Akubras to hard hats: easing skill shortages through labour harmonisation strategies.

• Author: Storer, Christine
• Position: Contributed Article - Report

Abstract

This article examines skill and labour shortages within rural agricultural industries in Western Australia. It draws on primary and secondary data, including 600 survey respondents in the sector. It is determined that there may be a shortage of farm workers during the busy seasons, while they are unemployed during the low seasons. Consequently, it is proposed that a human capability framework is utilised to encourage farm owners and (or) workers to consider the potential for labour-harmonisation (LH) strategies which would allow workers to transit between working on the land during the busy seasons and in mining during the low seasons. The outcomes of the study are considered in relation to indicators of precarious work illustrating that LH could enable an easing of labour shortages for both the farming and mining sectors, while providing benefits for the respective workers, employers, and the region in general

1. Problems with Labour and Skill Shortage Definitions and Measurement

   This article reports on a study that was commissioned in 2008 by the Western Australian Primary Industry Training Council (WAPITC) in order to determine first, whether a skill shortage existed and second, if so, the extent of the skill shortages within rural agriculture-based industries in the region. The rationale for the study was based on reports from WAPITC members that labour shortages were affecting the productivity of the sector. Conversely, some government reports suggested that a shortage did not exist and there was not expected to be an increase in demand for workers in the agriculture sector (DEWR 2006).

   Part of the problem concerning skills in the sector has been a lack of accurate and detailed information relevant to agriculture and related sectors. For example the Bureau of Transport and Regional Economics (BTRE 2006) identified that there was no comprehensive data referring to the geographic distribution of skill shortages in the sector, as relevant research had not been conducted examining t he potential existence or extent of shortages, the geographical distribution in regional Western Australia, nor the impact this was likely to have (BTRE 2006). Moreover, discussions held with the Australian Council of Agricultural Deans indicated that the agricultural industry classification contained in the Australian and New Zealand Standard Industrial Classification (ANZSIC) excludes services to agriculture (ABS 2012c). In addition, farmers in rural areas have been outsourcing higher-skilled jobs such as financial, agronomic, and market advisors with increasing regularity to offsite farm-service providers and this pattern has not been recognised in the statistics collected. For example in a report to the Australian Council of Agricultural Deans, Pratley and Hay (2010) analysed job advertisements and estimated that for every three jobs located on a farm, there were two jobs that could be outsourced to off-farm service providers. Such estimates indicate that the demand for jobs in the sector has been substantially underestimated in existing calculations.

   Further issues relate to the definitions of skill and labour shortages. Trend le (2008) maintains that skill and labour shortages have no universally agreed definitions, although the terms are sometimes used to refer to a shortfall in the number of individuals in the labour force, and sometimes to a possible mismatch between workers and jobs in the economy. Shah and Burke (2005, p. 44) propose that 'the concept of a skills shortage has different meanings to different people' and the lack of a common understanding of the concept often obscures analyses of problems, their causes, and possible solutions. The OECD (2003) uses the term labour shortage, specifying that labour shortages are not easy to define or measure, whereas the definition of a skill shortage provided by DEWR (2006, p. 39) refers to:

   situations where employers are unable to fill or have considerable difficulty filling vacancies for an occupation at current levels of remuneration and conditions of employment and reasonably accessible locations. Shah and Burke (2005) point out that skill shortages can have an impact on the economy, resulting in underutilisation of capacity and reduced production. In turn, the response of employers is usually to raise wages, which means that, during times of shortage, 'the existing supply of workers circulates more quickly between employers, thus making retention more difficult and the employees involved less productive' (p. 47). For example, a recent Hay Group survey found that the resources boom has raised salaries in regional Western Australia by almost 17 per cent above the market average, with some premium jobs in mining, and oil and gas commanding salaries at 35.5 per cent above the market average--up from 26.6 per cent in 2011 (Ooi 2012).

