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Hello world and welcome to my new blog, Skilling Time.

The term ‘skills shortage’ has dominated Australia’s business landscape for a number of years.  But what does it mean for Australia during an economic downturn?  While the economic conditions may mean some companies place skills development on the backburner, once the economy recovers, the age-old issues of skills shortages will return.

A skills shortage, in plain and simple terms, means that businesses are struggling to fill vacancies.  Despite the current economic crisis, skills shortages are occurring across Australia’s economy – both in the trades and the professions.  We simply don’t have enough architects, plumbers, engineers, nurses, computer programmers, teachers and electricians to go around.

The Department of Education, Employment and Workplace Relations notes that the occupations showing the biggest increase in vacancies are medical and science technical officers (including radiologists, hospital pharmacists, sonographers and dental technicians), organisation and information professionals (such as project managers and specialists in Java, Internet Security and PeopleSoft) and accountants and auditors. But almost every industry is affected in some way, particularly in regional areas.

According to the Australian Chamber of Commerce and Industry’s Survey of Investor Confidence, skills shortages are the number one constraint on small and medium business investment.

In knowledge economies such as Australia, where skills are fundamental to competitiveness, skills shortages can reduce productivity and increase inflation.  As the pool of available workers dries up, salaries skyrocket and so do the prices of the associated products and services.

So, what’s the solution?  Over the next few months, Skilling Time will explore ideas and options to secure Australia’s talent base.  And I invite you to join the conversation.

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Australia and the global recruitment industry

I recently returned from overseas, where I met with recruitment industry colleagues from the UK, Ireland, Singapore and Hong Kong. And like the curate’s egg, the global economy is good in parts. It is apparent that European economies are in worse shape than Australia, and Asian economies remain in a better place.

Ireland, just a short time ago the darling economy that drove growth through outsourcing opportunities, is in recession and even public sector spending has been dramatically cut, affecting recruitment companies there.

The UK is in a similar position, with the financial sector in disarray and the flow-on effect impacting other service companies. But like Australia, there are sales in the retail sector, particularly as London gears up for Christmas. When times get tough, it is said that women buy more lipstick!

I spent some time in France and Germany in 2004 and again in 2006 and the highly regulated nature of the temporary hire industry in those two countries, coupled with the fact that permanent placement by employment providers in still in its infancy, means that labour hire companies will be dramatically affected by economic downturn. We have already seen some announcements from the large global companies about downsizing operations in France, and I would expect Germany to be close behind.

There is no doubt, particularly in European countries, that the recruitment industry is in a state of flux – just as it is in Australia. Some organsiations are failing, many are undertaking redundancies and right-sizing activities and have declared decreased revenues and profits.

However taking their cues from Ronald Reagan’s 1986 statement, “if it moves tax it, if it keeps moving regulate it and if it stops moving then subsidise it”, major developed economies have moved to shore up their economies and protect citizens and some industries.

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Global world, global crisis

In recent years, the world has witnessed unprecedented levels of economic liberalisation resulting in increased flows of people, goods, capital and money between nations, markets and economic spheres. If we needed a reminder that we live in a global economy, the global financial crisis has sent the message through, loud and clear.

We’ve all heard the talk of global recession, banks being nationalised, the end of free deregulated markets and rising unemployment in all developed countries. I think many HR managers were relieved that the current economic uncertainty would give see a slight loosening in the candidate market. And that is true. However, while unemployment is forecast to rise to 6 per cent and the lack of job creation in September means that there is some short-term relief, our demographic profile tells us that the skills shortage is here for the long haul. Organisations will continue to look at how they recruit and retain people, especially the best performers in their industry.

The best thing any company can do to attract the best and brightest is to maintain a positive attitude. Our society has moved to a culture of negativity and a view that the way to be heard is to complain. In 1994 there were 3 positive messages in the media for every 1 negative article, today there is 1 positive message for every 18 negative articles.

Translate those statistics into your own organisation and assess which way the wind blows on an up-beat, can-do culture.  The organisations that people want to work for are those with a positive culture – no matter how dire the prevailing external environment.

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Strength in uncertainty

In tough economic times, when we watch venerable institutions go to the wall, workers look to companies that are solid and reliable.

If exciting jobs are associated with higher employment risk then candidates do not want to pursue that option. In 2007, the number one employment destination for university graduates was government – both federal and state government agencies. I see no reason why this will not be the case in 2008.

I was talking to the Commonwealth Bank internal HR team a few weeks ago and reminded them that right now an organisation that displays security and adherence to governance is a desirable employer. Internally, the bank has transposed its 1963 slogan – “Get with the Strength” to “Strength in Uncertainty”.

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