Opinion: Tackling Australia’s skills gap

Nicholas Wyman explains how apprenticeship or training programs can help reduce your organisation’s skills shortages.
Is your company struggling to recruit skilled workers? Are promising projects sitting on the shelf for lack of able hands? Leaders in many industries think so. The Australian Institute of Company Directors’ April Director Sentiment Index found that more than half of directors see skilled labour shortages as the main economic challenge facing our businesses. Anthony McLellan, director and chairman of several companies, put it to me this way: “Although staffing is primarily a management issue, boards need to concern themselves with the broad perspective. If we cannot recruit, train, and motivate an appropriate workforce, the entire investment may be at risk.”

Some companies are tackling the problem through apprenticeship or training programs. Consider Mercedes-Benz Melbourne (MBM). To prosper and grow – and to keep its customers happy – MBM needs skilled mechanics and technicians. It develops and retains them through mentor-based apprenticeships, continuing education and career development. For MBM, that’s been a winning formula. Without it, the company would not have enough technicians to run the critical service end of its business.

Two Related Programs

MBM and other forward-thinking companies 
are demonstrating how apprenticeship or training programs can help solve two related problems facing Australian business and 
society: skilled labour shortages in many sectors and a painfully high rate of youth unemployment. Let’s consider each.

Skilled labour shortages

The number of people entering the Australian workforce is declining even as our skilled baby boomers are marching into retirement. The result: a reduction in Australia’s inventory of skilled human capital, which will worsen if we fail to invest in skills development. According to Skills Australia, the nation will need 2.4 million new workers with Certificate III level skills by 2015, and 5.2 million by 2025. Yet, given the number of young people in the pipeline who are achieving those levels, many positions will not be filled, hamstringing business growth.

Youth unemployment – a lost generation?

Australia’s other nagging problem is high youth unemployment. About five per cent of working-age Australians are unemployed and on welfare. Among 15 to 19-year-olds not in school, the rate is dramatically higher: 16 per cent nationally, and over 55 per cent in some areas. This is breeding a culture of dependency and an underclass of “unemployables” — potentially a lost generation. It is also increasing pressure on the public purse. In the mid-1960s, the ratio of benefit recipients to working Australians was one to 22. Today, that ratio is one to five, and will get worse if we fail to take corrective action.

Regrettably, well-meaning government income support makes welfare more attractive than many first-year apprenticeships and entry-level jobs.

Practical Solutions

While many positions that go begging in business and industry require university degrees, most do not and can be filled through apprenticeship or training programs. Those programs open the door to rewarding careers in automotives, retailing, horticulture, hospitality, healthcare, the building trades and others. Hardworking people who enter those fields and augment their skills year by year can achieve solid middle class incomes.

Some may ask: “But don’t we already have a national apprentice/job training program?” Indeed we do. The Australian Department of Education, Employment and Workplace Relations regulates and funds most aspects of vocational education and training (VET). In addition, Job Service Australia, a $4.7 billion project, aims to help unemployed individuals find work. Unfortunately, these programs are not working well. Half of VET enrolees drop out.

What directors can do?

Government has a role to play in closing Australia’s skills gap and reducing youth unemployment, but the ultimate solution is in the hands of Australian business. Directors can do their part by asking CEOs to identify current and future skill gaps, to implement effective recruiting and training programs, and to develop strategies for dealing with the ageing workforce.

Part of the skills-gap solution rests with younger citizens — our future. We need to connect many of these young people with the training they need to get ahead, providing a bridge between school and the world of work. A hand up, not a hand out. Here are a few things I have learnt about making skills-building programs for these young people more successful:

Demonstrate long-term commitment and rock-solid executive support.
Offer attractive pay to apprentices or trainees, and offer each a “career ladder” to more challenging and better-paying positions.
Assign a mentor to every participant. An effective mentor transfers tacit organisational knowledge while providing support and guidance. Young people and their mentors develop bonds of loyalty that lead to employee satisfaction and retention.
Design apprenticeship or training around your company’s business needs. These programs shouldn’t be about charity, but about creating value for your enterprise.
Giving a “hand up” through skills building is a powerful way for directors to help their organisations while addressing one of Australia’s nagging social problems. It’s an excellent way to do well by doing good.