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Understanding the Skills Shortage in the Australian AEC Industry

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With recent changes in the Australian Government’s skilled migration strategies, the skills shortage in the Architecture, Engineering and Construction (AEC) industry in Australia faces has become a hot topic. The industry faces a significant challenge due to the shortage of skilled workers across various occupations, as highlighted in a recent article from Engineers Australia, it reports that:

  • More than 20 per cent of Australia’s qualified engineers are not in the labour force
  • It’s expected that over 68,000 engineers will retire over the next 15 years, with 25,000 retiring in the next five years 
  • Approximately 3200 engineers leave the profession for other sectors annually 

Ai Group has highlighted the extent of the skills shortage crisis and identified what businesses are doing to address the issue in 2023. The problem of skills shortages is not new for the industry, but the impact of the shortage has become more evident in recent years.

The preliminary findings of the study, based on a survey of recruitment managers from contracting companies across Australia, indicate that skills shortages are a significant concern across a range of occupations in the industry, including experienced engineers, tradies, and site managers. The turnover among employees is also high, adding to the problem of skills shortages.

The skills shortage severely impacts the industry’s productivity and competitiveness, resulting in increased project costs and delays. This is particularly concerning as the construction industry is a significant contributor to the Australian economy, contributing significantly to GDP growth and job creation across multiple segments, including residential, non-residential, infrastructure, and engineering construction. The shortage of skilled workers is also hindering the industry’s ability to take on new projects and invest in innovative technologies, impacting its long-term growth potential.

The problem calls for targeted efforts to address the supply and demand gap of skilled workers.

Contributing Factors

Ageing Workforce

One of the factors contributing to the skills shortage is Australia’s ageing workforce. The country’s population is ageing, and a significant portion of the workforce is set to retire in the next decade. As experienced engineers retire, there is a need to ensure a smooth transition and succession planning to address potential skill shortages resulting from the departure of experienced professionals. The retirement of a significant portion of the engineering workforce could lead to a loss of institutional knowledge and expertise, potentially exacerbating the skills shortage within the profession.

Lack of Investment in Current Employees

Another factor is difficulty finding and retaining skilled workers. The skills shortage in Australia has made it challenging for businesses to find and retain employees with the necessary expertise, knowledge, and qualifications. While the Ai Group report captures the industry’s perspective on the skills shortage, academic research paints a slightly different picture, suggesting a reluctance among companies to invest in training and upskilling. Instead, there’s a preference for recruiting experienced talent, sidestepping the need for additional training. This approach might inadvertently contribute to the industry’s high turnover rates as skilled employees are poached from market competitors rather than upskilling internal candidates.

A lack of professional growth and skill development avenues within a company leads to employee dissatisfaction, lower job performance and heightened work-related stress. Feeling undervalued, these individuals will likely seek opportunities for progression and development elsewhere. This trend is concerning, as ignoring career development dissatisfaction can lead to diminished workplace engagement and increased staff turnover. Essentially, the industry’s avoidance of nurturing existing talent could be a significant factor in the ongoing skills shortage challenge.

In addition to investing in the careers of skilled employees, the research suggests a need for increased employer investment in training and apprenticeships within the Australian engineering sector. While employers currently show some hesitancy, there’s a significant opportunity to enhance skills supply through strategic and proactive training initiatives. Such investment is key to addressing the skills shortage and supports the long-term sustainability and growth of the engineering profession.

Total apprenticeship commencements for the 2022-23 financial year. Note: this dataset is not limited to AEC roles.
Source: Apprentices and trainees 2023: June quarter (ncver.edu.au)

Barriers for Migrant Engineers

The barriers faced by migrant engineers, including challenges related to local experience, networks, and recognition of international qualifications, can impact the overall availability of engineering skills within the workforce. Addressing these barriers is crucial for promoting diversity, enhancing employment outcomes, and leveraging the skills and expertise of migrant engineers within the profession.

Overseas-born engineers, particularly female engineers, experience higher unemployment rates compared to their Australian-born counterparts. Additionally, overseas-born engineers take longer to find employment in engineering occupations, and they are more likely to be underemployed than Australian-born engineers. These disparities in employment outcomes highlight the challenges faced by migrant engineers and the potential impact on the overall availability of engineering skills within the workforce.

