Trends of Imported Labor Force & Skill Migration of Engineers : Focus on Australia

1. Oil&Gas Note | May-2014
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Trends of Imported Labor Force & Skilled Migration of Engineers
Focus on Australia
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47,4%
30,5%
86,5%
26,5%
50,8%
52,6%
69,5%
13,5%
73,5%
49,2%
Australasia Europe Middle East North
America
Russia and
CIS
Imported Labor Local Labour
Imported vs. Local Workforce in the Oil&Gas Industry
(whole workforce involved in the industry)
Taking Australia between two important years – 2006
and 2011 (the Census years) we can say that it was a
general increase of compound 5,6%1 per year in supply of
qualified engineers. The notable fact is that 71.4% of this
growth fell to the share of skilled migration and resulted in
the balance of the engineering labor force changing from
an Australian born majority in 2006 to an overseas born
majority in 20111 (However, the balance of the whole
workforce involved in the industry is still in favor of the
local one). According to the recent Hays Oil&Gas Global
Salary Guide, in 2013 the proportion of imported and local
workforce in the oil & gas industry (whole workforce
involved in the industry, not only qualified engineers) in
the Australasian region was 47.4% and 52.6% respectively.
Therefore, the proportion of imported workforce involved
in the Oil&Gas industry in the region is relatively high
surpassing significantly the one in Europe or North
America.
1The Engineering Profession: A statistical Overview; Tenth Edition, September 2013 Source: Hays Oil & Gas Global Salary Guide, Review of 2013,outlook for 2014.
$163700
$164000
Imported average annual salary
Local average annual salary
Local vs. Imported workforce salary in O&G sector
$700 $660
$910
$1190 $1160
$330 $315 $496
$664
$950
Australia World average
Contractor Day Rates by the level of seniority
Source: Hays Oil & Gas Global Salary Guide, Review of 2013,outlook for 2014.
Australian Oil & Gas sector pays equally
generously both local and imported workforce
with very slight advantage in favor of the latter.
In general, countries tend to pay their imported
workers more and very often significantly
more. Frequently it is seen in developing
economies whilst in developed countries the
payment is closer to equal or even in favor of
domestic workforce.
The average level of contractor day rates in
Australia and Australasian region as a whole is
the highest among all the regions. The biggest
gap between Australian rates and the world
average is for the Operator/Technician level.
With increase of the seniority level the gap
shrinks and on the level of VP/Director the
Australian rates go in line with the world
average being just slightly higher.
The highest contractor day rates lead to the
lowest benefits. This is the logic that can
explain why only 56% of workforce in the
Australasian Oil & Gas industry receive any kind
of benefits. This is the lowest proportion
among all the regions. Leaders in that issue are
Asia, Middle East and South America paying
benefits respectively to 77%, 77% and 78% of
their workers.
Australian
Labor
Market in
Figures
44% No
Benefits
9% Training
11% Car/Transport/Petrol
12% Home leave allowance/flights
15% Health Plan
19% Pension
30% Bonuses
Top Industry Benefits in the region
Australasia is a region that comprises Australia, New Zealand,
the island of New Guinea, and neighboring islands in the Pacific Ocean.

2. 33,8%
23,1%
14,5%
9,4%
9,2%
7,9%
2,1%
40,0%
27,7%
13,9%
6,4%
3,3%
4,6%
4,2%
Skills shortages
Economic instability
Environmental concerns
Safety regulations
Security/safety caused by
social unrest
Immigration/overseas visa
program
Other
Oil&Gas Note | May-2014
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Employers’ Concerns in the Current Oil&Gas Employment Market
World Australasia
Source: Hays Oil& Gas Global Salary Guide, Review of 2013,outlook for 2014.
According to the diagrams above it is clear that the absolute
leader among the employers’ concerns on the labor market is
Skills Shortage. This trend is seen in all the regions but mostly – in
Europe, Australasia and North America being significantly above
the average. Taking Australasia in particular the Economic
Instability is another aspect that raises concerns among the
Oil&Gas experts more than the world average.
Speaking about the problem of Skills Shortage in Australia we
should mention first of all the domestic skills shortage. The
increase in number of domestic university graduates who did
engineering is very recent and there is not enough of skilled
professionals. Again looking back at the period between the two
Census years we see that the demand for qualified engineers was
growing by compound 5.5% per year with the demand for
qualified engineers in engineering occupations growing even
more – by 6.0% per year. When we look at the figures of the
supply we can see that the flow of new domestic engineering
team graduates grew only by an average 1.9% per year.
Therefore, the overall compound 5.6% per year growth in supply
of qualified engineers was mostly provided by skilled migration
(71.4% of the total).
The trend seems to be at least saved or changed for even
bigger proportion of skilled migration in total supply. The reason
– a lot of big and “skilled consuming” projects that are already in
process or are about to start, primarily in the LNG sector.
Employers will have to overcome the problem of skills shortage
by using the processes of permanent and temporary skilled
migration. However, this also will be tough as on the international
labor market competition for qualified engineers is and will be
not much less than on the national one.
Source: The Engineering Profession: A StatisticalOverview; Tenth Edition, September 2013.
17,0%
18,9%
27,6%
21,7%
14,8%
12,3%
16,6%
26,4%
24,7%
19,9%
Level 1 (2-3) Level 2 (6-8) Level 3 (14-17) Level 4 (21-24) Level 5 (25-27)
Average to 2006 2013
Recruiting Difficulties Experienced by Grade Sought in 2013
Compared to the Medium Term Average
(Average number of years experience)
6%
32%
48%
15%
2%
21%
52%
25%
Risk to the project Major problems Moderate
problems
Minor issues
Average since 2006 2013
The Consequences of Recruiting Difficulties Experienced in 2013
Compared to the Medium Term Average
Source: Engineers Australia's Recruitment Difficulties Survey, 2014
Looking at the graph concerning recruiting difficulties by the level
of an engineer we can notice a trend that in 2013 the more
experienced an engineer was the more difficulties employers
faced to find and recruit him comparing to 2006. It can be
explained by the fact that over the last 7-8 years the number of
young people in Australia enrolled into engineering profession
increased a lot (between 2006 and 2011 there was a 38%
increase in terms of number of students commencing
Engineering & Related Technologies course with the highest leap
in 2009). Therefore, the proportion of young professionals grows
but the competition for experienced and valuable employees
also increase due to the big number of huge and complicated
projects which require the best and the most experienced
people.
In terms of consequences of various recruiting difficulties we can
also notice that the tendency in changes in 2013 comparing to
the average since 2006 is the opposite. We see a significant
decrease in terms of major problems, however minor issues
occur much more often. Here it is important to indicate what
these major, moderate and minor issues involve. Minor issues –
minor irritations but no monetary problems. Moderate problems
are problems with some monetary issues. Major problems are
the problems that include project delays & costs. Risk to the
project – risk to not proceed with available project at all.