Recently released government projections for the engineering workforce up to May 2023 indicate that, depending on the Unit Group, the market will be at best subdued and at worst poor.
The predictions for the workforce size of engineering Unit Groups by the Department of Jobs and Small Business (DJSB) can be found here under ‘Occupation projections’: http://lmip.gov.au/default.aspx?LMIP/EmploymentProjections and in graphical form here: https://engineeroversupply.weebly.com/workforce.html The predicted annual growth rate over the next five years for each of the seven engineering Unit Groups is: 2331 Chemical and Materials Engineers 2.1% per annum 2332 Civil Engineering Professionals 2.6% per annum 2333 Electrical Engineers -0.5% per annum 2334 Electronics Engineers -1.0% per annum 2335 Industrial, Mech. and Prod. Engineers -1.5% per annum 2336 Mining Engineers -1.2% per annum 2339 Other Engineering Professionals 3.2% per annum The predicted overall growth rate for ANZSCO Minor Group 233 ‘Engineering Professionals’ is 1.0% per annum. Compared with last year’s projections, the outlook has worsened for Mining Engineers; Industrial, Mechanical and Production Engineers; Electronics Engineers; Electrical Engineers; and Civil Engineering Professionals, although for this latter group the expected growth rate is still positive. The outlook has improved for Other Engineering Professionals, which is a mixed group of unrelated engineering occupations. It has also improved for Chemical and Materials Engineers. It should be noted that it is almost impossible to predict the workforce size for individual occupations or Unit Groups more than two years in advance, as can be seen from the graphs of DJSB predictions for the last three years at: https://engineeroversupply.weebly.com/workforce.html In September 2018, the Department of Jobs and Small Business (DJSB) released the results of its annual survey of employers about their recruitment experiences. This survey is used by the DJSB to determine whether selected occupations do or do not have a shortage of skills. The findings were that after five years of no skills shortages, there are now widespread shortages of appropriately qualified and experienced civil engineering professionals in Australia; shortages of appropriately qualified and experienced mechanical engineers in two States; and no shortages of either electrical or mining engineers. Other engineering occupations were not evaluated. See:
docs.jobs.gov.au/collections/engineering-professions-labour-market-research-reports According to DJSB, demand for civil engineering professionals has been driven by strong non-residential and infrastructure construction. This has been gathering pace over the last couple of years and, as assessed by the author of this website, civil engineering professionals have experienced the least oversupply. The localised shortage of mechanical engineers is in the context of increased demand from the manufacturing and construction industries in NSW, and from engineering and building construction in South Australia. Although the number of applicants per engineering vacancy has decreased over the last two years, engineering vacancies still attract more applications than most other professions. See: engineeroversupply.weebly.com/applicants.html The general comment from DJSB was that engineering vacancies received large numbers of qualified candidates, but that 80% of these were deemed unsuitable by employers. This was primarily because applicants had insufficient experience in the industry sector or specialisation relating to the job, or they lacked the employability skills (eg. communications skills) required to do the job. In its Skill Shortage Research Methodology available at docs.jobs.gov.au/documents/skill-shortage-research-methodology-0 DJSB notes that: “The research provides an indication of employers’ experience recruiting skilled workers at a particular time. The labour market can change quickly and employers’ needs may be very specific in terms of the breadth and depth of skills and experience. Shortages are typically for specialised and experienced workers, and can co-exist with relatively high unemployment overall or within the occupation. A rating of shortage does not mean that every job seeker in that occupation will readily find employment, even if they have relevant skills and experience.” This is consistent with skill shortages emerging in a hugely oversupplied engineering labour market. Most migrant engineers are brought in on the subclass 189 skilled independent ‘population-booster’ visa. They are not required to have any particular amount of experience in any particular industry, and they are not required to live in any particular location. In contrast, employers need engineers with experience in specific industries who are available to work in specific locations. Employers have always had access to the subclass 457 visa (now replaced by the subclass 482 visa), and they still do. They should be addressing skills shortages through the use of this visa. The other side of the coin is that in a labour market which is significantly skewed in favour of employers, those same employers become increasingly fussy about satisfying long wish-lists of desirable qualities for successful job candidates, who ideally need no training in any aspect of the job. The evidence is that an employer’s definition of ‘suitable’ for job applicants depends very much on labour market conditions. In an environment where skill shortages exist, over time engineering employers tend to relax stringent role requirements and find a higher proportion of applicants to be ‘suitable’. It is not until engineering migration is restricted to employer-nominated visas (the subclass 482 temporary visa and the subclass 186 permanent visa) that the oversupply of the engineering labour market will stop. The significant number of Australian and migrant engineers who are currently unemployed or displaced from their profession, and who want to return to their profession, will have the best chance of being absorbed back into engineering when the subclass 189, 190, 476, 485 and 489 visas are no longer open for engineering immigration. In May and June 2018, the Department of Jobs and Small Business (DJSB) undertook its six monthly review of the skilled migration occupation lists (SMOLs) to determine which occupations would be included on the lists and therefore open for skilled migration. DJSB commenced its consultation process by holding secretive discussions with vested interests such as industry groups and peak professional bodies. It then applied its points-based scoring system to a selection of labour market parameters for each occupation, and made ‘traffic light’ recommendations about which occupations should be included on, or excluded from, the SMOLs. The general public was invited to make submissions about the recommendations before the consultation process finished later in June.
