Figure 1: Employment Level ('000) 10 years to August Employment Outlook for Manufacturing

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1 Manufacturing Manufacturing is the fourth largest industry in Australia, employing people (or 8.3 per cent of the total workforce) as at August However, reflecting the structural shift in the Australian labour market, ten years ago, Manufacturing was the largest employing industry in Australia, employing more than one million people and accounting for 11.4 per cent of total employment. The largest contributor to employment in Manufacturing is the Food Product Manufacturing sector, employing people (or 22.1 per cent of industry employment) as at August 2011, followed by Machinery and Equipment Manufacturing ( or 12.3 per cent) and Primary Metal and Metal Product Manufacturing ( or 10.7 per cent). Employment Over the ten years to August 2011, employment in the Manufacturing industry has decreased by (down by 8.3 per cent). Manufacturing recorded the second largest fall in employment (behind Agriculture) over the decade as international competition and a high Australian dollar continued to place pressure on this industry. More significantly, Manufacturing employment has fallen by over the last three years. Figure 1: Employment Level ('000) 10 years to August Source: ABS Labour Force Survey (trend data) cat. no

2 Employment in Manufacturing has also declined in the medium term, by (or down by 6.1 per cent) in the five years to August Employment over this time decreased in all States and Territories except for the Northern Territory (up by 300 or 10.0 per cent). Growth in the Northern Territory was driven by increases in the Transport Equipment Manufacturing and Food Product Manufacturing sectors. The largest decrease in the five years to August 2011 was recorded in South Australia (down by or 19.5 per cent), followed by Queensland ( or 6.5 per cent). Figure 2: Employment Change by State and Territory ('000) five years to August NT -1.2 TAS -2.7 ACT NSW WA VIC QLD SA Source: ABS Labour Force Survey cat. no , DEEWR (trend) At the Labour Force Region level, the largest decline in employment over the five years to August 2011 was recorded in North Eastern Melbourne (down by 9000 or 28.8 per cent), followed by Gosford-Wyong in New South Wales (8200 or 57.1 per cent). On the other hand, the largest increases in employment were recorded in Hunter in New South Wales (up by 8700 or 30.1 per cent) and Central Highlands-Wimmera in Victoria (6100 or 70.4 per cent). Sectoral Employment The share of total employment in the industry by sector has changed considerably in the five years to August Food Product Manufacturing is the largest sector, accounting for 22.1 cent of all jobs within the industry, an increase of 3.1 percentage points over the period. On the other hand, the share of total employment in the industry accounted for by the Fabricated Metal Product Manufacturing sector has fallen from 8.6 per cent to 6.4 per cent), the largest decline of all sectors. Employment has declined in ten of the 15 sectors over the five years to August The largest decline was recorded in the Fabricated Metal Product Manufacturing sector (down by or 31.8 per cent) followed by the Transport Equipment Manufacturing sector ( or 21.4 per cent) and Textile, Leather, Clothing and Footwear Manufacturing ( or 25.2 per cent). While overall employment in the Manufacturing industry has declined, some sectors within the industry have recorded employment gains. The largest growth was recorded in the Food Product Manufacturing sector (up by or 6.7 per cent) followed by Primary Metal and Metal Product Manufacturing (9400 or 11.1 per cent) and Beverage and Tobacco Product Manufacturing (7300 or 29.5 per cent). Figure 3: Sectors - Employment Growth ('000) five years to August 2011 Food Product Manufacturing Primary Metal and Metal Product Manufacturing Beverage and Tobacco Product Manufacturing Basic Chemical and Chemical Product Manufacturing Petroleum and Coal Product Manufacturing Non-Metallic Mineral Product Manufacturing Furniture and Other Manufacturing Machinery and Equipment Manufacturing Wood Product Manufacturing Polymer Product and Rubber Product Manufacturing Printing (including the Reproduction of Recorded Media) Pulp, Paper and Converted Paper Product Manufacturing Textile, Leather, Clothing and Footwear Manufacturing Transport Equipment Manufacturing Fabricated Metal Product Manufacturing Manufacturing Source: ABS Labour Force Survey (trend data) cat. no Industry 2