Migrant engineers may also face underemployment, where their level of experience is not fully utilised in the roles they secure. This underutilisation of skills can lead to dissatisfaction and a mismatch between their qualifications and the positions they hold. If skilled engineers cannot fully utilise their expertise, it can contribute to a skills gap within the profession, as valuable skills and knowledge may not be effectively leveraged to address industry needs.

Government Policies and Industry Initiatives

Several initiatives have been implemented to address the AEC industry’s skills shortage, including government policies and industry-led solutions. These initiatives aim to increase the pipeline of motivated, educated, and skilled individuals who can work in the AEC industry.

In response to the skills shortage in the AEC industry, the Australian government has launched a suite of initiatives designed to boost the skilled workforce. These include Vocational Education and Training (VET) Programs, offering practical skills for trades like construction and carpentry, and Apprenticeship and Traineeship Schemes for specialized training in AEC trades.

Statistics on Australian apprenticeship completions from 1980 – 2023. Represents all apprenticeships in all industries.
Source: Historical time series of apprenticeships and traineeships in Australia from 1963 to 2023: infographic (ncver.edu.au)

They’ve also established industry partnerships and invested in tertiary education to ensure institutions can offer courses with advanced technical content that align training and education programs with the industry’s needs.

Finally, Immigration and Skilled Migration Programs attract international talent and supplement domestic skills. These measures aim to address the current gap in skilled labour by creating pathways for acquiring relevant skills and attracting a diverse range of talents into the AEC sector, thereby ensuring a robust, skilled, and adaptable workforce to support the industry’s growth and sustainability.

Statistics on Australian skilled engineer migration.
Source: Migration program statistics (homeaffairs.gov.au)

Note: The Department of Home Affairs lists the category “Professional, Scientific and Technical Services” under employer-sponsored visas. This category includes the migration of both engineering and non-engineering professionals. The engineering data collates all datasets where the ANZSCO occupation is listed as a type of engineer.

Meanwhile, the industry has implemented a range of initiatives to nurture and expand its workforce. They’ve invested in workforce development programs, providing mentorship, on-the-job training, and continuous learning to fill skill gaps and aid career progression. By forming partnerships with educational institutions, they ensure graduates are ready to meet the sector’s challenges.

Apprenticeship and graduate programs have been vital in providing practical experience and specialised training, creating a skilled future workforce. The industry is also leveraging technology and innovation, like BIM, to improve efficiency and reduce dependency on traditional labour methods.

Diversity and inclusion initiatives are also being embraced to create a more varied and innovative talent pool. These steps are crucial in building a robust, skilled workforce, capable of adapting to and thriving in the ever-evolving landscape of the AEC industry.

Looking Ahead

As we reflect on these diverse efforts to combat the skills shortage, it becomes evident that the path forward, while challenging, is brimming with opportunities. The initiatives the industry is taking represent the first steps in a broader, ongoing dialogue about the future of the AEC industry.

In the next article, we’ll discuss the solutions and strategies being implemented to overcome these challenges, exploring how industry and government initiatives are shaping the future of the AEC sector in Australia.

References

Aibinu & Francis, (2010) Understanding the skills shortages in the Australian construction industry: An exploratory study of the site management team

Shooshtarian, S. (2022) Transformation towards a circular economy in the Australian construction and demolition waste management system

Solving the skills shortage crisis | Ai Group

Skills shortage for Australia’s construction industry (brentnalls-sa.com.au)

The Architecture, Engineering and Construction Sector Trends to heed in 2021 | LinkedIn

Statistics | Engineers Australia

Skills Shortages Analysis | Jobs and Skills Australia

Engineers Australia response to Government’s new migration strategy and Infrastructure Australia Market Capacity Report | Engineers Australia

New report reveals deepening engineering skills crisis | Engineers Australia

Apprentices and trainees 2023: June quarter (ncver.edu.au)

Historical time series of apprenticeships and traineeships in Australia from 1963 to 2023: infographic (ncver.edu.au)

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