Will Australasia’s Skills Shortages Restrict Future Real GDP Growth?
Euromonitor International’s Countries and Consumers team recently released a briefing, which concluded that skills shortages across the mining, healthcare and ICT industries in Australasia may affect the region’s growth prospects in the future.
Skills shortages across these industries could have a detrimental impact on the region’s ability to attract new foreign direct investment (FDI) inflows, if companies struggle to fill key positions. In 2011, Australia had inward FDI flows of US$41.3 billion versus US$35.6 billion in 2010, owing to its buoyant mining sector and vast natural resources.
Skills shortages could also hold back business innovation and industry development, putting Australasia at a competitive disadvantage;
According to Australian national statistics, in 2011 employers filled only 62% of positions advertised (the figure was 40% for engineers), as employers demanded formal qualifications and adequate work experience. In New Zealand, qualified workers are relocating overseas to gain international experience, which is adding to the country’s skills shortages.
Is relaxation of immigration parameters the best solution? Or would better education and training of local labour be sufficient to keep up?
Australasia may resort to encouraging immigration from overseas, in order to resolve skills shortages. In 2011, net migration (the difference between the number of immigrants into and emigrants from the area) rose by 11.9% to 152,900 in Australia whilst there was a drop of 20.2% to 13,000 in New Zealand. However, overseas entrants into
the labour market could also lead to higher unemployment amongst the local population. Australasia’s unemployment rate was 5.3% of the economically active population in 2011.
Yet the picture isn’t completely gloomy. Australasia’s real GDP is expected to grow by 2.4% in 2012 and 2.8% in 2013, owing to strength in the mining and ICT sectors. Its population is expected to grow by 6.7% between 2011 and 2016, owing to increased birth rates and immigration meaning a further rise in demand for services and resources;
The governments of Australia and New Zealand are providing funding for training in sectors that have skills shortages and creating new qualifications to encourage learning in such industries. In Australia, domestic students are encouraged to take more engineering courses at university. Some progress has been made in this area with an increase of 7.5% in the number of graduates in engineering, manufacturing and construction between 2006 and 2011.