POLICY BRIEF 2012/4
Workforce Skills, Education & Training
Priorities and principles of the Australian minerals industry
Minerals Council of Australia Policy Brief 2012/4| Workforce Skills, Education & Training | The policy principles of the Australian minerals industry December 2012 WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY Minerals Council of Australia (MCA) ABN 21 191 309 229 MCA Level 3 ‐ 44 Sydney Av Forrest ACT 2603 PO Box 4497 Kingston ACT Australia 2604 P: + 61 2 6233 0600 F: + 61 2 6233 0699 info@minerals.org.au MCA – Northern Territory Suite 1, 14 Shepherd St Darwin Northern Territory 0800 P: + 61 8 8981 4486 F: + 61 8 8941 1625 info.nt@minerals.org.au MCA – Victoria 10‐16 Queen St Melbourne Victoria 3000 P: + 61 3 8614 1851 F: + 61 3 9629 8603 info.vic@minerals.org.au © Minerals Council of Australia 2012 MCA Publications Disclaimer No person should rely on the contents of this publication without first obtaining advice from a qualified professional person. The Minerals Council of Australia, and the authors, editors and any consultants accept no liability (including liability in negligence) and take no responsibility for any loss or damage which a user of this publication or any third party may suffer or incur as a result of reliance on this publication, and in particular for:  any errors or omissions in this publication;  any inaccuracy in the information and data on which this publication is based or which is contained in this publication; and  any interpretations or opinions stated in, or which may be inferred from this publication. 2 WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY Executive summary A productive workforce needs to be a skilled workforce. The Minerals Council of Australia (MCA) advocates building an uninterrupted, sustainable education and training pathway to increase workforce participation, workforce diversity and workforce skills, regardless of the business cycle in the industry. The MCA is developing and implementing national strategies to ensure the adequate supply of skills to the industry and to increase minerals industry labour productivity by:  Advocating public policy and institutional capacity building for improved delivery in the tertiary education sector – both the university sector and the vocational education and training sector (VET) – in minerals industry related areas  Working with industry and government to build an outputs‐based model of VET quality  Advocating diverse training opportunities in the minerals sector that suit business and workforce needs, including advanced adult apprenticeships  Supporting programs that build a gender and culturally diverse workforce aligned to business needs  Demonstrating the extensive education and training (including privately‐funded training) undertaken by the minerals industry  Providing a definitive national reference point for industry career and employment information  Improving community and stakeholder access to information on industry career opportunities and education and training pathways. Along with building industry capacity, there is a need to reduce third‐party intervention in minerals sector workplaces. Over the past two decades, direct employer‐employee relationships have provided the foundation for the industry’s capacity to meet changing market conditions, with benefits to individuals and communities alike. Against this backdrop, the MCA is:  Highlighting the value of a range of work arrangements that suit business and workforce needs, including fly‐in, fly‐out (FIFO)  Supporting the retention of an uncapped temporary skilled migration scheme (457 visas) and reform to the Enterprise Migration Agreement (EMA) scheme to support long‐term growth in the industry  Supporting reform of the Fair Work Act to ensure Australian workplace laws support flexibility, choice and direct relationships. 3 WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY Profile of the minerals workforce Employment has grown rapidly In November 2012, the minerals industry (excluding oil and gas) employed 242,010 workers, approximately 2.1% of the total Australian workforce. This is off an all‐time high of almost 260,000 workers in May 2012. The industry workforce has increased more than 180% in the decade to November 2012, almost doubling in the past five years. Over the past three years, the mining workforce has increased by 59%, compared with 5% growth in total employment over the period. The minerals sector has a relatively well qualified workforce. More than one third of employees (34%) have attained a Certificate III/IV level qualification or equivalent – nearly twice the all‐industry average of 18%. One in five employees in the industry holds a bachelor’s degree or higher. '000
Minerals sector (ex oil & gas) labour force 300
250
200
150
100
50
0
NRSET Projections (4.9%pa increase)
Source: ABS In 2010, the Australian Government’s National Resources Sector Employment Taskforce (NRSET) predicted employment in the sector would increase by an average of 4.9% per annum and reach 216,000 persons by the end of 2014‐15. The industry exceeded that forecast in November 2011. Employment growth in the minerals sector is still viewed by the Australian Government as having the strongest growth rate of any industry. The Australian Workplace and Productivity Agency (AWPA) identifies a need for between 27,300 and 44,800 full‐time equivalent short term jobs per annum until 2018 in resources construction, with a required increase of 53,606 workers in mining operations (ex‐oil and gas) by 2017, to a total of 301,037 workers. Between November 2009 and November 2012, the minerals industry’s female labour force rose from 19,460 to 35,350 (82% growth). Over the same period, the male labour 4 WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY force grew from 132,820 to 206,650 (56% growth). The most recent ABS data (November 2012) indicates that the percentage of women in the minerals sector workforce has increased slightly, from 13% in August 2012 to more than 14% in November 2012. '000
