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Factors and trends

Overview

This section examines some of the high-level factors and trends which influence and drive the demand for skills.

This includes economic conditions and trends in the labour market, as well as other factors such as changes in society and culture, business and market, advancements in technology, implications arising from climate change and increasing emphasis on sustainable environmental practices, and policy, institutional, and regulatory requirements. 

Drawing on information from the Industry Reference Committee (IRC) Skills Forecasts, this section identifies which factors are having a greater impact on different industries. 

The report Future skills and training: a practical resource to help identify future skills and training (update forthcoming) provides more detail on some of the factors listed above and is available on the Australian Industry and Skills Committee (AISC) website.

Factors identified as having the greatest impact on industry are:

Economic conditions

Australia continues to experience growth and low unemployment. In 2018, the top three industries contributing to this growth were:

  • Financial and insurance services
  • Construction
  • Mining.

Gross Value Added (GVA) for all industries had an increase of 2.8 percent from 2017 to 2018. In 2000, GVA for the top 3 contributing industries was manufacturing at 12.6 percent, financial and insurance services at 8.5 percent and construction at 6.9 percent. In 2018, GVA for the top 3 contributing industries was financial and insurance services at 9.5 percent, mining at 8.8 percent and construction at 8.1 percent. In May 2018, the unemployment rate was 5.3 percent overall and 11.0 percent for 15 to 24 year olds.   In May 2018, the underemployment rate was 8.3 percent overall and 17.5 percent for 15 to 24 year olds.

Trends in the labour market

Industry employment level

Employment grew in absolute numbers for the majority of industries between 2000 and 2018. The main exceptions being the Agriculture, Forestry and Fishing, and Manufacturing industries, which saw a decline in their workforce over this period.

Industry and occupation structural change

There is an evident shift in industry structure. The industries with the largest decline between 2000 and 2018 (in terms of share of total employment) are:

  • Manufacturing (4.8 percentage points)
  • Agriculture, Forestry and Fishing (2.2 percentage points).

The industries with the largest increases have been:

  • Health Care and Social Assistance (3.8 percentage points)
  • Professional, Scientific and Technical Services (1.8 percentage points)
  • Construction (1.6 percentage points).

Within these three industries, and noting that over this time the number of people employed across industries has grown by 42%, some of the industry sectors with the largest growth are:

 

The occupational structure of the labour market has changed over the same period as well, with higher-level skills increasingly more in demand. The occupation grouping with the largest growth is Professionals (increasing their share by 5.1 percentage points). The second largest increase is Community and Personal Service Workers (increasing its share by 2.4 percentage points).

Within the Community and Personal Service Workers category, for occupations where there were at least 20,000 people employed in 2018, the largest percentage increases between 2000 and 2018 are:

In terms of numbers employed however, the largest increases were:

In most industries part-time employment is also growing. The industries with the largest increases in part-time employment (as a proportion of total employment between 2000 and 2018) were Accommodation and Food Services (10.0 percentage point increase), and Administrative and Support Services (9.9 percentage point increase).

Demographic trends

Australia’s ageing population and workforce is affecting industries differently. In 2018, there were nine industries with 30% or more of their workforce aged 50 and over. Nearly half of Agriculture, Forestry and Fishing workers were 50 years or older (49.5%), but only 13.4% of Accommodation and Food Services workers were of that age.

Since 2000, there has been an increase in the proportion of the workforce aged 50 years and over in all industries. The industries which have seen the largest increase in the proportion of the workforce aged 50 and over are:

  • Public Administration and Safety (14.8 percentage points)
  • Agriculture, Forestry and Fishing (13.9 percentage points)
  • Administrative and Support Services (13.3 percentage points)
  • Transport, Postal and Warehousing (11.1 percentage points)
  • Manufacturing (10.5 percentage points)
  • Wholesale Trade (10.2 percentage points).

Shifts in gender participation has varied across industry and occupation groups. For most industries, there was little change in the proportion of the female workforce between 2000 to 2018. Industries which have seen the largest growth in the female workforce are Public Administration and Safety (8.1 percentage points) and Other Services (5.8 percentage points).

