Mon Aug 29

As the jobs summit talks skills – we predict which occupations will have shortages and surpluses in the next 2 years

Written by: Janine Dixon, Economist at Centre of Policy Studies, Victoria University

This article is part of The Conversation’s series looking at Labor’s jobs summit. Read the other articles in the series here ^[1].

Skills shortages are set to be a key theme at this week’s jobs summit. With the unemployment rate ^[2] at its lowest level in a generation, employers and consumers are looking for solutions.

To understand where the shortages are, researchers can survey employers or count the number and duration of job vacancies. These methods are useful for establishing where shortages exist, but not so helpful in anticipating where new shortages might emerge.

At Victoria University we have created a model-based analysis in which likely paths for supply and demand of many types of jobs are forecast. This will be useful in anticipating where shortages might emerge over the next couple of years.

For jobs where supply is not keeping up with demand, the model finds that wages increase relative to the average wage. And for jobs where growth in supply is exceeding demand, the model finds that wages fall relative to the average.

Although business groups are calling for an increase in immigration ^[4], we don’t consider this in the analysis. Instead, we focus on how to organise the people we have (which already factors in plenty of immigration) into the jobs that can best deliver the goods and services consumers want or need.

Forecasting the economy through to mid-2024, we put the occupations most likely to run into shortages or surpluses into four groups.

1. Supply struggles to keep up

Jobs with high wage growth and high employment growth are where we traditionally think of labour shortages.

For these jobs, demand is strong and supply will struggle to keep up. Most of the jobs in this group will be in demand from local consumers as our spending returns to normal after the pandemic.

They include jobs like education aides ^[5] who assist teachers in schools, personal carers and assistants in disability care and aged care, and several construction-related roles, which require certificate-level qualifications.

Nursing is another job where supply will struggle to keep up. Nursing requires at least a bachelor degree qualification, which means new nurses cannot be trained quickly.

2. Jobs nobody wants

Then there are the “jobs nobody wants” (at least, as indicated by this analysis). These are jobs employers will struggle to fill, even though demand growth isn’t terribly strong.

Most of these roles require either a certificate qualification or no post-school qualification at all, and may be physically arduous or have inherently difficult working conditions.

This category includes prison security guards, truck drivers, food preparation assistants (who do dishwashing, prepare fast foods and assist chefs with ingredient preparation) and bricklayers.

3. Attractive jobs

Jobs with low wage growth are the attractive jobs. Remember that in the modelling, if supply to an occupation is strong, it will depress wage growth.

We find attractive jobs are those requiring bachelor degrees or higher qualifications. Young people are twice as likely ^[6] to have these qualifications than older Australians. Three in ten people aged between 25 and 34 hold a bachelor degree, compared to just three in 20 people aged over 55.

As the older cohort retires and the younger cohort enters the job market, the supply of workers with bachelor degrees will grow, creating a strong supply of lawyers, engineers, accountants and architects.

Although these jobs are modelled to have relatively slow wage growth, these are generally high-wage white collar jobs offering good conditions and fulfilling work.

4. Attractive but declining jobs

These are jobs for which demand is expected to grow relatively slowly over the next two years, for a variety of reasons.

Unlike the jobs nobody wants, these jobs should not be difficult to fill. Demand for these roles will grow slowly due to workplace change. For example, hardly anybody uses typists these days. There are also fewer jobs for personal assistants, which have been replaced by more general roles such as “general clerk” who perform a range of administrative tasks. This is one of the roles where we find supply struggles to keep up.

While international travel remains in the doldrums, pilots are also on this list.

What to do next?

Labour shortages in some occupations make it difficult for businesses and governments to deliver the goods and services society wants. To address the shortages without changing the overall size of the population forecast (which already includes a large contribution from migration), increases in some types of jobs will mean reductions in others.

This makes the task more complicated than simply declaring we need more workers in the jobs that are in short supply.

Here are three suggestions:

encourage and enable people to qualify quickly and cheaply for occupations where supply is not keeping up – in particular, personal carers, education aides and the construction-related occupations. This may require more places to be offered in existing courses at TAFEs or other vocational education providers, and it may require design of new, shorter qualifications. Fees for these qualifications should be reduced or removed altogether
offer more domestic bachelor degree places for students to study nursing and midwifery. These students may be diverted from other bachelor degree courses. These courses necessarily take time to complete, so including nurses in our migration intake will also need to play a role
allow wages to climb in low-skilled, less fulfilling jobs such as checkout operators and sales assistants, until such time as automation becomes worthwhile. After that, people who would have been doing these jobs can instead address shortages in hospitality, which is more difficult to automate, or undertake a small amount of training to qualify as personal carers and assistants or education aides.