Minerals industry (ex oil and gas) labour force male and female
250
200
150
100
50
0
Source: ABS Around 5% of the mining workforce is Indigenous, with many mining operations co‐
located with Indigenous communities. The minerals industry recognises the compelling business case that surrounds effective engagement of Indigenous people in our industry and the contribution this can make to broader economic and social advancement in Indigenous communities. As at 31 October 2012, mining accounted for 8,820 of the 101,970 primary temporary skilled visa holders in Australia (the 457 sub‐class). This represents 3.8% of the total mining workforce. Three occupational categories (managers, professionals, and technicians and trades) account for 93% of all primary visa holders under the 457 sub‐
class. Traditionally, construction and the health care and social assistance services are the biggest users of the 457 visa scheme in Australia. The skills challenge The skills gap is significant High demand for skills means the minerals sector has experienced a skills shortage rather than a labour shortage in recent years with skills gaps most apparent for professional, skilled trades and skilled operator categories. Despite the slowdown in mining growth, these skills gaps are likely to be intensified by the current pipeline of resource sector investment. Skills gaps are likely to be exacerbated by an ageing workforce. The first cohort of “baby boomers” (born between 1946 and 1964) reached official retirement in 2011 and will be retiring in record numbers over the next decade. The NRSET Taskforce Report (2010) estimated that there would be around 16,000 persons retiring from or leaving the mining sector between 2010 and 2015. 5 WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY As highlighted in research for the MCA by Port Jackson Partners, near‐term demand for mining‐specific skills cannot be found within Australia’s labour force. On current trends, Australia will not be able to supply sufficient technicians, geologists, mining engineers or other related skills to meet immediate project needs. New graduates in geoscience between 2010 and 2015 are forecast to meet less than 20% of new and replacement demand. In mining engineering, the figure is 40%. These fields already rely on immigration to meet demand. In mining engineering, temporary migration visas outstripped university graduations by more than 2 to 1 between 2006 and 2010. In geosciences, the ratio was more than 4 to 1. Over 50% of the skilled engineering labour force is estimated to be overseas migrants. Shortages are also acute in key trades. Between 2005 and 2010, for example, supply of newly qualified electrical and telecommunications tradespeople was only 55% of new job growth before replacement. The skills challenge exists at all levels Some 4.1 million Australians do not have a post‐school qualification (Certificate III level), an issue identified as a problem in the Prime Minister’s March 2012 skills package Skills for All Australians. The Productivity Commission has found that the increase in literacy and numeracy skills from Certificate level I (low) to level III (that deemed necessary for an individual to function effectively in a complex environment) is associated with an increase in hourly wage rates of 30% and 25% for men and women, respectively. On this basis, Australians without a post‐school qualification could be earning an additional $400,000 on average over the course of a typical working life if they improved their skills to a Certificate III qualification or higher. Participation in science, technology, engineering and mathematics subjects in schools has also dramatically reduced over the past decade. Less than a fifth of high school students enroll in chemistry and physics, and there has been a shift towards elementary mathematics from intermediary and advanced levels. As prerequisites to higher education, low participation rates in these subjects will mean a dwindling pool of eligible students, especially in skilled occupations. 6 WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY Industry priorities and principles Leveraging further investment in higher education The failure of past Governments to index higher education funding has seen university departments become increasingly unviable under the student numbers‐based funding system, especially in mineral‐related departments that traditionally have small student numbers and high teaching costs. This is aggravated by shortages of skilled academic staff at our universities and the rising average age of academics in minerals‐related disciplines. Government failure has resulted in a need for direct minerals industry investment to secure a future supply of professionals for the minerals industry. As part of necessary reforms, the Australian Government should formally recognise the core disciplines of mining engineering, metallurgy and earth science as disciplines of national interest and, accordingly, alter the way these disciplines receive Commonwealth Grant Scheme (CGS) funding. This is required so that higher education institutions can:  deliver high‐cost/low‐student number programs without the need to rely on life‐support funding from the minerals industry for survival  attract and retain high quality lecturers and researchers  play