Among occupation groups, Professionals and Managers have seen the strongest increase in the female proportion of the workforce between 2000 and 2018, with 7.1 percentage point and 6.8 percentage point increase respectively. 

Factors influencing the demand for skills

The Miles Morgan report, Future skills and training (update forthcoming), identifies a number of factors and trends currently driving and influencing the demand for skills in Australia and internationally. The factors are grouped into five overarching clusters: society and culture, business and economics, technology, resources and environment, and policy and regulation. Below is a brief overview of these factors, with more detailed information available in the Future skills and training (update forthcoming) report.

Society and culture

This group of factors relate to changes in society and culture which have implications on the labour market and skills.

Society and culture-related factors which affect the labour market include:

  • demographic changes, such as population growth and an ageing population and their impact on the workforce and markets, including industry adaptation to the diversity of workforce aspirations and experience
  • globalisation and its impact on mobility, migration and international markets
  • changing work and career values with a greater emphasis on flexible working arrangements, work/life balance and increase in part time work
  • attracting and retaining a workforce
  • suitably skilled workforce and access to suitable training
  • urbanisation and implications for regional, rural and remote areas
  • increased participation by women and gender-related disparity
  • increasing participation by equity groups
  • workforce vulnerability due to automation and cost reduction strategies.

The majority of IRC Skills Forecasts identify at least one society and culture factor which has had an impact on their industry sectors. The following industries identify more than one society and culture factors:

  • Animal Care and Management
  • Community Services
  • Manufacturing
  • Personal Services
  • Racing
  • Transport and Logistics
  • Utilities.

The most prominent society and culture factor is demographic changes, particularly Australia’s ageing population, but also population growth. Many industries cite an ageing workforce as being a potential challenge. However, the ageing population is also creating new markets and new opportunities for some industries. 

Other factors mentioned among IRC Skills Forecasts include:

  • workforce skill requirements and challenges associated with accessing suitably skilled workers and suitable training
  • globalisation and its impact on mobility, migration and international markets
  • attracting and retaining a workforce, including changes to visa arrangements reducing access to overseas workers
  • urbanisation and implications for regional, rural and remote areas
  • suitably skilled workforce and access to suitable training.

Business and economics

These factors relate to trends in business and markets which influences how companies do business. Factors include:

  • high-speed competition and workplace dynamics involving re-organisation of human resources to sustain competition
  • start-up thinking (including entrepreneurialism, freelancing and contracting)
  • emerging or changing markets
  • skills mismatch, shortages or gaps
  • network working and producing and supply chain management
  • knowledge-based economy
  • empowered customers, and changing work and career values
  • a growing demand for care-related services and products.

Under half of the IRC Skills Forecasts discuss business and economics factors affecting their industry sectors. The following industries identify more than one business and economics factors which impact on their industry:

  • Automotive
  • Manufacturing
  • Personal Services
  • Sports and Recreation
  • Tourism, Travel and Hospitality
  • Utilities.

There were a variety of business and economics-related factors mentioned across the skills forecasts. Some of these factors were mentioned across several IRC skills forecasts while some were mentioned less often. These have for some industries involved changing business models and structural change. The factors mentioned include:

  • emerging or changing markets
  • empowered customers and changing customer preferences which drive new consumer-driven models and markets. 
  • High-speed competition and highly competitive markets
  • workplace dynamics involving re-organisation of human resources to sustain competition.

Technology

This group of factors cover the ever-evolving nature of technology and the implications it has for the workforce and skills needs. Factors include:

  • emerging technologies
  • digitisation and the Internet of Things, mobility and connectivity
  • big data and data analytics
  • artificial Intelligence (AI) and machine learning
  • automation and robotics (including drones)
  • more technologically advanced materials and products
  • augmented Reality and virtual reality
  • optimising brain and cross-disciplinary science.

