Underemployed Yet Unemployed
The Age
Tuesday July 3, 2001
DAVID Simons has a long list of letters after his name. There's the degree and, after spending five years maintaining wide- and local-area networks, he boasts an MCSE, CCNA and CCNP.
The latest strings are the Microsoft and Cisco certifications he secured on extra training. They are often cited in job advertisements.
Eighteen months ago Simons (not his real name) was a skilled and experienced worker in the fastest-growing industry in the world.
Now he is one of 20 information technology professionals from his former workplace who are unemployed.
He lost his job maintaining and building computer networks at a call centre about three months ago.
Meanwhile, three long-awaited reports documenting the demand for IT workers and the growth of the industry have been released by the industry, the professionals and a new skills body called the IT Skills Hub.
It's bewildering for someone such as Simons to reconcile the loss of his job with the concept of a skills shortage.
``I have never experienced the problems I am facing now," he says.
Although there is an economic downturn in IT-related businesses, growth in the sector still outstrips that of other industries and is predicted to stay that way.
Australia's IT industry employs about 680,000 people and earns about $100billion a year. The Australian Information Industry Association (AIIA) report estimates that in an ideal world - with all IT demand for skills met - it would add nearly 1 per cent to gross domestic product - more than 40 times the net present value of funding new university places, with hundreds of millions in increased exports and revenue, which is up to seven times the cost of training the extra IT workers currently needed.
The industry grew by 17 per cent between 1992 and 1999, but it is not all a picture of growth. Employment in some sub-sectors of the industry has declined since the mid-1990s; namely in computer and business-machine manufacturing, maintenance and telecommunications services, according to an Australian Computer Society study.
Job vacancy statistics released last month by the Department of Employment, Workplace Relations and Small Business showed the IT sector had slumped 10 per cent.
Simons' job hunt is hampered by the dilemma that he is striving to pick up a new set of skills, but by the time he is qualified, employers might be demanding different abilities. The mismatch of skills and job vacancies available through growth and changing technology is what comprises the skills shortage. It has been quantified as roughly 10,790 vacant positions by the most rigorous source, the Australian Bureau of Statistics and Deloitte Touche Tohmatsu for the IT Skills Hub.
This is the first time there has been an attempt to quantify what has been a difficult figure to calculate and which ultimately is a guess based on the shortfall between demand for employees and the supply of graduates.
The Skills Hub says this bears out a previous estimate of 30,000 made by Deloitte at the end of 1999, looking ahead to 2000. This report was commissioned for the Skills Hub's predecessor.
Another survey this year, Breaking the skills barrier, commissioned by the AIIA, suggests a gap of 27,500 graduates over the next five years.
But however large, the shortage itself has caused ``self-reinforcing" problems, the report says.
The report, produced by the Centre for International Economics for the AIIA, blamed the skills shortage for rising salaries, the poaching of IT teachers and the luring of graduates into jobs rather than pursuing further education.
``This has resulted in a lack of teaching resources, a lack of postgraduate students and less advanced academic research in the IT field," it says.
The shortage is underpinned by a complex range of factors, including a critical shortage of teachers, university funding restraints and a tax regime that doesn't offer incentives for self-education or share options.
A picture is emerging of an industry that is poaching heavily, has little incentive to train and is trapped in a vicious cycle.
Training has been inhibited by failures and friction in the market, resulting in firms being unable to capture and retain their investments in training, according to the AIIA report.
``The mission-critical nature of the work in the industry also creates a lack of training resources, particularly for small and medium-sized businesses, which dominate the Australian ICT (information and communication technology) sector," the report says.
``The result is a desire to buy `off-the-shelf' IT skills, evidenced by claims of an IT experience shortage."
Despite some companies having anti-poaching agreements with competitors, the ABS data shows poaching is the main recruitment method used by employers to get staff. More than half of the surveyed companies headhunted staff of other companies, while 14per cent took on graduates and only 7 per cent trained or retrained staff.
``The reason why they don't undertake training is because it's hard to keep staff," says Professor Peter Dixon, a labor market analyst at Monash University.
Simons says he has not been trained by an employer in five years because they are ``frightened that once you have done a course, you will take off".
Former CSIRO scientist and computer training expert Alan Aston runs the Australian Training Register, which lists all courses in the country and updates about 7000 every month. Aston says: ``It's a pretty sad state of affairs for the industry not to be training because they fear losing staff."
Dixon believes it is time for the IT industry to get serious about finding better incentives to keep staff so that training is a worthwhile investment.
He advocates contracts to lock in workers for certain periods, with big salaries kicking in after several years, as is done with highly skilled staff in the finance industry.
But the IT industry is cautious about this idea, hesitating because of the lack of flexibility for employers and workers in such a contract.
