.
In the two phases of the resources boom, which occurred in 2004-08 and 2010-12, demand for engineers was exceptionally strong. During these boom years, immigration provided an important source of engineering labour. Following the second phase of the resources boom, as demand for engineers fell sharply, the engineering labour market arrived at a point where, according to Government assessments, there was no shortage of engineers in most engineering occupations. This was in 2012-13.
After that time, the total number of job vacancies for engineers plummeted to a low in January 2015 of just 21% of what it was during the peak of the second phase of the resources boom. By September 2018, the number of vacancies had risen to 48% of the previous peak. For most engineering occupations, vacancies in September 2018 were between 29% and 59% of their monthly peak in 2011. The most sustained increase in vacancies in recent years has occurred for Civil Engineering Professionals (see Figure 1).
Even with the dramatic fall in demand for engineering labour over the last five years, the Federal Government has continued to maintain very high levels of engineering immigration. This is despite the Department of Jobs and Small Business' successive five-year forecasts which have predicted that employment prospects for engineering occupations will range from bleak to subdued. The outlook has been more consistently positive for Civil Engineering Professionals.
Figure 1
Job Vacancies for Engineers in Australia
Job Vacancies for Engineers in Australia
The information on this website and in the report on which it is based is focused specifically on the 21 engineering occupations in the Australian and New Zealand Standard Classification of Occupations (ANZSCO) Minor Group '233 Engineering Professionals'. This Minor Group is made up of seven Unit Groups (see Table 1 below) into which the individual occupations are categorised. A full list of the 21 occupations is contained in Appendix 1 of the report.
Oversupply
The number of applicants per engineering vacancy more than tripled between 2011-12 and 2015-16 as the many unemployed and underemployed professional and graduate engineers, as well as those displaced into other occupations, sought to find a suitable place in the engineering workforce. The number of applicants per engineering vacancy in 2016-17 was higher than for any other profession or trade monitored by the Department of Employment: 39.9 applicants per engineering vacancy compared with the average for all professions of 13.5 applicants per vacancy.
The huge oversupply has been created as a result of the Government granting points-tested visas to large numbers of migrant engineers. These visas are divorced from labour market demand. In contrast, engineering employers have used employer-nominated visas responsibly since the decline of the second phase of the resources boom. The graduate market is vastly oversupplied even when only Australian graduates are taken into account.
Table 1 documents three measures of oversupply for 2016-17.
Table 1
Measures of Oversupply for Engineering Unit Groups for 2016-17
** This is known to be an underestimate.
In Table 2, engineering Unit Groups are ranked according to their relative degree of oversupply. A ranking of 1 indicates the greatest oversupply, and a ranking of 7 indicates the least oversupply.
In Table 2, engineering Unit Groups are ranked according to their relative degree of oversupply. A ranking of 1 indicates the greatest oversupply, and a ranking of 7 indicates the least oversupply.
Table 2
Ranking of Engineering Unit Groups by
Degree of Oversupply
Reasons
The Federal Government has persisted with the deliberate oversupply of the engineering labour market for two main reasons. The first is to help meet its massive annual immigration targets, designed to bolster short-term gross domestic product following the decline of the second stage of the resources boom. Engineers, along with information & communication technology (ICT) professionals and accountants, have been targeted by the Government to make up a disproportionately large percentage of the skilled migration program, particularly the permanent migration component. These three professional groups are easy targets because they are largely non-unionised, and they are not part of the core constituencies of the major political parties.
The second reason is to satisfy the incessant, self-interested demands of the business, migration and university sectors.
Solutions
The solution to the major oversupply of the Australian engineering labour market is to stop the vast majority of engineering immigration until the market is brought back into balance. This will allow time for unemployed, underemployed and displaced engineers to be absorbed into suitable positions in the workforce. This will benefit Australian professional engineers, Australian graduate engineers, and recent migrant engineers who have been granted permanent residency.