3 Workforce Ageing Manufacturing has a relatively older workforce, with a median age of 41 years compared with 39 years for all industries. Mature age workers (45 and over) make up 40.6 per cent of total employment in the industry compared with 38.4 per cent for all industries. Figure 4: Employed Persons by Age Compared with All Industries (% share of employment) The Petroleum and Coal Product Manufacturing sector has the highest median age in the industry (48 years) while Food Product Manufacturing has the lowest (38 years) Median Age = 41 years Despite its high median age, the share of prime age workers (those aged 25 to 44 years) in Manufacturing is higher than the all industries average (46.1 per cent compared with 44.6 per cent) and over Manufacturing All Industries Source: ABS Labour Force Survey cat. no DEEWR (four quarter average). Gender and Full-time/Part-time Some 86.1 per cent of people employed in Manufacturing work full-time. This is considerably higher than the all industries average of 70.5 per cent. Female workers are underrepresented in the Manufacturing industry where they make up just 26.1 per cent of total employment compared with 45.5 per cent for all industries Figure 5: Employment by Gender and Full-time/Part-time (% share) year to August Female full-time workers account for 17.5 per cent of the industry and female part-time workers account for 8.6 per cent. This is significantly lower than the share of female workers for all industries (24.7 per cent for full-time and 20.8 per cent for part-time) Full-time (Males) Part-time (Males) Full-time (Females) Part-time (Females) In the five years to August 2011, fulltime employment declined by with the majority of this due to the decline in the number in males working full-time by By contrast, the number of males employed part-time increased (up by 3300). Total female employment declined over this period, with falls in the number of females working full-time and part-time (down by 7300 and 1900 respectively). Manufacturing All Industries Source: ABS Labour Force Survey cat. no , DEEWR (four quarter average). 3

4 Main Employing Occupations The largest employing occupation in Manufacturing in 2010 was Structural Steel and Welding Trades Workers (51 500), followed by Production Managers (42 900) and Metal Fitters and Machinists (38 800). In the two years to 2010, Production Managers recorded the largest increase in employment (up by or 31.8 per cent), followed by Food and Drink Factory Workers (3500 or 14.3 per cent). The largest decrease in employment over the same period was recorded for Product Assemblers (down by people or 29.9 per cent). Figure 6: Main Employing Occupations ('000) 2010 Structural Steel and Welding Trades Workers 51.5 Production Managers 42.9 Metal Fitters and Machinists 38.8 Packers Food and Drink Factory Workers Product Assemblers Sales Assistants (General) 24.9 Cabinetmakers Forklift Drivers Advertising and Sales Managers Sales Representatives Engineering Production Systems Workers Bakers and Pastrycooks Storepersons Manufacturers Printers Office Managers Purchasing and Supply Logistics Clerks Accounting Clerks Electricians Source: ABS Labour Force Survey cat. no (four quarter average custom request data) Education qualifications A lower proportion of workers in the Manufacturing industry have completed a non-school qualification compared with the all industries average (55.0 per cent and 62.3 per cent, respectively). The most prevalent non-school qualification is a Certificate III or IV (29.7 per cent), reflecting the importance of vocational education and training to the Manufacturing industry. While formal education is important for many occupations in the industry, a large proportion of people employed in the industry do not have a non-school qualification (45.0 per cent) compared with the all industries average (37.7 per cent), signalling job opportunities across all skill levels Figure 7: Educational Attainment - Share of Employment (% share of employment) - May 2010 With a non-school qualification Postgraduate Qualification Bachelor Degree Advanced Diploma or Diploma Certificate III or IV Certificate I or II Certificate or level not defined Without a non-school qualification Year 12 Year 10 or 11 Below Year Source: ABS Education and Work; cat. no (May 2010, custom request data)

