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  • The Deliberate and Sustained Oversupply of the Engineering Labour Market by the

    Australian Federal Government

    2012-13 onwards

    Jim Oakley

    www.engineeroversupply.weebly.com

  • 2 OversupplyoftheEngineeringLabourMarket

    Contact:engineeroversupply@yahoo.comRevision2 May2017Revision0 April2017Copyright JimOakley2017Thisarticlemaybedownloaded,copiedandrepublishedfornon-commercialpurposesonly.Incopiedandrepublishedarticles,theauthormustbeappropriatelycredited,andalinkprovidedtothefollowingwebsite:http://www.engineeroversupply.weebly.comAnyarticlescopiedorrepublishedcannotbeedited.

  • OversupplyoftheEngineeringLabourMarket 3

    Table of Contents

    Section Page No.

    Summary 5

    Acronyms 8

    1 Introduction 9

    2 EngineeringOccupationsConsideredinthisReport 9

    3 InternetJobVacancies 10

    4 DepartmentofEmploymentLabourMarketRatings 12

    5 EngineeringUnemployment 14

    6 OutlookUntilNovember2020 17

    7 ThePictureSoFar 18

    8 FactorsInfluencingUnemployment 19

    9 MigrationOversupply 20

    10 UnderstandingSkilledMigration 28

    11 RecentDomesticUniversityGraduates 41

    12 MigrantEngineers 45

    13 EngineersAustralia 48

    14 AustralianCouncilofEngineeringDeans 59

    15 ProfessionalsAustralia 62

    16 ReasonsWhytheFederalGovernmentHasDeliberatelyOversuppliedtheEngineeringLabourMarket

    63

    17 Solutions 68

    18 Conclusions 72

    19 References 73

    Appendix1 EngineeringOccupationsIncludedinthisReport 85

    Appendix2 2331ChemicalandMaterialsEngineers 86

  • 4 OversupplyoftheEngineeringLabourMarket

    Section

    Page No.

    Appendix3 2332CivilEngineeringProfessionals 89

    Appendix4 2333ElectricalEngineers 92

    Appendix5 2334ElectronicsEngineers 95

    Appendix6 2335Industrial,MechanicalandProductionEngineers 98

    Appendix7 2336MiningEngineers 101

    Appendix8 2339OtherEngineeringProfessionals 104

  • OversupplyoftheEngineeringLabourMarket 5

    Summary BackgroundOverthelastseveralyears,theAustralianFederalGovernmenthasdeliberatelycreatedamajoroversupplyintheengineeringlabourmarket.Theevidencetodemonstratethis,andthereasonsdrivingthestrategy,arediscussedinthisreport.Themeanstopreventfurtheroversupplyandtobringthemarketbackintobalanceareoutlined.In the two phases of the resources boom, which occurred in 2004-08 and 2010-12,demandforengineerswasexceptionallystrong.Duringtheseboomyears,immigrationprovidedanimportantsourceofengineeringlabour.Followingthesecondphaseoftheresources boom, as demand for engineers fell sharply, the engineering labourmarketarrivedatapointwhere,accordingtoGovernmentassessments,therewasnoshortageofengineersinmostengineeringoccupations.Thiswasin2012-13.Since that time, overall job vacancies for engineershaveplummeted to about thirdofwhat theywereduring thepeakof thesecondphaseof theresourcesboom.Formostengineeringoccupations,vacancies inDecember2016werebetween20%and25%oftheirpeak in2011or2012.Theonlysustained increase invacancieshasoccurred forCivil Engineering Professionals; there has been no increase for the other engineeringbranches.Evenwiththedramaticfallindemandforengineeringlabour,theFederalGovernmenthascontinuedtomaintainveryhighlevelsofengineeringimmigration.Thisisdespiteagenerally bleak outlook for engineering occupations over the five years to the end of2020,basedon forecastsby theAustralianGovernmentsDepartmentofEmployment.TheoutlookismoderatelypositiveforCivilEngineeringProfessionals.OversupplyThenumberofapplicantsperengineeringvacancymorethantripledbetween2011-12and2015-16as themanyunemployedandunderemployedprofessional andgraduateengineers, aswell as thosedisplaced into other occupations, sought to find a suitableplace in the engineering workforce. The number of applicants per vacancy inengineeringin2015-16wasfarhigherthanforanyotherprofessionmonitoredbytheDepartmentofEmployment.Aswellas this,due to theFederalGovernmentsdecisionnot to moderate the annual level of engineering immigration, the ratio of migrantengineers to job vacancies increased dramatically between 2012-13 and 2015-16. Bysetting the ratio of migrant engineers:vacancies to an index of 1.00 in 2012-13, theincreaseintheratioby2015-16foreachengineeringUnitGroupcanbereadilyseen,asshowninTableS1.Itisestimatedthatsince2012-13,theGovernmenthasadmittedatleast10,800migrantengineers in excess of labour market requirements. Consistent with the generaloversupply of engineers, many Australian graduate engineers are having difficultyfindingfull-timeworkthatisbroadlyrelevanttotheirfieldofstudy.TableS2documentsthe latest (2015) data for recent Australian graduate engineers working full-time inengineering,scientific,technicalormanagementrolesasapercentageofthoseavailableforfull-timework.