To achieve this, the most important step is for the Federal Government to remove all engineering occupations associated with the Unit Groups in Table 1 from a key version of the Medium and Long-term Strategic Skills List (MLTSSL), known prior to April 2017 as the Skilled Occupation List (SOL). This will prevent access to visas in the following categories:
- Independent (subclass 189 visa)
- Family nominated (subclass 489 visa)
- State and Territory Government nominated (subclass 190 and subclass 489 visas)
- Temporary graduate (subclass 485 (Graduate Work Stream)).
The first three of these visas are points-tested visas that are not in any way focused on labour market demand. They are simply 'population-booster' visas kept in place by the Federal Government to help meet its massive annual immigration targets.
With the current substantial oversupply of Australian engineering graduates, there is no justification for allowing international graduates to have access to the Australian engineering labour market. The subclass 485 (Graduate Work Stream) visa only serves as a holding visa for migrant engineers seeking to obtain a subclass 189 permanent residence visa.
The evidence is that engineering employers have behaved responsibly in the use of employer-nominated visas during the difficult conditions of the last five years. Access to the following employer-nominated visas should remain:
- Subclass 482 Temporary Skills Shortage (TSS) visa
- Subclass 186 permanent residence visa.
See the ‘Visa Maps’ page on this website for comprehensive information about how the skilled migration program is structured.
At present no engineering occupations associated with the Unit Groups in Table 1 are listed on any versions of the Short-term Skilled Occupation List (STSOL), known prior to April 2017 as the Consolidated Sponsored Occupation List (CSOL). All engineering occupations should remain off the STSOL until such time as there is reliable evidence of emerging labour skills shortages.
Access should also be removed to another two visa subclasses which do not require occupations to be listed on the MLTSSL or STSOL. These are the subclass 485 (Post-Study Work Stream) temporary residence visa and the subclass 476 temporary residence visa, both of which – subject to specific requirements – allow international students access to the Australian engineering labour market. Access to these visas should cease until there is reliable evidence that there is sufficient engineering labour market demand to accommodate all Australian and at least some international engineering graduates.
The current focus of the MLTSSL on including occupations based on the skills needs of the economy in four-to-ten year’s time is irrational. Apart from the fact that it is not possible to make accurate labour market predictions for individual occupations so far in advance, the concept of bringing in migrant workers now to meet demand in four-to-ten years' time defies the reality of the labour market. In the case of engineering occupations, most of which are substantially oversupplied, the ongoing influx of immigrant engineers creates and entrenches unemployment and displacement from the profession. Once an engineer has not been able to practice in the profession for a few years, the probability of being able to return to the profession is low due to the recruitment preferences of employers. Given that migrant engineers can effectively be brought into Australia ‘on tap’ within a couple of months on the subclass 482 Temporary Skills Shortage (TSS) visa, the focus of the MLTSSL for engineering and other occupations should be changed to address occupational skills needs only up to two years into the future.
Other issues discussed in the report
- Impact of the oversupply on domestic university engineering graduates (Section 11)
- Impact on migrant engineers (Section 12)
- Critical review of Engineers Australia's 2015 and 2016 submissions to the Federal Government's annual review of the Skilled Occupation List (Section 13)
- Critical review of the Australian Council of Engineering Deans' 2016 submission to the Federal Government's annual review of the Skilled Occupation List (Section 14)
- Vacancy and oversupply graphs for each engineering Unit Group (Appendices)
- Impact of the oversupply on domestic university engineering graduates (Section 11)
- Impact on migrant engineers (Section 12)
- Critical review of Engineers Australia's 2015 and 2016 submissions to the Federal Government's annual review of the Skilled Occupation List (Section 13)
- Critical review of the Australian Council of Engineering Deans' 2016 submission to the Federal Government's annual review of the Skilled Occupation List (Section 14)
- Vacancy and oversupply graphs for each engineering Unit Group (Appendices)
Sources
Figure 1
Department of Jobs and Small Business, 2018, IVI Detailed Occupation Data - March 2006 Onwards. Available on the Department's Labour Market Information Portal.
Tables 1 and 2
Author's June 2018 submission to the Department of Jobs and Small Business about the composition of the skilled migration occupation lists. Available at:
https://engineeroversupply.weebly.com/submissions.html