Most of the IRC Skills Forecasts identify technology factors as an issue affecting their industry sectors. Indeed, technology-related trends were raised more often than any of the other trends in the IRC Skills Forecasts. The following industries identify more than one technology factor which impacts on their industry:

  • Agriculture, Horticulture and Conservation and Land Management
  • Animal Care and Management
  • Automotive
  • Business Services
  • Community Services
  • Corrections and Public Safety
  • Culture and Related Industries
  • Electrotechnology
  • Financial Services
  • Forest and Wood Products
  • Health Services
  • Information and Communications Technology
  • Manufacturing
  • Mining, Drilling and Civil Infrastructure
  • Printing and Graphic Arts
  • Property Services
  • Tourism, Travel and Hospitality
  • Transport and Logistics
  • Utilities
  • Wholesale and Retail

The most prominent technology factor is emerging technologies (and technological advancements). Some industries cite emerging technologies as being a potential challenge for the workforce as it has implications for the way work is conducted and therefore the skills mix required. However, emerging technologies are also seen as leading to new opportunities.   

Other technology factors which are mentioned in some of the IRC Skills Forecasts include:

  • automation and robotics (including drones)
  • big data and data analysis
  • digitisation, Industry 4.0 and the Internet of Things
  • more technologically advanced materials and products (specific to each industry)
  • artificial intelligence and machine learning
  • virtual reality and augmented reality.

Resources and environment

These factors cover issues such as climate change, international action on sustainability, as well as access to reliable internet, and the implication for business, the workforce and education and training. Factors include: 

  • international and domestic sustainability action, driving the demand for more sustainable products and services
  • climatic weather shifts and the impact of climate change
  • improving energy efficiency
  • access to quality internet
  • financial viability.

Less than half of the IRC Skills Forecasts discuss resources and environment factors as an issue affecting their industry sectors. The following industries mention more than one resources and environment factor:

  • Electrotechnology
  • Construction, Plumbing and Services
  • Manufacturing
  • Mining, Drilling and Civil Infrastructure
  • Property Services
  • Utilities
  • Transport and Logistics.

The most prominent resources and environment factor is international and domestic sustainability action, which is driving the demand for more sustainable products and services. Some industries cite sustainability action as being a potential challenge for the industry due to changing customer expectations and changes in approaches to business operations and challenges in meeting skill requirements. However, most industries identify sustainability action as leading to new opportunities and markets. 

Related to this, the effects of climate change and greenhouse gases were also discussed in quite a few of the IRC Skills Forecasts. This also leads to both challenges and opportunities in the need to adapt to changing expectations by both customers and governments. In a similar vein, the other resources and environment factor discussed in some skills forecasts was improving energy efficiency and renewable energy. This factor was more applicable to some industries than others due to the nature of those industries (for example, Utilities industries).

Policy and regulatory

This group of factors covers the policy settings and regulatory factors which influence the demand for skills, including understanding and adhering to the regulatory environment, the policy environment and its implications for businesses and the workforce, and reform in the education and training sector. Factors include:

  • innovation ahead of regulation
  • policy environment
  • appetite for reform
  • high and complex regulatory environment
  • safety requirements.

The majority of IRC Skills Forecasts rank policy and regulatory factors as an issue affecting their industry sectors. The following industries mention at least one of these factors:

  • Agriculture, Horticulture and Conservation and Land Management
  • Animal Care and Management
  • Aquaculture and Wild Catch
  • Automotive
  • Community Services
  • Construction, Plumbing and Services
  • Education
  • Financial Services
  • Forest and Wood Products
  • Government
  • Health Services
  • Manufacturing
  • Mining, Drilling and Civil Infrastructure
  • Personal Services
  • Property Services
  • Public Safety
  • Racing
  • Transport and Logistics
  • Utilities.

The most prominent policy and regulatory  factor mentioned across the IRC Skills Forecasts is a high and complex regulatory environment. For most industries a high and complex regulatory environment is part of the operational environment, either specific to the industry or applied more broadly, and can include:

  • licensed occupations
  • industry standards
  • legislation to manage and protect resources
  • workplace health and safety legislation
  • legislation to protect consumers (noting that these can vary by state or territory).