  • 6 OversupplyoftheEngineeringLabourMarket

    TableS1RatioofmigrantengineerstovacanciesANZSCOCode

    UnitGroup Ratioin2012-13

    Ratioin2015-16

    2331 ChemicalandMaterialsEngineers

    1.00 3.23

    2332 CivilEngineeringProfessionals 1.00 1.35

    2333 ElectricalEngineers 1.00 3.14

    2334 ElectronicsEngineers 1.00 3.26

    2335 Industrial,MechanicalandProductionEngineers

    1.00 2.40

    2336 MiningEngineers 1.00 4.282339 OtherEngineering

    Professionals 1.00 1.65

    TableS2Graduateengineers

    Engineeringdiscipline %Workinginrelevantjob

    Aeronautical 42.0Chemical 50.8Civil 68.0Electrical 70.2Electronic/computer 71.0Mechanical 59.9Mining 63.9Otherengineering 57.4

    ReasonsThe Federal Government has persisted with the deliberate oversupply of theengineering labourmarket for twomain reasons. The first is to satisfy the incessant,self-interesteddemandsofthebusiness,migrationanduniversitysectors.Thesecondisto help meet its massive annual immigration targets, designed to bolster short-termgrossdomesticproductfollowingthedeclineofthesecondstageoftheresourcesboom.Engineers, along with ICT professionals and accountants, have been targeted by theGovernmenttomakeupadisproportionately largepercentageoftheskilledmigrationprogram, particularly the permanent migration component. These three professionalgroupsareeasytargetsbecausetheyarelargelynon-unionised,andtheyarenotpartofthecoreconstituenciesofthemajorpoliticalparties.SolutionsThesolutiontothemajoroversupplyoftheAustralianengineeringlabourmarketistostop engineering immigrationuntil themarket is brought back into balance. Thiswillallowtimeforunemployed,underemployedanddisplacedengineerstobeabsorbedintosuitablepositionsintheworkforce.ThiswillbenefitAustralianprofessionalengineers,Australian graduate engineers, and recentmigrant engineers who have been grantedpermanentresidency.