key roles in delivering on the national innovation agenda, and  offer undergraduate programs that not only provide students with high quality and relevant technical skills, but also equip graduates with skills to make informed business decisions that take account of the social, environmental and financial aspects of development in ways that account for the rights and interests of both current and future generations. The Australian Government has identified student‐centered funding arrangements for higher education as the means by which shortfalls in these core disciplines are to be addressed. Changes in base funding of these core disciplines provide the mechanism to achieve this. So far, the Australian Government has yet to respond to the recommendations of the Higher Education Base Funding Review. As a result, the MCA – through its Minerals Tertiary Education Council (MTEC) – continues to subsidise collaborative initiatives at 16 universities across Australia. MCA member companies have invested more than $32 million of unencumbered funds over the past decade in these programs. The industry also supports higher education by:  providing paid vacation work and structured practical experience to more than 600 undergraduates from a wide range of disciplines each year at an annual cost that exceeds $6 million in wages alone  funding professorial chairs and other academic positions and programs at universities. For example, the University of Queensland has 11 research and academic professorial chairs that are part or wholly funded by minerals companies 7 WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY 
providing a large number of undergraduate scholarships and bursaries (the minerals departments of two universities have approximately half of their students on minerals industry scholarships) and  providing sponsorships for student site visits, field trips and other academic and social events. Through its innovative Minerals Industry National Associate Degree (MINAD) Program, the MCA is working to develop para‐professional roles in mining engineering and minerals geoscience to alleviate reliance on four‐year trained professionals. Holders of these collaborative, nationally consistent associate degrees will perform discipline‐
specific roles under the supervision and mentorship of a four‐year trained professional. In time, this will create a new pipeline of skilled labour, though it will not negate the chronic need for four‐year trained mining engineers and minerals geoscientists. The MCA, with support from the Australian Government through the Workforce Innovation Program and significant direct and in‐kind MCA member support, will deliver an Associate Degree Program Model in mining engineering and minerals geoscience that is nationally accessible and delivering para‐professional occupational outcomes. Employer‐driven, quality VET training The minerals sector spends more on training per employee than most industries and significantly more than the national average, with the overwhelming majority of training privately funded. This covers all categories of employees from entry level employees, apprentices, up‐skilling of operators and trades people, supervisor training, technical training and higher education. More than 5% of the minerals industry workforce is either a trainee or apprentice with many more undertaking training that is not part of a formal qualification – for example discrete skills sets or unaccredited operator training. Employers also fund a myriad of other training‐related activity, for example Indigenous pre‐employment programs, work experience interns and cadets, employee tools and training materials and equipment and grants for local TAFEs. The Productivity Commission concludes that genuine partnerships between employers and VET providers often deliver good results, with gains to employers such as an enhanced capacity to focus on their core business and to deal with skill shortages. The National Workforce Development Fund (NWDF), where employers control a portion of training monies to spend according to their skills priorities, has proven popular with the mining industry as well as other sectors. The Minister for Tertiary Education, Skills, Science and Research, Senator Chris Evans, said of the NWDF: “Putting industry at the heart of the system means we are not training people for training sake – we are training people for jobs. This is a fundamental difference from the traditional supply side system where an individual selects the training package they want… This fundamental reform ensures the Government is training people in the skills that employers want and the economy needs”. The MCA advocates that the training market should be geared towards meeting employer demands to ensure more job‐centred quality outcomes. An employer‐driven 8 WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY training system will ensure increased quality and better value for the training dollar, for governments, employers and students. Reform in this direction poses a challenge to current arrangements where most VET funding is supplied by State Governments direct to the training provider. For many years, the publicly‐funded VET sector largely failed to meet the needs of the minerals industry. While progress towards a demand‐driven VET sector is acknowledged, concerns continue to surround the variable quality of training outcomes within the sector. Training reforms nationally and in the States have tried to reform the provider‐centric model but, as evidenced in the Victorian reforms of 2009, consumer sovereignty has tended to reside narrowly with students rather than with employers. Unscrupulous private providers