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Fighting to entice skilled workforce during downturn

03 November, 2009

The Australian Industry Group/Deloitte CEO survey, Skilling Business in Tough Times, has highlighted the strong pressures on employment and training during the downturn and the efforts by companies to retain and up-skill their staff.

The survey of 500 CEOs in businesses of all sizes, found that as a consequence of the 2008/09 downturn the overall expenditure on training by business will be reduced by 4.1% in 2009/10.

A third of businesses reported plans to reduce training expenditure and four out of five of those companies are reducing their training budgets by more than 20%.

Also, 36.8% of companies employing apprentices expect to reduce the number of apprentices in training in 2009/10, down 5.9%. In addition, the uptake of new apprentices is expected to be down by 10.6% over that period.

Employment is not expected to hit the lows of past downturns, with companies planning to reduce employment by an average of 3.8% in 2009/10. Across the sectors, employment is anticipated to be down 3.0% in manufacturing, 2.5% in construction and 4% in services.

Ai Group Chief Executive, Heather Ridout, said: "It is clear from the survey that Australian companies have understood the lessons of past recessions and are doing all they can to hold on to staff with a view to being well placed to take advantage of growth when it resumes.

"While training budgets have been reduced, with, for example, apprenticeship commencement cuts by up to a third of companies, the overall performance in this area is in marked contrast to previous downturns. Training budgets have been trimmed rather than slashed and strategies have been employed across the board to retain staff, albeit with fewer hours.

"Despite the downturn and its impact on employment, skill shortages continue to be a major strategic issue for business, and industry remains alert to the problem. Indeed, over the next 12 months skills shortages are anticipated for a range of occupations. Most prominent among these are technicians and trades workers at 28.1% of companies and engineers at 15.3% of companies.

"The findings reinforce the timeliness of the recent Federal Government decision to provide additional incentives for businesses with the aim of employing more than 20,000 new apprentices. This is essential to addressing future skill shortages. However, the survey suggests that it is highly likely more will need to be done in this critical area," Ridout said.

David Brown, Deloitte Human Capital partner said: "Beyond the technical skills shortages highlighted in the survey, reduced investment in leadership training is also having an impact on senior managers and executives in Australia.

"Under investment in leadership training will need to be addressed if Australia is to take advantage of being one of the first economies to emerge from the downturn and attract the talent it needs to drive growth" he said.

"Organisations will need to ensure they attract and retain more than their fair share of the available talent, particularly as we start to see an increase in the demand for talent in the new year.

"How organisations have been looking after their employees and continuing to invest in technical and leadership development will influence people's decision to either stay or move on when opportunities present themselves.

"As the demand for talent continues to escalate, those organisations that have focused on flexible work design and multi skilling will also be better placed to take their share of the available talent," Brown said.

Among the findings:

- There is expected to be an overall 4.1% reduction in expenditure by business on training in 2009/2010. A third of businesses surveyed reported plans to cut training budgets and four in five of those plan to do so by more than 20%. Among the sectors: construction 6.6%; manufacturing 5.4%, and services 2.2%.
- 36.8% of companies employing apprentices expect to reduce the number of apprentices in training during 2009/10. Overall, apprentice numbers are anticipated to decline by 5.9% and intake of new apprentices is expected to fall 10.6%.
- Companies surveyed expected ongoing skills shortages particularly among technicians and trade workers (28.1% of companies) and engineers (15.3% of companies).
- Majority of businesses surveyed are opting to up-skill existing workforce (65.7%) rather than recruit new workers (28.5%) to meet their skill needs.
- A quarter of employers (25.1%) indicated a shortage of literacy skills, 22.5% of enterprises reported numeracy skills shortages and over a third of enterprises (34.7%) identified shortages in information technology skills.
- Employers consider employability skills (33.1%) and a positive attitude (32.6%) to be the most important factors when they are recruiting graduates.
- Employers are minimising job losses by reducing non-labour costs (44.8%), shortening working hours (39.6%), freezing salaries and bonuses (35.4%) and bringing forward leave (32.2%).

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