5 Earnings In 2010, the median weekly earnings for full-time workers in Manufacturing were slightly lower than the average for all industries ($983 compared with $1050). The lowest median full-time weekly earnings within the industry was recorded in Furniture and Other Manufacturing and Textile, Leather, Clothing and Footwear Manufacturing (both $800). On the other hand, the Petroleum and Coal Product Manufacturing sector had significantly higher median full-time earnings ($1668). Figure 8: Sectors - Median weekly earnings (full-time and before tax) August 2010 Petroleum and Coal Product Manufacturing $1,668 Pulp, Paper, Converted Paper Mfg Basic Chemical, Chemical Product Manufacturing Machinery and Equipment Manufacturing Transport Equipment Manufacturing Primary Metal, Metal Product Manufacturing Polymer, Rubber Product Manufacturing ALL INDUSTRIES Printing (incl Recorded Media) Non-Metallic Mineral Manufacturing Manufacturing Fabricated Metal Product Manufacturing Beverage, Tobacco Manufacturing Food Product Manufacturing Wood Product Manufacturing Textile, Leather, Clothing, Footwear Mfg Furniture and Other Manufacturing $1,250 $1,150 $1,134 $1,100 $1,100 $1,075 $1,050 $1,000 $1,000 $983 $950 $900 $875 $860 $800 $ Source: ABS Employee Earnings, Benefits and Trade Union Membership cat. no (August 2010, custom request data). Employment Prospects The latest DEEWR annual employment projections for the five years to indicate that the Manufacturing industry is the only industry projected to record a decline in employment (of 0.6 per cent per annum). Employment is projected to decline across 11 of the 15 Manufacturing sectors, equating to a reduction of around jobs. Figure 9: Sectors - Projected Employment Growth ( 000) - five years to Food Product Manufacturing 16.7 Primary Metal, Metal Product Manufacturing 11.5 Basic Chemical, Chemical Product Manufacturing 1.9 Printing (incl Recorded Media) 0.6 Petroleum and Coal Product Manufacturing Machinery and Equipment Manufacturing Pulp, Paper, Converted Paper Mfg Non-Metallic Mineral Manufacturing Beverage, Tobacco Manufacturing Fabricated Metal Product Manufacturing Polymer, Rubber Product Manufacturing Furniture and Other Manufacturing Wood Product Manufacturing Textile, Leather, Clothing, Footwear Mfg Transport Equipment Manufacturing Source: DEEWR Projections

6 Employment in Manufacturing is projected to decline in four States and the ACT with the largest decline projected to be in Victoria (down by or 1.3 per cent per annum), followed by New South Wales ( or 0.7 per cent per annum). The Transport Equipment Manufacturing sector is projected to record the largest decline (down by or 3.2 per cent per annum) followed by Textile, Leather, Clothing and Footwear Manufacturing (7000 or 3.4 per cent per annum) and Wood Product Manufacturing (6700 or 4.0 per cent per annum). The two sectors projected to record the largest employment gains are Food Product Manufacturing (up by or 1.6 per cent per annum) followed by Primary Metal and Metal Product Manufacturing ( or 2.4 per cent per annum). At the Labour Force Region level, the largest decline in employment is projected to be in South Eastern Melbourne (down by 8200 or 4.7 per cent per annum), followed by Outer Western Melbourne (6600 or 3.7 per cent per annum). The largest increase in employment in the five years to is projected to occur in Queensland (up by 6300 or 0.6 per cent per annum), followed by Western Australia (up by 3400 or 0.8 per cent per annum) as Mining and Construction continue to drive employment in the Primary Metal and Metal Product Manufacturing sector. The largest increase in employment at the Labour Force Region level is projected in the Hunter (up by 8000 or 4.4 per cent per annum) followed by Wide Bay-Burnett in Queensland (6400 or 0.3 per cent per annum). Skills in the Manufacturing Industry Employment in Manufacturing includes a diverse range of skilled occupations, including large numbers of Managers (including Production Managers, Advertising and Sales Managers and General Managers). The industry is also a key employer of Engineering Trades, notably Structural Steel and Welding Trades Workers (about ), Metal Fitters and Machinists (38 800) and Sheetmetal Trades Workers (8200). Trades occupations which have significant employment in Manufacturing are, though, varied. ABS Labour Force Survey data suggest that in addition to the Engineering Trades Workers there are Cabinetmakers, Bakers and Pastrycooks, Printers, Electricians and Carpenters and Joiners employed in the industry. In terms of professions, Engineers (Industrial, Mechanical and Production) and Accountants are key occupations (with employment of and 8800 respectively). DEEWR research suggests shortages in highly skilled occupations which have large numbers employed in Manufacturing are