In October 2017 the DJSB received nearly 70 submissions about its draft methodology for evaluating how occupations should be assessed for inclusion or exclusion from the SMOLs. It ignored all the feedback in these submissions, and proceeded to use the draft methodology in its consultation process in May/June 2018. The draft methodology has major flaws:
On top of this, DJSB makes recommendations about one ‘generic’ version of the Medium and Long-term Strategic Skills List, even though five different versions exist in the legislation. The versions of the MLTSSL for employer-nominated visas (in legislative instruments IMMI 18/048 and IMMI 18/049) have a vastly different labour market impact than the version of the MLTSSL for points-tested migrants (in IMMI 18/051). The methodology takes no account of this. The MLTSSL is the only one of the SMOLs on which engineering occupations are included. Not surprisingly, for engineering occupations DJSB recommended that the status quo should be maintained, ie. all 21 engineering occupations should remain on the MLTSSL. This was virtually a pre-determined outcome given the role the Federal Government has played in planning, implementing and maintaining the oversupply of the engineering labour market over the last five years. The DJSB methodology is so skewed and lacking in transparency that it can only be concluded that it is designed to achieve a political outcome, rather than provide any kind of objective assessment of the state of the labour market for individual occupations. The June 2018 submission by the author of this website to the DJSB as part of the consultation process can be viewed here: https://engineeroversupply.weebly.com/submissions.html The author’s May 2018 review of the DJSB methodology and points-scoring system can be found at the same link. As promised by the Federal Government in April last year, the notorious Temporary Work (Skilled) subclass 457 visa for migrants sponsored by an employer has been replaced by the Temporary Skills Shortage (TSS)(subclass 482) visa, which has a two-year stream and a four-year stream. The change occurred in March 2018.
Because engineering occupations are only listed on the Medium and Long-term Strategic Skills List (MLTSSL), only the four-year visa is available for engineering migrants who are sponsored for this visa by an employer. Applications for permanent residency can be made after three years in the four-year visa stream. See the visa maps on this website for more information: http://engineeroversupply.weebly.com/visa_maps.html On 16th January 2018, the Department of Home Affairs released updated versions of the Medium and Long-term Strategic Skills List (MLTSSL) and the Short-term Skilled Occupation List (STSOL). There were no changes to the listings of engineering occupations.
For independent and family nominated migrant engineers, 18 out of 21 occupations in ANZSCO Minor Group ‘233 Engineering Professionals’ are listed on the MLTSSL. The exceptions are: 233611 Mining Engineer (excluding Petroleum) 233612 Petroleum Engineer 233999 Engineering Professionals (not elsewhere classified). The 18 occupations on this version of the MLTSSL are also available for State and Territory Government nominated visas. For permanent and temporary employer nominated visas, all 21 engineering occupations are listed on the respective versions of the MLTSSL. These listings mean that migrant engineers still have virtually unhindered access to the Australian engineering labour market, which remains very poor apart from an upturn in demand for some civil engineering occupations over the last three years. For more details, see the Visa Maps page on this website, or click the link below: http://engineeroversupply.weebly.com/visa_maps.html In September 2017, it was announced by the Department of Employment (DoE) that it was assuming responsibility for reviewing which occupations should be included in the skilled migration occupation lists, ie. the Medium and Long-term Strategic Skills List (MLTSSL) and the Short-term Skilled Occupation List (STSOL). Previously the review was done by the Department of Education and Training (for the MLTSSL) and the Department of Immigration and Border Protection (DIBP) (for the STSOL). DIBP still has the final say on the composition of both lists.
