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Mind the Gap

Following is an extract from Mind the Gap – a body of research conducted by PwC between October 2011 and April 2012 with senior executives from more than 20 energy, resources and mining services companies operating in Australia. Thirty chief executive officers, business unit leaders, vice-presidents and general managers were interviewed and asked to prioritise the root causes of skills shortages in their organisations.

The comforts of home

In contrast to workers in other countries, Australian workers have been unwilling to relocate on the promise of jobs in the resources sector, even to take up attractive and lucrative offers.

A vital issue for 88% of our interviewees was the reluctance of Australian workers to relocate for work. Figures from a DEEWR survey of recent engineering graduates revealed that few of them move interstate to take up employment. While more than half the graduating students indicated they were willing to work in remote or regional areas, only 11% took up employment in those parts of Australia. The rest stayed in the cities.

The trend is similar for tradespeople despite the higher pay they can receive from working in remote regions. In 2006 two-thirds of Australia’s tradespeople were employed in capital cities and only 2.5% of them worked in remote regions. In fact, there appears to be a shift in mining jobs away from remote areas and towards capital cities. From 1996 to 2006, there was a 10% reduction in the number of tradespeople employed in mining jobs in remote areas, and a 48% increase in the number of mining jobs in capital cities.

One interviewee described Australians as too “rich, fat and happy” to relocate for work. An extreme perspective, but one that underlines the reluctance which continues to hamper recruitment in the sector. Another interviewee said: “There’s no willingness to work in extreme conditions where mines can’t provide an environment that’s satisfactory”.

Provide incentives, remove obstacles

Government incentives and educational scholarships for people willing to relocate to remote areas to work and study in the resources industry should also be considered. The Australian Mines and Metals Association wants “enhanced incentives” to localise workforces in regional towns hit by high housing rent levels.42 The Association said there needed to be stronger policy decisions to support and co-ordinate regional development. Governments could help by abolishing stamp duty or by introducing concessions for people relocating to take on new job opportunities in regional mining communities – benefitting the industry and strengthening the community. Unfortunately, changes announced in the recent Federal Budget mean that fringe benefit tax breaks on Living Away from Home allowances will be wound back for both locals and foreigners unless they are legitimately keeping a second home. These changes create significant challenges for resources companies that rely on interstate moves for work purposes, as they may face additional employment costs, including payroll tax and additional superannuation costs.

Invest to make commuting more attractive

With Australian’s reluctance to relocate for work, resources companies are making it more attractive for skilled workers to commute long distances to their place of work. An example is Oz Minerals, which is providing direct flights from Melbourne to Prominent Hill in South Australia, where workers live in a village with dining, medical and recreational facilities. Through FIFO, workers are offered the best of both worlds: “mining career, Melbourne life”.

More investment in regional infrastructure will be needed to extend FIFO operations and make FIFO more attractive to Australian workers. Large regional cities such as Wollongong, Geelong and Ballarat are well supported by universities and TAFE colleges offering courses related to the industry. These cities have relatively large populations of working age people and some, such as Ballarat, have a culture that closely associates itself with the resources sector. In these centres, airports could be extended, providing greater capacity to fly more people over longer distances to critical destinations. This also underlines the need for greater public/private partnerships to invest in the development of regional hubs.

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