particularly evident for Mechanical Engineers Engineering Trades (including Sheetmetal Workers, Fitters and Machinists and Welders) Cabinetmakers Bakers and Pastrycooks. Manufacturing Skills Australia s Environmental Scan notes significant concern about the sector s ability to compete with the resource sector for skills and identifies skill shortages as a key issue. Its survey for 2011 identified workers qualified at the Certificate III (trade) and Certificate IV levels to be hardest to find (65%), followed by Certificate II level production skills (42%). The scan identifies a larger range of occupational shortages than the DEEWR research. Skill Shortages DEEWR skill shortage research focuses on skilled occupations (that is, those which generally require at least three years of post school education or training), mainly trades and professions. The research is occupationally based and it does not provide evidence for gauging differences between employers experiences across sectors. The following summarises the labour market for trade and professional occupations which have employment in excess of 5000 in the Manufacturing sector. Professions Mechanical Engineers ABS Labour Force Survey figures show Manufacturing accounts for the employment of almost two in five Industrial, Mechanical and Production Engineers (separate figures for Mechanical Engineers are unavailable), with another 25 per cent in Professional, Scientific and Technical Services and slightly less than 10 per cent in Mining. The labour market for Mechanical Engineers is very tight in some states and the occupation is in national shortage. There is, though, some disparity across the states and territories which may reflect differences in employing sectors. A low proportion of vacancies surveyed in early 2011 for Mechanical Engineers were filled (about one-third) and there were 0.6 suitable applicants per vacancy. The tightest labour market is Western Australia where employers filled a very low proportion of their vacancies, while in New South Wales and South Australia employers experienced little difficulty recruiting. 6

7 Accountants The Manufacturing sector represents a very small proportion of employment of Accountants (around 5 per cent) and competes for these services with a wide range of industries. About half of Accountants work in Professional, Scientific and Technical Services. DEEWR research undertaken in late 2010 suggests the labour market is adequately supplied, with employers experiencing little difficulty filling their advertised vacancies for both entry-level and experienced Accountants. National shortages of Accountants were recorded continuously from 2004 to 2008, but there has been a marked reduction in demand for these professionals since the onset of the global recession. Employment of Accountants fell by 1.4 per cent (or 2200) over the year to August 2011, to (although it is 12.6 per cent higher than five years ago), and the level of advertised vacancies although recovering slightly since early 2010, remain more than 50 per cent below the peak recorded in mid Technicians and Trades Engineering Trades Manufacturing is the largest employing industry for Engineering Trades, having as much as 93 per cent of the total employment of some trades, for example Sheetmetal Workers. Nonetheless, it competes with the resources sector for many skilled trades workers, particularly Fitters and Machinists and Structural Steel and Welding Trades. Since late 2009, though, there have been signs of tightening in this labour market, and during 2010 relatively widespread shortages re-emerged. All Engineering Trades assessed by DEEWR are now considered to be in shortage either overall or in regional locations, with the exception of Metal Fabricators. Despite this tightening and re-emergence of shortages, employers continue to find it easier to recruit Engineering Tradespeople than they did in 2007 and Employment of Engineering Tradespeople in May 2011 is 9.2 per cent higher than it was two years earlier, and is above the level recorded immediately prior to the onset of the global recession in Cabinetmakers Shortages of Cabinetmakers have been persistent over the past decade, even during periods of economic downturn. The labour market is particularly tight in Western Australia, South Australia and Victoria (with employers in those locations filling fewer than 60 per cent of their vacancies). On the other hand, employers in New South Wales and Queensland experienced little difficulty in recruiting Cabinetmakers. Bakers and Pastrycooks DEEWR research