Jobs and Skills Australia labour market update

In February the new Jobs and Skills Australia Agency published its latest labour market update, reflecting information from the last quarter of 2022. It reports “labour market conditions have been strong over the December 2022 quarter, with continuing strong demand and growth in labour supply.”

There has been generally strong employment, including those in full-time work, coupled with underemployment rates “that have remained at very low levels.” Unemployment is sitting at around 3.5% and the labour participation rate is around 67%. As the report notes:

“Total employment continues to shift towards jobs that are commensurate with some level of post-secondary school qualification (skill level 1 to 4 jobs) and away from jobs that do not typically require such a qualification (skill level 5 jobs).”

Skills in demand

“Over the past year, around 36% of total employment growth has been in Skill Level 1 occupations, while just over 60% of total employment has been in Skill Level 2 to Skill Level 4 occupations (where VET qualifications are the primary pathway). This underscores the importance of both the higher education and VET systems to growing a highly skilled Australian workforce,” the report points out. (Level 1 occupations require a degree of some kind, level 2s some form of diploma, level 3s a Cert III or IV, level 4s a Cert II or III and level 5s a Cert I or secondary education).

The likelihood of filling vacancies has declined, as have the average number of applicants and average number of suitable applicants per vacancy when compared with previous years. These issues are more significant in regional areas too, and “skills shortages for many Technicians and Trades Workers occupations appear to be persistent over time.”

Jobs and Skills Australia’s preliminary analysis has looked at “the underlying drivers of skills shortage for the top 20 occupations in demand – in particular, whether the shortage is primarily driven by a lack of people with the essential technical skills, or by other factors (such as non-technical qualities considered important by employers, or by willingness to apply for the vacancies under current conditions). This preliminary analysis has found that of the top 20 occupations in demand, seven occupations have a shortage that is primarily driven by a lack of people with the essential technical skills, reinforcing the importance of the domestic skills system in addressing these shortages.”

Occupations in demand

Of the top 20 occupations most in demand on the basis of internet vacancy data, quite a number are clearly VET related, for example: both aged and disability care, and childcare (numbers 3 and 4 respectively), motor mechanics (number 6), chefs (number 8), fitters and machinists (number 10), electricians (number 13) and gardeners (number 18). Others on this list might also be recruited because of VET related qualifications (e.g. contract, program and project administrators (number 15)). Three occupations “had a job mobility rate that was significantly above the economy-wide figure, indicating challenges with retention of existing workers (Contract, Program and Project Administrators; Child Carers; and Aged and Disabled Carers).”

Applying a classification system for skills shortages, the report found that for a level 1 shortage (where there are few qualified applicants per vacancy and a Bachelor degree, Certificate IV or apprenticeship Is required), the occupations falling into this category were Motor Mechanics, Early Childhood (Pre-primary School) Teachers, Electricians, Metal Fitters and Machinists and Physiotherapists. There was a quality gap in applicants for chefs’ jobs and in a number of other occupations (This is where there are many qualified applicants per vacancy, but few suitable applicants per qualified applicant). Another category is a skills mismatch (Where there is above-average job mobility (below-average rates of retention) that is potentially reinforced by low number of new applicants per vacancy). Such mismatches occur for Contract, Program and Project Administrators, Aged and Disabled Carers and Child Carers.

The report points out that:

“From a major occupational group perspective, employers had the most difficulty filling vacancies for Technicians and Trades Workers, with just 44% of vacancies filled in 2022 (down from 50% in 2021). Shortages within this broad group of occupations appear to be persistent over time. The proportion of vacancies filled has been particularly low during 2022 for:

Automotive and Engineering Trades Workers (down from 43% in 2021 to 27% in 2022)
Construction Trades Workers (down from 45% in 2021 to 32% in 2022); and
Electrotechnology and Telecommunications Trades Workers (down from 54% in 2021 to 36% in 2022).”

Jobs and Skills Australia’s analysis suggests that “employers seek skills beyond those provided by qualifications. The most common reason employers stated for applicants not being suitable was a lack of experience and specific skills.” This accords with one of the other articles in this edition. On average, employers received 4.3 qualified applicants per vacancy, and that was more than twice the number they deemed suitable. “This implies that the issues with low fill rates are not simply a matter of not enough people being formally educated in the field – but a mismatch between employer requirements for experienced staff with the required skills and the availability of such staff.”

Finally, “higher-skilled occupations also remain more difficult to recruit for compared with lower-skilled occupations, with difficulty rates for recruiting employers of 72% (for Skill Level 1 to 3 occupations) and 58% (for Skill Level 4 and 5 occupations) respectively in December 2022.”

The report has a lot of other detail which VDC News readers may find potentially interesting. These include state- and territory-specific information and data. Maybe worth a look?