Aston also recommends that IT employers take a look at their training schemes because they can't always say it is the government's responsibility when the numbers of people they want ``are beyond TAFE training".
An unnamed IBM manager in the AIIA report argues that universities ``can help with about 10 per cent of the problem but that's it - the rest of it is up to industry, TAFE and private colleges".
``Several commentators suggested that industry needs to have a close look at itself when it comes to the development of ICT skills and re-evaluate its approach to training, hiring, staff development," the report says.
``One of the constraints to creating job-ready graduates is the unwillingness of segments of industry to take responsibility for part of graduate training."
This was particularly the case for small to medium enterprises (SMEs).
The IT Skills Hub, whose 18 founding members are some of the biggest companies in the world, is planning a pilot program with a group of small IT companies to ensure their participation in the hub. ``SMEs are not getting the message about training," chief executive officer Brian Donovan says.
``The commodity that all the companies have got is their people. Companies were previously measured on their capital, but now it's their strategic HR plans."
The AIIA report says big users of IT labor, including governments, also have to take a more active interest in providing workplace training for students before graduation.
``It has been suggested industry needs to make its own people," it says. But with no incentive to train, and ``mission critical" work leaving little time for staff development, this was difficult.
``The movement of ICT labor may be endemic to the profession and, almost despite the fact that market failures exist, industry needs to be committed to investing in ... training."
The bigger companies with enough money to spend on training often have fixed policies on the amount of training provided to staff.
In the US, companies use packages to keep staff, to ensure the investment in training is not lost.
Australian software engineer Jon Cook joined US company Rational because he liked its software and believed the company made a positive difference to the industry. But a salary package with health insurance, income insurance and stock options was also a drawcard.
``To be valuable to our clients, we need to be very current, so there's a lot of internal training too - that's a huge differentiator when choosing a job in IT, because there's lots of shops out there who are short-sighted and reluctant to train their staff," Cook says.
The industry says stock options, highlighted as a priority earlier this year in the government's innovation statement, are also a big issue.
The AIIA is lobbying Federal Treasury to change the tax regime so that options are treated as a gain and not income, and are not taxed until the gain is realised.
But the association's executive director, Rob Durie, rejects the idea of locking staff into longer contracts, saying it reduces flexibility for both staff and companies.
However, the AIIA is concerned and is about to survey members to see what training is done.
It is quick to point out that the IT industry spends more than any other industry - about 10 per cent of gross revenue - on training and more than $140 million goes into goodwill, such as funding for university chairs.
The AIIA is also working with TAFE colleges to ensure that courses are relevant and industry gives the courses greater recognition.
Employers indicated a clear preference for university graduates when surveyed by the ABS.
``Navel gazing" is going on in the industry, according to AIIA education head Michel Hedley, who says that if ``more employers appreciated TAFE graduates, the demand would go up".
But Aston believes short courses are the solution because they don't take critical staff away for long periods and they are more up to date.
Universities and TAFE colleges are not doing enough to keep up, he says, adding that of the 70,000 courses listed, about 18 per cent are for IT disciplines.
``They are still teaching Visual Basic. They don't produce a really skilled person," Aston says.
Private providers are also proving a barrier to easing the skills shortage. Many who were approached by the ABS were reluctant to provide much-needed data on enrolments and graduation numbers, which inhibited the collection of supply data.
The executive director of the Information Technology Contract and Recruitment Association, Norman Lacy, says a lack of training by employers is contributing to the skills shortage. ``I suspect that is part of it," he says.
Companies that don't train have misguided and short-sighted managers, because training ``cuts a lot of ice" with employees, he says.
``If you can build a culture where you are committed to personal development, you can keep them for a very long time. That's what employers need to be looking at."
LINKS
• www.atr-training.com.au
REPORTING SEASON
IT Skills Hub report, Market for Australian IT&T Skills 2000-2002 (May 2001)
• Produced by the Australian Bureau of Statistics and Deloitte Touche Tohmatsu.
• Quantified the skills shortage for the first time as both a mismatch of skills and absolute numbers of about 10,790.
• Surveyed 1500 companies.
• Detailed data on demand and supply of skills.
www.itskillshub.com.au
Breaking the skills barrier, Demonstrating the benefits of investment in ICT higher
education in Australia (April 2001)
• Produced by the private consulting firm, the Centre for International Economics, for the Australian Information Industry Association.
• Predicted the economic advantages of meeting the skills shortage including millions in extra export revenue and nearly 1 per cent of gross domestic product.
http://www.aiia.com.au/publications/menupublications.html
Impact of the ICT industry in Australia (May 2001)
• Commissioned by the Australian Computer Society.
• Produced by Professor John Houghton at the Centre for Strategic Economic Studies at Victoria University.
• Analysed employment, expenditure and benefits of the industry.
www.acs.org.au/notices/itcimpact.pdf
© 2001 The Age
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