Many industry sectors report the need for business and compliance skills to enable the workforce to negotiate the regulatory environment. Regulation has also led to new technologies in some areas that require new skills. This can also have implications for training package development.

In contrast, at least two of the skills forecasts mentioned that there was a lack of legislation and regulation around new technologies that have been introduced in the industry. An example of this was unmanned and autonomous aircraft.

The other policy and regulatory  factor which is of importance to some industry sectors is appetite for reform, where industry would like to see reform in their industry or have recently been impacted by reform. This is particularly so in the Community Services and Health industries, with initiatives and reforms such as the National Disability Insurance Scheme, My Aged Care, and Jobs for Families Child Care Package.

Method and sources

Methodology

The factors and trends framework has largely been based on the factors outlined in the Miles Morgan report Future skills and training: A practical resource to help identify future skills and training (update forthcoming), which will be made available on the AISC website in 2019. The report outlines a number of factors which are influencing the demand for skills in the following broad categories: society and culture, business and economics, technology, resources and the environment, policy and regulatory.

A systematic review of the Skills Forecasts from 2018 has been undertaken to identify which factors are most prevalent for the IRCs. 

Employment data has also been provided to show how labour market trends have also been shaping the workforce between 2000 and 2018.

Sources

Australian Bureau of Statistics 2018, Gross Value Added (GVA) by Industry, 5204.0 – Table 5, viewed November 2018 <http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5204.02017-18?OpenDocument>

  • Top three contributing industries, 2000 and 2018

Australian Bureau of Statistics 2018, Underutilised persons by Age and Sex - Trend, Seasonally adjusted and Original, 6202.0 – Table 22, viewed November 2018 <http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6202.0October%202018?OpenDocument>

  • Unemployment May 2018 (all and 15-24 year olds)
  • Underemployment May 2018 (all and 15-24 year olds)

Australian Bureau of Statistics 2017, Employed persons by Industry group of main job (ANZSIC), sex, state and territory, November 1984 onwards, 6291.0.55.003 - EQ06, viewed November 2018, <http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6291.0.55.003Aug%202018?OpenDocument>

  • Employed total by ANZSIC 1 digit Industry, 2000 to 2018, May Quarter
  • Employed total, percentage change by ANZSIC 1 digit Industry, between 2000 and 2018, May Quarter
  • Employed total, percentage change by ANZSIC 3 digit Industry group, between 2000 and 2018, May Quarter, for selected industry sectors
  • Employment status, percentage change by ANZSIC 1 digit industry, between 2000 and 2018, May Quarter
  • Employed total, proportion of females in workforce, percentage change by ANZSIC 1 digit Industry, between 2000 and 2018, May Quarter

Australian Bureau of Statistics 2018, Employed persons by occupation group of main job (ANZSCO), sex, state and territory, November 1984 onwards, 6291.0.55.003 - EQ08, viewed November 2018 <http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6291.0.55.003Aug%202018?OpenDocument>

  • ANZSCO 1 digit occupation, percentage change between 2000 and 2018, May Quarter
  • ANZSCO 4 digit occupation unit group, percentage change between 2000 and 2018, May Quarter
  • Employed total, proportion of females in workforce, percentage change by ANZSCO 1 digit Industry, between 2000 and 2018, May Quarter

Australian Bureau of Statistics 2018, Employed persons by Age and Industry division of main job (ANZSIC), November 1984 onwards, 6291.0.55.003 – EQ12, viewed November 2018 <http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6291.0.55.003Aug%202018?OpenDocument>  

  • Employed total, proportion of workforce aged 49 and under and 50 and over by ANZSIC 1 digit level, 2018 May Quarter
  • Employed total, proportion of the workforce aged 50 and over by ANZIC 1 digit level, percentage change difference between 2000 and 2018, May Quarter
Updated: 18 Dec 2018
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