The Battlefield for Skilled Jobs: Economy vs Society

Too often skilled jobs are discussed exclusively within the context of productivity, competitiveness and the economy. 

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There needs to be a discussion of the battle for skilled jobs from a human, rather than solely economic, perspective.

Economics tells us about the efficient allocation of resources.  It tells us nothing about the human qualities of fairness or what is good for individuals or what builds a cohesive, functioning society.

For an individual, access to a skilled job can mean access to long-term financial security. It can be the means to personal fulfilment. It contributes to our collective wellbeing as a society. Denying or limiting access to skilled jobs can fuel inequality, reinforce discrimination and limit opportunity.

Using Western Australia as a case study, we can pass on lessons learned from experiences of inequality and limited access to skilled jobs to the rest of the nation. Indicators such as the Gini Coefficient, which is a relative measure of income inequality, places Australia in the top 20 of nations experiencing income inequality.

WA has seen great movement over the past 15 years and now sits in second place nationally. We believe this has most recently been, in large part, fuelled by the resources boom. Another factor that may impact income inequality includes the gender pay gap, with WA sitting at number 1 position well above the already large national rate.

Inequality (Gini Coefficient), Mainland States, Australia, 2003-04 to 2011-12

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However, our emphasis here is to discuss the impact of limiting access to skilled jobs. With the poorest rates of formal vocational training, WA sits at the bottom of the leader board in this regard. A below-average proportion of our state population holds a graduate or postgraduate qualification and despite rapid population growth, raw numbers of trade apprenticeships in key areas have actually fallen. As either a resulting or contributing factor, WA also relies on more temporary overseas or interstate skilled labour than any other state. 

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But more importantly than statistics and charts, is the impact limiting access to skilled jobs is having on our core Australian values: our egalitarianism, our classless society, our ethos around the ‘fair go’.

There are three groups in particular that are being disproportionately impacted: skilled migrants, young people and women.

We have heard many stories of skilled workers coming from relative security in their home countries after being head-hunted by labour hire firms to come to Australia on 457 visas with the promise of better jobs and better working conditions.

A recent audit by the Fair Work Ombudsman found up to 40 per cent of foreign workers employed under 457 visas were underpaid, not performing the jobs they were supposed to do or no longer employed by the person who sponsored their entry into Australia. Due to their visa status, they are unable to access benefits when their employment opportunities change. They are often then forced to accept insecure and impermanent work and often not able to utilise the skills they were headhunted for in the first place.

Many of these workers have left behind families with the promise of good, permanent work here. They experience loss of the support of their family and friends and sometimes, isolation within Australian society. 

Recently the Abbott Government commissioned a review of the 457 visa program, the most common known system of temporary work visas to Australia. It is no surprise that the report noted the inordinate use of 457 visas by West Australian employers. 

“Between 2009-10 and 2012-13, the two resources states of Western Australia and Queensland experienced a 140 per cent increase in the number of visas granted while the rise for Australia as a whole was 42 per cent.” 

While unemployment rose and other labour force indicators weakened due to the impact of the Global Financial Crisis, 457 visa numbers have risen continuously, without a blip. The Federal Government review records that the total number of 457 visas issued over the past seven years has nearly doubled to just under 200,000.  

Many employers are now getting used to accessing a large pool of highly dependent workers and having a ready supply of skilled labour, without the expense or inconvenience of having to do anything to help train or skill those workers.

While some have tried to label the union movement as having racist attitudes to migrant workers, the issue is around ensuring that all who work here enjoy good and fair working conditions with promises kept. This is not happening and any deflection from an examination of these adverse working conditions is detrimental to all of us.

However we must acknowledge that the increasing importing of skilled migrant workers is acting as a disincentive to the training of young people for skilled jobs in Australia. Australian employers and governments must step up to the plate and train our own populace –  the supply of overseas labour who do not enjoy the rights of citizens is a cheap solution – but again, are we living in an economy or a society?