  • OversupplyoftheEngineeringLabourMarket 7

    Toachievethis, the firststep is for theFederalGovernment toremoveallengineeringoccupations associatedwith theUnitGroups inTable S1 from theMediumandLong-termStrategicSkillsList(MLTSSL),knownpriortoApril2017astheSkilledOccupationList (SOL). This will prevent access to three main visa subclasses, in particular thesubclass 189 permanent residence visa. At present, most engineering immigrationoccurs via the subclass 189 visa. Access will also be prevented to the subclass 485(GraduateWorkStream)temporaryresidencevisa,whichallowsinternationalstudentswho have graduated from an Australian institution to gain entry to the Australianengineering labour market. All engineering occupations should be removed from theMLTSSLforthreeyears,withtheexceptionofthoseassociatedwithUnitGroups2332Civil Engineering Professionals and 2339 Other Engineering Professionals, whichshouldberemovedfortwoyearstoaccountforthelowerlevelsofoversupply.The second step is to remove all engineering occupations associated with the UnitGroupsinTableS1fromtheShort-termSkilledOccupationList(STSOL),knownpriortoApril 2017 as the Consolidated Sponsored Occupation List (CSOL). This will preventaccess to another threemainvisa subclasses, inparticular thenotorious subclass457temporary residence visa, and the subclass 186 permanent residence visa. Allengineeringoccupations shouldbe removed from the STSOL for three years,with theexception of those associatedwithUnit Groups 2332 Civil Engineering Professionalsand 2339OtherEngineeringProfessionals,whichshouldbe removed foroneyear toaccountforthelowerlevelsofoversupply.Access should also be removed to another four visa subclasseswhich do not requireoccupationstobelistedontheMLTSSLorSTSOL.Theseincludethesubclass485(Post-Study Work Stream) temporary residence visa and the subclass 476 temporaryresidence visa, both ofwhich subject to specific requirements allow internationalstudents access to the Australian engineering labour market. Access to these visasshouldceaseforthreeyears.Federal Government expertise in understanding and predicting labour marketrequirementsresideswiththeDepartmentofEmployment,andtoa lesserextentwiththeDepartmentofEducationandTraining.Theoccupations listedon theMLTSSLandthe STSOL should be determined by the Department of Employment, and theDepartmentof ImmigrationandBorderProtectionmustno longerhaveanypower tochangethecompositionoftheselists.ThecurrentfocusoftheMLTSSLonincludingoccupationsbasedontheskillsneedsofthe economy in five-to-ten years time is irrational. Apart from the fact that it is notpossibletomakeaccuratelabourmarketpredictionsforindividualoccupationssofarinadvance,theconceptofbringinginmigrantworkersnowtomeetdemandinfive-to-tenyears time defies the reality of the labour market. In the case of engineeringoccupations, most of which are substantially oversupplied, the ongoing influx ofimmigrantengineerscreatesandentrenchesunemploymentanddisplacementfromtheprofession.Onceanengineerhasnotbeenable topractice in theprofession fora fewyears, the probability of being able to return to the profession is low due to therecruitmentpreferencesofemployers.Given thatmigrantengineerscaneffectivelybebrought into Australia on tapwithin three to sixmonths depending on the visa, the

  • 8 OversupplyoftheEngineeringLabourMarket

    focusoftheMLTSSLforengineersandotheroccupationsshouldbechangedtoaddressoccupationalskillsneedsuptotwoyearsintothefuture.Acronyms ABS AustralianBureauofStatisticsACED AustralianCouncilofEngineeringDeansAIG AustralianIndustryGroupANZSCO AustralianandNewZealandStandardClassificationofOccupationsAusIMM AustralasianInstituteofMiningandMetallurgyAWPA AustralianWorkforceProductivityAgencyCSOL ConsolidatedSponsoredOccupationListDoE DepartmentofEmploymentDE&T DepartmentofEducationandTrainingDIBP DepartmentofImmigrationandBorderProtectionGCA GraduateCareersAustraliaGDP GrossDomesticProductGFC GlobalFinancialCrisisICT InformationandCommunicationTechnologyMACSM MinisterialAdvisoryCouncilonSkilledMigrationMLTSSL MediumandLong-termStrategicSkillsListNOM NetOverseasMigrationSEW SurveyofEducationandWorkSOL SkilledOccupationListSTSOL Short-termSkilledOccupationListTSS TemporarySkillsShortage(visa)

