Workforce, Certification & Training

Skills gap threatens to derail Australia’s project boom

Australia’s rail industry will struggle to cope as demand for labour peaks in the middle of the next decade and the workforce continues to age, with some sectors forecast to lose 30 per cent of their existing workforce to retirement by 2028, according to the BIS Oxford Economics report released by the Australasian Railway Association at the end of 2018.

The ARA used AusRAIL, its peak annual event in 2018, to highlight the skills crisis challenging the sector in the near future, launching its highly-anticipated report into the skills shortage facing the region’s rail industry.

The study carried out by BIS Oxford Economics consisted of a workforce capability analysis based on planned and forecast rail infrastructure development in Australia and New Zealand over the next decade. The resulting report, Skills Crisis: A Call to Action, presents evidence that confirms what many rail industry employers had already been experiencing first-hand: Australia and New Zealand’s rail industries are facing a massive gap in their ability to provide the requisite skills for the surging investment in rail projects that are underway, or planned in coming years.

Federal and state governments across Australia have collectively committed $100 billion over the next 12 years to infrastructure projects to ensure the nation’s rail networks can bear the weight of a steadily expanding population, and the concomitant increase in demand for rail services.

Alongside this sharply rising demand for investment in rail infrastructure construction, operation and maintenance, there is also a rapidly changing technological base, which is steadily transforming the kinds of skills that the industry will require going forward.

Introducing the report at on the first morning of the AusRAIL conference last year, ARA CEO Danny Broad said that this expansion of investment in rail projects, while eminently welcome, was outstripping the current capacity to carry the necessary works – construction, operation and maintenance – to completion in a timely and efficient manner.

“We are entering into a golden age of rail, a rebirth of rail construction and development, including metros and light rail projects in our capital cities, level crossing replacement programs, and key freight projects, such as Inland Rail,” Broad said.

“But we all know, and have known for some time, that we have shortages of critical labour skills that are essential to our ability to build, manufacture, operate and maintain such projects on budget and on time.”

The ARA board commissioned BIS Oxford Economics six months ago to undertake a comprehensive workforce capability and capacity study across Australia and New Zealand to predict the needs over the next ten years, match these against the current and projected workforce, identify capacity constraints, and provide recommendations for immediate action.

BIS Oxford carried out both quantitative and qualitative research into the rail industry’s labour challenges and requirements, which involved talking to 48 different agencies and conducting several interviews with groups of people together from a range of organisations, including government and industry.

Among the findings of the study’s quantitative research is the speed at which the rail industry workforce is ageing.

Modelling carried out by BIS Oxford indicates that over 20 per cent of the existing workforce will retire by 2028, further exacerbating the strain.

“Rail has an ageing workforce, and we are going to see further skills pressures from that,” said Adrian Hart, senior economist with BIS Oxford.

“In some occupations we will see a loss of 30 per cent of the existing staff over the next decade purely through retirement. And while that’s fairly normal when you look over a decade – about 3 per cent per year – when you look at the incoming tsunami of investment in rail infrastructure over the next 10 years, it becomes clear that there is a shortage now and that shortage will worsen if something isn’t done.”

Hart, who manages BIS Oxford’s research across the building, construction and maintenance industries, took the leading role in putting together the report.

Presenting the report on the first morning of AusRAIL, he presented the audience with some of its most salient findings.

“We don’t see a peak in major transport investment until the mid 2020s. The big projects are just continuing to stack up. And, in many ways, it is a big, sudden wave of investment,” Hart said. “Politicians can often announce projects without thinking through the engineering and all the other skill sets that we need to deliver this.”

And further, in Australia, Hard said governments have not invested in a sustainable manner. Politicians invest when they are prepared to invest. “And the challenge with this is that we therefore haven’t had a nice sustainable growth path for this industry that would allow skills to develop and allow companies to have the incentive to invest in education and training when enthusiasm for investment is lower.”

Hart explained rail investment had, over the decades, been very “up and down”. The high levels of investment being seen right now are to compensate for lack of investment over many years, leading to challenges in sustaining necessary industry skills over a long period of time.

Rail Express‘s full report into the ARA/BIS Oxford Economics study will feature in the next issue of Rail Express Magazine, published later this month. Subscribe today.