Engineering is a complex profession requiring intensive and extensive education and training over a long period, life-time professional development, numerous areas of specialisation and specialisation is often dependent on engineering practice. These characteristics mean that engineering is not governed by a single labour market for homogeneous “engineering” skills but numerous labour markets conditioned by specific engineering skills and experience levels.
In recent years, the supply of engineers in Australia has grown rapidly. The major source of growth has been skilled migration and recent intakes are at near record levels. Supply from domestic sources has also increased as more students complete engineering qualifications. These circumstances indicate that the supply of engineers continues to increase strongly.
In contrast, in the past few years the demand for engineers has collapsed. There are several factors involved including slow macroeconomic growth, decreased levels of investment in economic
infrastructure and the transition of the resources boom from its construction phase to production. The combination of these circumstances indicates that the engineering labour market has changed abruptly to one of over-supply.
14.1 Assessing the Engineering Labour Market
This Chapter draws on the material covered by the Statistical Overview to assess the status of the engineering labour market. The ideal, and simplest, statistics for this task would be ABS Labour Force Survey time series for employment, unemployment and the labour force constrained by the educational qualifications required to be an engineer. As has been explained at several points, this ideal cannot be achieved at present and a more complex process involving surrogate indicators for changes in supply and demand is necessary.
The assessment that follows looks at the macroeconomic situation, a common enough approach. However, a number of caveats need to be borne in mind when formulating judgments based on the available evidence. These include:
• Engineering is not homogeneous but is distinguished by extensive educational training, post education on-the-job specialisation into numerous fields and the capacity and experience to practice engineering independently.
• The demand for engineers has no substitutes and attempts to employ other skills are high risk and high cost.
• Similarly, substitutability between engineering specialisations is limited.
• The supply of engineers, however, can be employed in engineering and in a wide range of other analytical and problem solving areas.
Throughout the Statistical Overview we have distinguished between people who hold recognised
engineering qualifications and those who employ these qualifications in engineering occupations. At this stage the majority of available statistics relate to the former, but at a practical level when the demand for engineers is less than supply, many qualified engineers find employment in the broader economy. Whether they return to engineering depends on how long they are away from engineering and their personal assessment of life beyond engineering. This process is not yet well understood but it appears to be at the core of periodic skill shortages.
14.2 Changes in the Supply of Engineers
Between 2006 and 2011 the supply of qualified engineers grew by 5.6% per year adding an additional 63,275 to the engineering labour force; 18,109 were already resident in Australia 45,166 were new skilled migrants. The growth rate for Australian born supply was 3.3% per year and for overseas born supply it was 7.9% per year.
Since 2011, the supply of engineers has increased as domestic students complete entry level engineering qualifications and join the labour market and as additional skilled migrant engineers are granted the necessary visas. The supply of engineers is reduced by age retirement of engineers and by retirement from the labour market for family formation and further studies. Statistics are available to estimate the increases in supply but a major gap is statistics on departures.
In 2011, the supply of Australian born engineers was 121,528. Table 6.7 brought together statistics on the completion of entry level engineering qualifications for Professional Engineers, Engineering
Technologists and Associate Engineers. The average annual growth in numbers from this source was shown to be 6.6% for 2011 to 2013 inclusive. Acceptances of places in university engineering courses have continued to increase and so too have entry level course commencements. It is reasonable to assume therefore that this growth will continue through into 2014.
The cumulative increase since the census has been about 27,300. Between 2006 and 2011, educational completions added 38,200 to domestic supply and the net increase in supply was 18,104. Assuming retirement behaviour in the past three years is unchanged from the inter-census period, this ratio was used to discount the number of education completions to a net increase in supply of 12,900. In other words, domestic supply in 2014 is estimated at 134,400 suggesting that the increase in annual education completions has increased domestic supply growth to 3.4% per annum.
In 2011, the supply of overseas born engineers was142,362. Estimating an approximate increase in supply since then is more difficult because as well as the complications associated with retirements, large numbers of migrant engineers work in Australia on temporary visa ranging from a few months to four years duration. Since 2011, 26,506 permanent visas have been granted to migrant engineers and another 23,937 temporary visas. Some temporary visas holders have probably completed their contracts and returned to home countries, others have been sponsored by employers for permanent visas and are included in those statistics and an unknown remainder are still on temporary visas. Suffice it to say that the analysis in Chapter 7 showed that in the past three years annual permanent migration has increased by 15.2% per year compared to 16.1% for the period since 2002. In other words, the increase in the supply of engineers from skilled migration has continued to increase at a rate similar to the inter-census period.
The conclusion that can be drawn from these considerations is that the supply of engineers has continued to increase by about 6 to 6.5% per year.
14.3 Changes in the Demand for Engineers
Between 2006 and 2011, the demand for engineers increased by 5.5% per year, slightly lower than the increase in supply. Since then the changes that have occurred include:
• A collapse in vacancies for Engineers.
• A downturn in engineering construction on economic infrastructure with rapid completion of projects underway and falling new commencements.
• The end of the resources sector construction boom with high current activity levels largely supported by a large over-hang of work to be completed on projects underway and with new commencements falling.
• Falls in average salary packages for engineers at all levels across both private and public sectors.
• Comparatively low economic growth below its trend level.
These indicators suggest that the demand for engineers has fallen well below the levels recorded between census years. As projects underway are completed, it is likely that demand will fall further.