in some cases have taken advantage of the lack of information held by students in the marketplace. This lack of information can reinforce provider‐centricity within the TAFE sector, where students have been enrolling in courses with little prospect of a job at the end. As a result, many of the qualifications granted in the VET system are not valued by employers, partially because of the variability between providers. Similarly titled courses can be of days duration or years and provide very different quality outcomes. Vocational training should be focused upon gaining a particular skill or set of skills for employment. Quality training always has a job or an employable skill as its aim, which in turn is dependent on employer demand. Unemployment is never solved by supply‐side solutions. The Prime Minister’s Skills for all Australians initiative in March 2012 took a step forward in removing barriers to accessing vocational training, with training to Certification III available under a National Training Entitlement. Even so, there are limited mechanisms for ensuring a more demand‐driven VET from an employer point of view. Another missing element is the mechanism to improve the quality of the VET teaching output and its assurance. A strong national regulator is yet to emerge to deal with unscrupulous training providers. The industry’s Skills Council, SkillsDMC, with the support of the MCA, has developed draft criteria and ratings for VET delivery for the minerals industry. This would introduce an added element of market discipline beyond that which companies already exercise. Workforce strengthening ‐ Increased capacity for workforce diversity and participation To strengthen the pool of skilled labour, the industry is taking steps to build a more skilled and diverse workforce. Female participation The minerals industry has long recognised that drawing on the skills of women workers helps to build workforce diversity and improve productivity. While the female workforce has almost doubled in the last three years, female participation remains relatively low, especially at operational sites. 9 WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY The MCA has taken steps to further increase female participation in the mining workforce. In 2009, the MCA and Thiess initiated a Women in Engineering Scholarship, aimed at female engineering students in their second year. The Scholarship is helping to identify the next generation of talented female engineers. The MCA is also improving opportunities for female participation on mining company boards. In 2012, three Australian Institute of Company Directors (AICD) scholarships for women nominated by MCA member or associate member companies were awarded. The Mining Education Australia (MEA) program has also appointed its first female Governing Board member. Indigenous participation The minerals industry has multiple strategies geared to better engaging Indigenous Australians in our industry. As one example, the MCA Northern Territory Division’s award‐winning Indigenous Pre‐
Employment Program at Batchelor Institute of Indigenous Education seeks to prepare Indigenous candidates for the world of work via access to a real job at the completion of their training. Nearly 60% of male graduates over the past 18 months are still employed in the minerals industry and most of the graduates from the first women’s program remain employed. The MCA will now broaden the Indigenous Pre‐Assessment and Pre‐
Employment Programs toward an independent remote delivery model to work with regional job service advisers and other relevant entities to identify suitable individuals to participate in the program. Early career attraction and participation In order to reach those outside the sector, including younger generations, the MCA together with State affiliates has established a national portal for careers called People for the Future (www.peopleforthefuture.com.au). This complements the MCA’s Mining Careers website (www.miningcareers.com), which attracts almost one million visitors per annum. MTEC’s national student engagement program has commenced using social media to facilitate MCA member engagement (www.mtec.org.au). The aim is to grow knowledge of minerals industry careers and higher education opportunities by peer‐to‐
peer processes. Adult apprenticeships The MCA is a strong supporter of adult apprenticeships as a viable pathway into the minerals sector. The National Apprenticeships Program (NAP), endorsed by the Australian Government and supported by the MCA and other industry stakeholders, has received 6,473 applications from talented and experienced Australians looking for the opportunity to up skill and join the industry. Of these numbers, 3,968 are eligible to proceed through the selection process. NAP has conducted five intakes to date for a range of miners and contractors. Labour mobility ‐ cross‐industry collaboration The MCA/National Farmers Federation/Commonwealth Government Skills MoU, signed in 2007, formalises a partnership to develop collaborative cross‐sector skills and employment initiatives. The Regional Agriculture and Mining Industry Training (RAMIT) Project Pilot saw the development of a successful model for provision of tailored cross‐