We have moved from a nation that valued the importance of a trade, to a nation that imports its skill base. Skills and training opportunities for young people in Australia are ceasing to exist. Where once an apprenticeship was considered a passport to a good job and a good life, we are seeing these opportunities dry up. Over the past few years the training rate as a relative measure has put WA in, embarrassingly, last place nationally, despite our need for skilled labour.  The mining boom that WA has enjoyed should have provided the perfect circumstances for a much needed boost in apprentice numbers; especially in the key heavy trades of automotive, engineering and construction.  Yet WA apprentice numbers in training are weakest in these traditional trades training areas while numbers of skilled migrants on 457 visas are fastest growing. 

Training rate Feb/March 2009-2014, Australia and mainland States

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There are a number of reasons finding and keeping an apprenticeship is challenging for young people, including the higher risk of being made redundant (the lowest on the pecking order is affected first) and interpersonal difficulties with employers rating highly. Interestingly, low wages was not cited as the most common reason, however it did factor.

There are also some interesting stats relating to the characteristics of apprentice-employing workplaces. While only 4% of apprentices are found in the public sector, they enjoy a striking 80.3% completion rate, compared with a little under half (49.1%) in the private sector. Smaller employers have the poorest completion rates. Indeed sole tradespeople, who sponsor 25% of all trade apprentices, have completion rates of only 46.8%.

There obviously needs to be a refocus on support schemes for apprentice-employing sectors. The positive completion rate within the public sector with its ensuring of standards of fairness, safety and other reasonable conditions for their workforce is clearly evident.

Another cause for concern is the disparity across gender with regards to uptake of trade apprenticeships, which still tend to largely be the preserve of young men. We need to provide access to skilled jobs for young men AND women. Societally, this is crucial if we are to enjoy a populace that is engaged and productive across many measures.

As we know, the TAFE system is undergoing massive changes at the moment.  Increasing numbers of private providers are having a corrosive effect on our TAFE system.  Course fees are increasing dramatically. Yet TAFE is such an important institution, with access to courses of vital importance, particularly to young people, in accessing skills training and setting them on a pathway to a fulfilling career. We need to get serious about funding education properly - at all levels education is not a cost – it’s an investment.

The following chart shows Commonwealth and state government funding across all educational sectors, with an alarming decline in vocational education and training institutions. This will continue to have huge impacts on access to education and training.

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But underfunding is not the only factor affecting people’s access to education. The University of Western Australia recently released its proposed tertiary fee structure under a deregulated market model, which shows prices for degrees skyrocketing beyond the reach of many. In addition to broad-ranging increases across all degrees, there was a notable impact on women in particular.

“…the UWA prices impact lower-pay graduate occupations such as nursing and education. For all courses the impacts are larger for females due to their lower wages and hours worked compared to males…for (mostly) female students...their repayments for popular courses such as nursing and teaching will mean they will still be paying off their degrees well into their forties rather than completing repayments at around 30.”
'NATSEM: UWA model would lift uni debt for women, disadvantaged' by Ben Phillips and Stephen Parker, The Conversation, 29 September 2014

Women’s labour market experience may be similar to men’s at the outset. But the difference in access to skilled jobs becomes clear once women make the decision to have children. If deregulation becomes a reality, there will also be a considerable and impacting financial burden on women into their thirties which may affect their career choices and their decision to have children at all.

Looking at ABS data, there are interesting statistics noting that women are now graduating from university at higher rates than men, with 57% of higher education students in 2011 being women.

The Grattan Institute has found that prior to having children, young women are as likely as young men to be employed in paid work. However when women becomes parents during their 20s or 30s, they are much less likely to be engaged in paid work, or if women remain in the workforce, they are more likely to work for shorter hours over the rest of our working lives. What impact is the compounding issue of a huge HECS debt going to have on women’s career choices?

And then there’s the issue of the persistent gender pay gap. WA women earn on average 25.3% less than men compared to a still appalling 18.3% national average. It’s worth noting that this gap is based on a comparison of full time, ordinary time earnings. The gap is even greater when part-time work (which is overwhelmingly undertaken by women) and paid overtime (overwhelmingly paid to men) are factored in.