DoE commenced with a public consultation period on the draft of the methodology it would use to determine the composition of the lists. It proposed that there should be primary and secondary labour market factors which should be taken into account. Incredibly, DoE omitted from its analysis important, statistically valid data such as the number of permanent visas previously awarded for individual occupations. In engineering, this has been a major factor contributing to the oversupply. DoE’s proposed methodology can be viewed here: https://docs.jobs.gov.au/documents/skilled-migration-occupation-lists-proposed-methodology The submission by the author of this website about the shortcomings of the methodology can be viewed here: https://docs.jobs.gov.au/0007-jim-oakley In November 2017 the DoE issued a ‘traffic light bulletin’ indicating its recommendations for the occupations to be included on both skilled migration occupation lists. Submissions were sought from stakeholders and the general public on the recommendations. No engineering occupations were recommended to be placed on the STSOL, but all engineering occupations were recommended to remain on the MLTSSL. The DoE stated that: “There were substantial changes to the skilled migration occupation lists in April and July 2017. Therefore, the Government has prioritised continuity and stability. For this reason, no changes have been proposed for the medium and long-term strategic skills list at this time”. For engineering occupations in ANZSCO Minor Group ‘233 Engineering Professionals’, there were no substantial changes during 2017. Nearly all engineering occupations have remained continuously on the MLTSSL and its predecessor the Skilled Occupation List (SOL) for years, and this has been the primary cause of the massive oversupply of the engineering labour market since 2012-13. The final lists will be legislated by the Department of Immigration and Border Protection (DIBP) in January 2018. The DoE’s traffic light bulletin can be viewed here: https://docs.jobs.gov.au/documents/traffic-light-bulletin The submission by the author of this website can be viewed on the ‘Submissions’ page of this website. http://engineeroversupply.weebly.com/submissions.html and on the website of the Department of Jobs and Small Business: docs.jobs.gov.au/0423-jim-oakley Note: In December 2017, DoE changed its name to the Department of Jobs and Small Business. DIBP was absorbed into the larger Home Affairs department in the same month. As reported in the News post dated 6th August 2017, at the beginning of July six of the most heavily oversupplied engineering occupations were removed by the Government from the list of occupations requiring market testing before a for 457 visa can be granted to a migrant. The occupations were:
233111 Chemical engineer 233112 Materials engineer 233411 Electronics engineer 233511 Industrial engineer 233513 Production or plant engineer 233612 Petroleum engineer. For these occupations, this meant that employers did not have to advertise jobs in the general market; rather, they could employ migrant engineers directly. Following complaints by the author of this website to the Department of Immigration and Border Protection (DIBP), the six engineering occupations were returned to the list in November 2017. Now 20 of 21 engineering occupations require market testing before a 457 visa can be granted. The exception is 233213 Quantity surveyor. See: www.homeaffairs.gov.au/visas/Pages/general-guide-to-457-programme-occupations-which-are-not-exempt-from-labour-market-testing.aspx In September 2017, the Department of Employment released its projections for growth in occupational workforces from May 2017 to May 2022. It was predicted that the workforce for ANZSCO Minor Group ‘233 Engineering Professionals’ would grow from 146,200 in 2017 to 159,900 in 2022, an increase of 13,700. This allows a quick calculation of supply and demand for engineers in Australia to be done on a per annum basis. The results are presented in the table below. Notes
- Numbers are based on 2015 or 2015-16 data. It is likely that 2017 supply data will be greater. - The total for international graduates assumes only 30% are granted subclass 485 work visas. The actual percentage is likely to be higher. The Government does not release this data. - Some international graduates may obtain a permanent residence visa or a 457 visa within a year of graduation. - An assumed unemployment rate of 5% represents 7,310 engineers. Displacement from the profession is likely to be at least this much. Some unemployed engineers eventually become displaced engineers. - Retirements assume that 19.3% of the workforce is over the age of 55, and that 60% of those over 55 retire in the next five years. The percentage of the engineering workforce aged 55 or over is actually lower (see Table 13 in the report available on this website). 