shows there are shortages of Bakers and Pastrycooks. Shortages are most evident in specialist establishments (and may be more prevalent in the Retail Trade sector than in Manufacturing) which require apprenticeship qualified workers who have high levels of skills across all aspects of the trades. Shortages in these trades labour markets have been persistent over the past decade, and although DEEWR research shows recruitment has become somewhat easier over the past few years, shortages of trade-qualified workers who have the broad range of skills are still relatively widespread. Printers Over the past decade, the demand for Printing Trades has declined (evident in the ABS Labour Force Survey data which show that employment has fallen over the long term). Consistent with this decline in employment, employers noted that there have been printing business closures over the past few years. The impact on the labour market has, though, been complicated by tradespersons leaving the industry as a result of changes in technology and the uncertain business environment. The occupation is not considered to be in shortage. It is notable, though, that despite an easing in the labour market for this occupation over the past three years, highly experienced Printing Machinists continue to be in strong demand and are often able to negotiate their pay and conditions of employment. Electricians DEEWR research undertaken in mid-2011 suggests Electricians are not in national shortage. Employers who filled their vacancies generally reported little difficulty doing so and some reported an increased response to their advertisements compared with previous recruitment exercises. Surveyed vacancies were from a range of fields including commercial, domestic, industrial, solar and general maintenance. Those employers who did not fill their vacancies all received applications from qualified Electricians but for a variety of reasons considered them to be unsuitable. 7

8 Carpenters and Joiners DEEWR research in the first half of 2011 indicates the vast majority of employers filled their positions for Carpenters with little difficulty. A number of employers in New South Wales and Queensland undertaking large scale recruitment exercises (20 or more Carpenters), for project and flood recovery work, attracted a large number of applicants and filled all their vacancies within four weeks. Generally, in major metropolitan areas, there were strong responses to advertised vacancies for Carpenters, and results of this research suggest that there has been a slight easing in the labour market for Carpenters since mid While a relatively small number of employer contacts were made in regional locations, the research suggests employers outside state capital cities experience more difficulty filling carpentry vacancies than their capital cities counterparts. Aircraft Maintenance Engineers The labour market for Aircraft Maintenance Engineers (mechanical) eased over 2010, with employers in metropolitan areas experiencing relative ease in filling vacancies in late 2010 although shortages persist in regional Australia. Shortages of Aircraft Maintenance Engineers (avionics) are more widespread, with the occupation assessed as being in national shortage. 8

9 Additional Information on Employers Recruitment Experiences In addition to its skills shortages research, DEEWR has an ongoing program of surveys of employers recruitment experiences across selected regions. Over the 12 months to March 2011, DEEWR surveyed 7329 employers across 25 regions 1. The following analysis is based on the results of the 859 of these employers who were in the Manufacturing industry. Recruitment activity was below average in the Manufacturing industry with a smaller proportion of employers recruiting in the 12 months prior to being surveyed (68 per cent) and a lower recruitment rate (16.5 vacancies per 100 staff), compared with all industries (71 per cent and 21.8 vacancies per 100 staff respectively). A slightly smaller proportion of vacancies in the Manufacturing industry remained unfilled in the 12 months prior to being surveyed (6.8 per cent, mainly Structural Steel and Welding Trades Workers) compared with all industries (7.3 per cent). However, the proportion of employers who reported recruitment difficulty was above average at 58 per cent. Within the Manufacturing industry, employers reported a slightly larger proportion of recent vacancies unfilled (8.5 per cent) and fewer suitable applicants per vacancy (1.9 suitable applicants) in their most recent recruitment round compared