   Reported shortages in the agriculture and related industry sectors interact with both labour shortages, where people are required to undertake unskilled and semi-skilled work. There are also skill shortages relating to jobs that require accredited training and qualifications. Given the broad intentions of this study, labour shortages, skilled, unskilled, and semi-skilled requirements are all given consideration. However, the confounding nature of skill and (or) labour-shortage definitions has meant that, to date, there has been a dearth of transparent data available on the topic, combined with problems of measurement which will be discussed in the next section of the article.

   When undertaking the study, the first research objective was to identify whether a labour shortage existed in the sector. Second, if there was found to be a shortage, the intention was to identify the nature of the skill and (or) labour shortage, the reasons for it, and what could be done to deal with it. Specifically, the research questions were as follows:

1. Does a labour shortage exist in the agricultural sector?

2. If a shortage were found to exist, then:

   What was the extent of the shortage of skilled and unskilled labour in grains, sheep, equine, farm input supply, agricultural mechanics, and rural transport industries?

   What were the reasons for the shortage of skilled and unskilled labour?

   What impact was the labour shortage having on the industries/sector?

   What could be done to deal with the labour shortage problem?

   The next section of the article draws on secondary data and the research literature to outline the relevant issues related to labour and skill shortages in the agricultural and related industry sectors in consideration of measurement factors to do with the seasonal nature of work, casual labour, and outsourcing. Next, we return to the title of the study asking: why Akubras to hard hats? A human capability framework is proposed in order to encourage farm owners and workers to consider the potential for labour harmonisation (LH) strategies which would allow employees to transit between working on farms during the busy seasons, then working in mining when their labour is not required on the farms. Subsequently, the method and sample utilised for the study is discussed followed by the findings, conclusions, and implications for further research.

2. Labour Skill Issues in Agriculture and Related Industry Sectors

   Government expectations of changes in labour demand have been contradictory to other reports, such as surveys conducted by Westpac and the National Australia Bank where evidence showed that the agricultural sector had experienced labour shortages since 2002 (CCIWA 2007). In 2005, it was reported that over 20 per cent of firms in the sector were finding it more difficult to recruit labour than three months prior, and over half indicated that the availability of suitable labour was a constraint on productivity (CCIWA 2007). Similarly, a national survey conducted by the Kondinin group in 2004 indicated that 65 per cent of growers found that sourcing both permanent and casual farm workers was difficult (Nugent 2005). Hence, it is observed that government statistics indicated that there was not a shortage of skilled labour in the past, primarily because the industry has not been as competitive in attracting labour as other sectors such as mining.

   Shah and Burke (2005) suggest that occupational unemployment rates can provide indications of skills imbalances, with a high rate indicating a surplus and a low rate a shortage. However, they caution that it is also possible that the number of unemployed workers may under-represent the supply with, for example, a person being qualified to work in one occupation but temporarily employed in another so that they are not counted among the unemployed. When unemployment rates are considered as indicators for the sector, ABS statistics show that the rate for Australia was 4.4 per cent in September 2007 and 3.2 per cent for Western Australia, while unemployment in some rural areas was as low as 1 to 2 per cent. Unemployment levels in the regional wheat belt areas of rural Western Australia have traditionally been half to two-thirds lower than the rest of the state (Wheat Belt Development Commission 2006) in common with those found in other Australian rural areas (DAFF 2008). Indeed, low unemployment in rural areas has been apparent for almost a decade, although across Australia figures were close to 6 per cent in early 2009 following the global financial crisis, dropping to approximately 4 percent in Western Australia and 5 percent more recently (see Figure 1, ABS 2012a; 2012b).

   The agriculture forestry and fishing sector accounted for 11 per cent of businesses in Australia as a whole in 2006 (Wheat Belt Department Commission 2006; Tonts and Haslan-McKenzie 2008). Notably, figures were not collected by the Department of Employment and Workplace Relations (DEWR) regarding the extent of employment in this sector.

   The most detailed information available on skills was produced by the DEWR Skills in...