19.3% is the highest reported value for an engineering Unit Group. *Note that redundancies do not create demand because the vacated positions no longer exist by definition. Without accounting for supply from unemployed and displaced engineers or from graduate engineers, and considering only the supply from immigration, it can be seen that with current immigration levels, the supply of migrant engineers would exceed labour market demand by 30% (or 1,836 engineers) each year over the next five years. In reality, there are many thousands of unemployed and displaced Australian engineers seeking engineering positions as well. Add to that more than 13,000 new graduate engineers per annum, and it can be seen that the oversupply of engineers will remain at disastrous levels. Graduates are, of course, not interchangeable with experienced engineers in the engineering workforce. However, if the entire annual demand for 6,126 engineers were only for graduates, then the annual supply of Australian graduates would be 75% greater than demand. Back in 2015, the Department of Employment forecast growth for engineering professionals to be a total of 1,500 from November 2015 until November 2020. Despite this almost no-growth scenario, the Federal Government continued with its program of oversupplying the engineering labour market. The case for doing so then, and now, is indefensible. The only reasonable course of action is to halt engineering immigration until such time as the labour market comes back into balance, allowing unemployed and displaced Australian engineers to be re-absorbed into the workforce. Engineering graduates are coming onto the market in numbers which far exceed labour market demand. To help alleviate this situation, international graduates must no longer be granted work visas. Recently the Department of Employment (DoE) released the results of its 2017 Survey of Employers who have Recently Advertised (SERA). Once again, the engineering profession had the highest number of applicants per vacancy of any profession or trade monitored by the DoE. The number of applicants per engineering vacancy was 48.2 in 2016, falling to 39.9 in 2017. According to DoE, the fall in this number was driven by a lower number of applicants for vacancies for civil engineering professionals. For mechanical engineers, there were 65.9 applicants per vacancy. In stark contrast, the average number of applicants per vacancy for all professions measured was just 13.5. This is additional confirmation of the enormous, ongoing oversupply of the Australian engineering labour market. See:
www.engineeroversupply.weebly.com/applicants and https://docs.employment.gov.au/documents/engineering-professions-australia DoE also recently released its five year projections for the seven Unit Groups in the ANZSCO Minor Group ‘233 Engineering Professionals’. See: www.engineeroversupply.weebly.com/workforce and http://lmip.gov.au/default.aspx?LMIP/GainInsights/EmploymentProjections This forecast, from May 2017 until May 2022, conveys a more positive outlook for engineering occupations than the previous five year forecast released in 2015. The projected compound annual growth rate of the workforce for ANZSCO Minor Group ‘233 Engineering Professionals’ over the next five years is a very modest 1.8% per annum. For the individual engineering Unit Groups, the projections are as follows: 2331 Chemical and Materials Engineers 0.3% per annum 2332 Civil Engineering Professionals 3.8% per annum 2333 Electrical Engineers 0.3% per annum 2334 Electronics Engineers 0.3% per annum 2335 Industrial, Mech. and Prod. Engineers -1.1% per annum 2336 Mining Engineers 1.7% per annum 2339 Other Engineering Professionals 2.1% per annum The predicted workforce growth for '2332 Civil Engineering Professionals' is the largest, and derives from the expected ongoing demand for these professionals in the east coast residential construction boom, and from numerous planned State and Federal Government infrastructure projects. Who loses the most when a professional labour market is enduring both poor economic conditions and a significant oversupply of labour? As insight into the answer can be obtained from the annual professional employment survey by The Australasian Institute of Mining and Metallurgy (AusIMM). In June 2016, the AusIMM surveyed its members and received responses from 2,472 of them. The break down of respondents by occupation was: geoscience professionals: 40.3% mining engineers: 32.7% met/chem/mat engineers: 15.8% others: 6.9% Of the Australian-based members (who were 81.8% of respondents), 14.1% were unemployed and 6.8% were underemployed. Of the mining engineers who responded to the survey, 12.6% were unemployed, while among metallurgical/chemical/materials engineers the unemployment rate was 11.3%. Unemployment was not distributed evenly across age groups (see the figure below). On the contrary, professionals over the age of 50 had a disproportionately high rate of unemployment. Of the total who were unemployed, 42.4% were long-term unemployed, ie. they had been actively looking for work for more than 12 months. Of the long-term unemployed, two-thirds were aged over 50. See: https://www.ausimmbulletin.com/feature/the-ausimm-professional-employment-survey-2016/ and http://www.ausimmbulletin.com/app/uploads/2015/01/Professional-Employment-Survey-2016-Charts.pdf Unemployment can be damaging at any age, and long-term unemployment can be financially and psychologically corrosive. Many experienced professionals find that their working life over the age of 50 is a period when they can focus on saving to fund their own retirement. Being unemployed, or forced to take lower-skilled, lower-paid employment, impairs their ability to save for the future and heightens the probability that they will need to rely, at least in part, on a government-funded pension in retirement. |
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November 2018
CategoriesAuthorJim Oakley |