with all industries (8.1 per cent and 2.3 suitable applicants respectively). Recruitment difficulties were reported across a range of lower skilled occupations such as Sales Assistants (General), General Clerks, Sales Representatives and Product Assemblers (see Table 3). Employers in the Manufacturing industry received an average of 6.2 applicants per vacancy in their most recent recruitment round, which was lower than the average for all industries (7.3). The most common reasons applicants were considered unsuitable for vacancies in the Manufacturing industry were insufficient experience (58 per cent) and insufficient qualifications (28 per cent) to perform the job duties. Employers in the Manufacturing industry who most recently recruited for a Machinery Operator and Driver had a higher proportion (10.6 per cent) of vacancies that remained unfilled and a lower average number of suitable applicants per vacancy (1.7) compared with all industries (6.2 per cent unfill rate and 2.4 suitable applicants). Despite this, the proportion who reported recruitment difficulty was in line with all industries (both 40 per cent). A slightly smaller proportion (44 per cent) of employers in the Manufacturing industry expected to recruit in the 12 months following being surveyed compared with all industries (48 per cent). A slightly larger proportion of employers in the Manufacturing industry (18 per cent) were also uncertain about future recruitment when compared with all industries (15 per cent). Almost three-quarters (73 per cent) of these employers reported that a fall in demand for their products or services was the reason for their future recruitment uncertainty. The proportion of employers with an apprentice or trainee in the Manufacturing industry was larger compared with all industries, but only a slightly larger proportion of employers in the Manufacturing industry anticipate recruiting an apprentice or trainee in the future. Most employers had experienced challenges with their apprentices, mainly concerning general work readiness and soft skills. Table 1: Occupations difficult to fill in the Manufacturing industry by skill level Higher Skill, Qualification or Experience Structural Steel and Welding Trades Workers Metal Fitters and Machinists* Cabinetmakers Sheetmetal Trades Workers Bakers and Pastrycooks Lower Skill, Qualification or Experience Sales Assistants (General)* General Clerks* Sales Representatives* Product Assemblers Truck Drivers* Other Factory Process Workers Other Miscellaneous Labourers* Printers Occupations marked with an asterisk (*) were frequently reported as difficult to fill across multiple industries and not only in the Manufacturing industry. 1 It should be noted that some of the areas surveyed over the 12 months to March 2011 were Priority Employment Areas. Therefore, the results may be reflective of disadvantaged labour markets and caution should be used when applying the results more broadly. 9

10 Table 2: Recruitment experiences in the Manufacturing Industry Key Results All regions surveyed 12 months to March 2011 Manufacturing Industry Recruitment experiences in the 12 months preceding the survey All Industries Proportion of employers who recruited 68% 71% Proportion of vacancies remaining unfilled 6.8% 7.3% Proportion of employers who reported recruitment difficulty 58% 54% Recruitment experiences for the most recent recruitment round Average number of applicants per vacancy Average number of suitable applicants per vacancy Proportion of vacancies remaining unfilled 8.5% 8.1% Proportion of employers who reported difficulty recruiting for their most recent recruitment round 43% 41% Technical skill requirements of the job 52% 44% Soft skill requirements of the job 24% 23% Tight labour market/not enough applicants 21% 20% Recruitment expectations for the 12 months following the survey Proportion of employers who expect to recruit 44% 48% Proportion of employers who expect to increase staff numbers 30% 27% Proportion of employers who expect difficulty recruiting 47% 43% Proportion of employers who were uncertain about future recruitment 18% 15% Apprenticeships and Trainees Proportion of employers who currently have an apprentice or trainee 46% 36% Proportion of employers who expect to recruit an apprentice or trainee in the 12 months following the survey Proportion of employers with apprentices who have experienced challenges in employing apprentices 25% 22% 65% 59% Lacking general work readiness 32% 29% Lacking soft skills 27% 26% Don't complete (don't stay long enough) 14% 14% 10