10 WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY industry skilling for mining, agriculture and related industries. The Project was piloted at two regional locations – Morawa (Western Australia) and Emerald (Queensland). Participant outcomes were outstanding: 86% (25 of 29) of the original participants graduated with certificates and 93% (27 of 29) gained employment or returned to advance their studies. Skills DMC will roll out the RAMIT program and is working in concert with the MCA and State bodies to target some key mining and agricultural regions. Reducing third‐party intervention The MCA has continued to highlight the problems arising from increased third‐party intervention in the areas of workplace relations, workforce planning and training, especially where this is mandated by government. Such intervention runs counter to a system of industry‐led training and the development of strong organic relationships between employers and employees. The increased scope for union intervention in managerial decision‐making under the Fair Work Act is discussed separately in MCA Policy Brief 2012/3 on Workplace Relations. Mandated training levies According to the official figures, the minerals industry commitment to apprentices and trainees continues to grow with approximately 5% of the workforce engaged in training for formal qualifications, with numbers in training rising by 26% between June 2011 and June 2012. Nonetheless, the CFMEU in Western Australia has been waging a campaign to force the resources sector as a whole to contribute 0.2% of the value of projects to the building and construction industry training fund. In response to false claims that the minerals sector underspends on training, including apprenticeships, the MCA has commissioned the National Centre for Vocational Education Research to determine more accurate private training expenditure. This will track the apprentices and trainees not only engaged by mining companies, but also mineral processing plants, contractors and Group Training Organisations. The report will also illuminate the fact that apprentices and trainees are working on site but classified under different industry sectors (eg. construction). It is anticipated that the report will be ready in early 2013. Mandated diversity targets The MCA is monitoring closely the implementation of the Workplace Gender Equality Act which became law in 2012. The new Act introduces a number of new ‘gender equality indicators’, including gender composition of workforces and boards. Under the Act, the Minister will have the power to set industry specific ‘minimum standards’ in relation to the gender equality indicators. While the MCA supports the broad aims of the Act, question‐marks surround the means of achieving them, via a set of onerous minimum standards and associated sanctions for employers. The Bill will add to red tape via increased reporting requirements and compliance burdens and increase the scope for union and government interference in business operations. 11 WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY Labour mobility ‐ skilled immigration The mining industry has been targeted by unions for over‐reliance on immigrant labour. The facts, however, tell a different story, with 457 visa holders making up only 3.8% of the industry’s workforce. Considering the high costs to industry associated with using the temporary skilled migration option (usually as a last resort), smooth transition to permanent migration under the Employer Nominated Scheme is critical to ensure retention of skills. However, the maintenance of an uncapped skilled migration scheme is critical to the industry in the face of chronic professional skills shortages, including a Skilled Occupations List (SOL) that reflects the industry’s medium‐to‐long‐term skills needs. The SOL is not a list of occupations that experience short term skill imbalances or shortages. It is intended to facilitate sufficient numbers of skilled migrants, without distorting the underlying domestic training and labour markets. The entry of required 457 workers under EMAs for large resources construction projects continues to face strong union interference and onerous regulatory burdens. Union consultation requirements have been mandated on employers, who in turn have to share workforce and training plans with relevant unions, making EMAs less attractive. Labour mobility ‐ long distance commuting The rapid growth in FIFO/DIDO work arrangements in the minerals sector has attracted increased attention in recent years, with many misconceptions surrounding this growth. A House of Representatives Inquiry will report on this issue early in 2013. FIFO/DIDO arrangements have arisen due largely to a demand from employees. A Queensland Resources Council workforce accommodation survey (February 2012) conducted by URS Australia shows that 68% of residential and 71% of non‐residential respondents in the Queensland resources sector are in preferred accommodation arrangements and only 10% of non‐residential workers would consider buying a house close to work. While the mining sector is often criticised over gaps in service provision as towns in mining regions grow rapidly, this is in the context of mining royalties more than quadrupling over the past decade and not being reinvested in mining region government infrastructure. To ensure policy responses are meaningful and evidence‐based, it is necessary to understand the size and nature of the FIFO/DIDO workforce across all industries, as well as hard data on improvements or otherwise in living standards in affected areas as a result of mining activity. The MCA has commissioned work on residential profiling of resource sector regions using ABS Census data to ascertain socio‐economic changes between 2006 and 2011 and a detailed study of ABS Census data detailing the size and distribution of Australia’s FIFO/DIDO workforce, supplemented by a survey of local council non‐resident accommodation, with results expected to be available in early 2013. 12 WORKFORCE SKILLS, EDUCATION & TRAINING – THE POLICY PRINCIPLES OF THE AUSTRALIAN MINERALS INDUSTRY