The Bankwest Curtin Economics Centre recently analysed the gender pay gap in detail, including by occupation.  The characteristics of those occupations with the very worst gender pay gaps in both WA and nationally are in skilled occupations, either trades or professionals, which are mostly male-dominated occupations. 

The occupations with the biggest gaps include technicians and trades workers, with a 57% gender pay gap in WA (45% nationally) and mechanical engineering trades workers (with a 40% gap in WA, 33% nationally).  These are both trade categories where apprentice numbers in WA are actually falling, both are high on the 457 visa list for non-citizen labour and each are highly male-dominated areas with only around 5% of women working in those occupations. 

The report analysed the WA workforce and found that it was possible to explain the gender pay gap in WA to a far greater extent than for Australia as a whole. Their conclusion is that the single greatest factor determining gender income difference is the extent of participation in paid work. Their conclusion is that much of the pay gap could be closed if women and men had the same ‘work participation experience’.

However, men and women don’t have the same experiences in paid work, regardless of how much we might wish for it to be the case.  They also don’t have the same experience in unpaid work - we also need to more fairly share the responsibility for raising our children and we need very different stereotypes about what a worker looks like and what a parent (particularly mothers) look like. 

Discrimination is a real and continuing part of the mix that contribute to women having lower wages.  The outcome of all this is lower earnings across a lifetime and lower levels of accumulated superannuation, arguably more important for women who tend to have greater life expectancy. Clearly income inequality is one outcome; fewer prospects for career advancement and less power at work are other consequences. These factors are beyond economics and cannot be fixed by modelling numbers. A human consequence of such inequality in income and inequality in workforce participation is anger, disengagement and a sense of injustice.

Clearly we have a long way to go. It’s never enough to just analyse or condemn – but what we do depends on what we value.

“The two domains in which West Australians are most satisfied relative to other Australians – finances and employment opportunities – do relate to the economy. However economic success may have come at the expense of social cohesion, for West Australians are significantly less satisfied with their feeling of safety, being part of the local community, and the neighbourhood in which they live.”
'Workforce and Skills: Western Australian labour markets in transition", Bankwest Curtin Economics Centre, August 2014

Of course we need a viable economy.  But access to paid employment, access to skilled jobs, to ‘good jobs’’ is essential to not just our economic wellbeing but to our social and human wellbeing as well.  We need to more consciously pursue goals of greater fairness and equality and access to skilled jobs is vital in this regard.

The development of workforce policies that are focussed on attraction and retention are vital to maintaining a healthy workforce – and society. We need to redefine the concept of work flexibility beyond parental leave – attention needs to be paid to parents raising children, not just birthing them. We need to get real about accommodating working parents and creating meaningful skilled part time work – with women making up 50% of the population and the majority of part time workers, this should be a no brainer.

Here we have discussed the impacts of lack of access to skilled work on only three groups – there are many others, including indigenous Australians and people with disabilities who are similarly disadvantaged in their access to skills and skilled jobs and the benefits that should flow from this. This discussion has also been framed around skilled workers but these parameters are applicable to all engaged in paid – and unpaid – work. The qualities of fairness and equity are defining values for all of us. 

The heavy reliance of the Australian workforce on non-citizen labour and the insecurity that this brings to those people and the workforce generally needs to be addressed by better workforce planning as well as stronger regulation and policing of workplace laws.

Corporate planning sessions spent crafting motivating mission statements or exhortations for innovation, improved customer service and commitment to quality of work will have little impact if large parts of our workforce feel systematically undervalued, poorly supported or excluded in other ways.

The challenge for Australia is to create a cohesive society that is engaged, with positive opportunities for growth, access to training and fair working conditions for skilled workers. While it would be disingenuous to deny the importance of the economy, it should not be the only driver that affects the decisions required to maintain an equitable society – we are people, not cogs in an economic wheel.

Adapted from an address by Meredith Hammat delivered to The Future of Industrial Relations Conference held in Sydney, NSW on Wednesday 8 October 2014.


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