Engineers in heavy demand

By Jo Studdert

“There are just not enough engineers in Australia to do the work at hand. In fact, there are just not enough engineers globally for the projects already commissioned,” says Megan Motto, chief executive of the Association of Consulting Engineers of Australia.

So dire is the need that in late March, the federal government announced it would put $350,000 towards funding two research projects into the problem.

The research will be conducted by the newly established Australian National Engineering Taskforce, a partnership between the Association of Professional Engineers, Scientists and Managers Australia, Engineers Australia, Consult Australia, the Australian Council of Engineering Deans and the Academy of Technological Sciences and Engineering.

In announcing the funding, Prime Minister Julia Gillard said the purpose of the research was to boost the engineering industry in Australia.

ANET’s first research project will be to study the supply and demand of engineering skills in Australia and the second will be to “research pathways for engineering education in the vocational education and training and university sectors”.

This latter is important because the number of engineering graduates in Australia has stayed consistently around the 6000 a year mark for many years, despite the huge increase in infrastructure, oil, gas and mining projects that all need great numbers of a range of engineers.

“There was a fall-off in engineering graduate recruitment during and just after the global financial crisis,” Motto says, “But we expect that to ramp up like mad next year.”

But, she says, what is even more crucial is actually getting a lot more students enrolling in engineering.

“We have more and more huge projects coming on line in all sectors of industry but our graduating numbers remain the same. That is bad but what is worse is that a big percentage of Australia’s practising engineers are nearing retirement age. If our graduating numbers are not lifted significantly, we won’t even be able to replace the retirees, let alone address the needs of all our growing industries,” Motto says.

In the past few decades, enrolment numbers in engineering generally see-sawed depending on momentary demand, but enrolments fell into a bit of a hole during the 1980s and 1990s which has left a gap in the skills pipeline.

Margaret Bozik, labour market analyst at APESMA, says the skills shortages Australia experienced in the decade from 2000 were the result of cutbacks in the preceding 20 years. “It led to salary explosions in the late 1990s against which many still measure their current salary.”

The industry is alarmed at the idea that the recent global financial crisis will cause another drop-off in demand for engineers which will lead to fewer enrolments and a guaranteed skills shortage down the track.

During the crisis, demand for engineers shrank and salary levels fell.

One reason salaries overall fell during the crisis was that many companies laid off their older (and more expensive) engineers and took on graduates, a strategy that might have saved money but sacrificed a lot of experience.

This strategy is part of a systemic problem identified by Motto.

“The skills shortages we have seen in the past are often described as a cyclical problem. It is not. It is a systemic problem and we need a systemic solution to it. That is what the ANET research will help identify,” she says.

The global financial crisis is not the issue, she says. “Brush away the immediate concerns raised by the GFC and you find that all the underlying issues and skill problems we had before the GFC are still there.

The GFC is not ‘the end of the world’ as some are saying: the real problem for us has nothing to do with the GFC, it is a deeper, systemic problem of not enough graduates, not enough experienced engineers.

“Unless something radical is done, Australia will be facing the same engineering skill shortages and salary pressure. And projects (will be) put on hold for want of engineers to manage them. We could be looking at a situation in 10 years’ time where we are even more desperate for engineers than we are now,” she says.

And if there was a shortage of engineers in the years when infrastructure build was dormant and the mining and resources industries less robust than today, it is easy to understand why the industry is so anxious about the supply of skills for the next several decades.

Recruitment company Manpower has recently completed research into skill shortages in Australia and found engineering high on the list of occupations where demand exceeds supply.

Manpower found that 45 per cent of employers were having trouble filling positions, particularly in three areas, skilled trades, sales and engineering.

At major recruiter Hays, regional director NSW and ACT for construction and property, Shane Little, says the dark days of the GFC are past and demand is clearly picking up but “there continues to be significant skills shortages for engineers working in the built environment — infrastructure, normal and heavy—and for mining, processing and design engineers.”

As an indicator, salaries are beginning to rise again after having steadied or fallen during the GFC, Little says.

The industry itself confirms this. An APESMA study has found that nationally the average base engineering salary in all disciplines is $100,000 with a total package of $120,000.

APESMA’s survey head, Dominic Angerame, says all sectors of engineering are recovering but some more strongly than others. Salaries for engineers working in the oil, gas and electricity fields have risen 5 per cent in the past year, compared to a mere 2 per cent for work in the communications sector, and 2-2.5 per cent in manufacturing.

Non-manufacturing areas such as utilities, services and some mining rose by about 4 per cent but, he says, salary movements have been affected by other issues such as whether the employer is a public or private organisation.

Uncommonly, he says, salary rises in the period since the GFC have tended to occur more frequently in the public sector, since those salaries are often based on award wages with built-in cost of living increases. “Wage rises in private enterprise have been relatively low since they are closely tied to the vagaries of the market,” Angerame says.

But Angerame pointed to survey results that showed average salaries for engineering graduates entering work was $56,000-$60,000, except in mining where the starting salary is not below $80,000.

So, again, demand is beginning to power, but the systemic problems of supply are yet to be addressed.

Article from The Australian, July, 2010.