  • OversupplyoftheEngineeringLabourMarket 9

    1. Introduction Therecenttwo-stageresourcesboominAustraliaresultedinanincreaseinAustraliastermsoftradethatwasunprecedentedinourhistory(Bishopetal.2013;Karunaratne2015).Thefirststageoftheresourcesboomranfrom2004untiltheonsetoftheglobalfinancial crisis (GFC) in 2008. Following the GFC, further resource-based activityboostedtheeconomyduring2010-12.Sincethentheeconomyhasbeensubdued,withsomesectorsperformingbetterthanothers.During the resources boom, Australias immigration policies promoted large annualpermanentandtemporaryskilledmigrationintakestosupplementthelocalworkforceinaseeminglyinsatiablejobmarket.Nearlyfiveyearsaftertheresourcesboombeganits final decline, immigration policies still reflect these previous economic conditions.However, therealityof theemploymentmarketnowisverydifferent,andtheFederalGovernmentsdeliberatelyinflexibleapproachtoimmigrationpolicyhashadaseverelynegativeimpactonemploymentprospectsinsomesectors.This report examines how the skilled migration program has been used to create amassive oversupply in the engineering profession, to the detriment of unemployed,underemployed and displaced Australian professional engineers, Australian graduateengineers,andrecentmigrantengineers.2. Engineering Occupations Considered in this Report The engineering occupations included in this report are those listed in theAustralianandNewZealandStandardClassificationofOccupations(ANZSCO)minorgroupingforEngineeringProfessionals(ABS2013a).ANZSCOClassification:MajorGroup: 2 ProfessionalsSub-MajorGroup: 23 Design,Engineering,ScienceandTransportProfessionalsMinorGroup: 233 EngineeringProfessionalsUnitGroups:2331 ChemicalandMaterialsEngineers2332 CivilEngineeringProfessionals2333 ElectricalEngineers2334 ElectronicsEngineers2335 Industrial,MechanicalandProductionEngineers2336 MiningEngineers2339 OtherEngineeringProfessionals.TheindividualoccupationsassociatedwitheachUnitGrouparelistedinAppendix1.

  • 10 OversupplyoftheEngineeringLabourMarket

    3. Internet Job Vacancies 3.1 Internet vacancy data Figure 1 shows the impact of the resources boom on job vacancies for three groups:professionalengineers;allprofessionals;andallAustralianoccupations.Theboomhadflow-oneffectsforthebroadereconomy,buttherelativeimpactonvacancieswasmorepronounced for engineering than for other professions generally. The three curves inFigure 1 are based on trend data from theDepartment of Employment (DoE) for jobvacancieslistedonSEEK,CareerOneandAustralianJobSearch(DoE2017a,2017b).Forprofessionalengineers,SEEKcoversprobablymore than95%ofadvertisedvacancies.Foreaseofcomparison,thedatainFigure1areindexedsothateachcurvehasavalueof100atJanuary2006.Figure1Internet jobvacancies toDecember2016 forengineers,professionals,and the totalAustralianlabourmarket,indexed(January2006=100)(DoE2017a)

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    InternetVacanciesAustralianTotal Professionals Engineers

    Theimpactoftheriseanddeclineoftheresourcesboomonengineeringvacancieshasbeenprofound,ascanbeseen fromFigure1.Followingasteep fallbeginning inearly2012,thenumberofengineeringvacanciesinDecember2016wasonly34%ofwhatitwas in January 2012. Looking at a longer time period, the number of engineeringvacancies in December 2016 was 67% of what it was in January 2006, despite theeconomybeing32%largerinSeptember2016thanitwasinMarch2006,asexpressedin constant September 2016 dollar gross domestic product (GDP) terms (ABS 2016a,2017a). In fact, the current employmentmarket formost engineering Unit Groups isworsethanatanytimeinthelast25years(EngineersAustralia2015a),ifnotever,andithasbeenthatwaysincethemiddleof2013.Figure 2 shows internet job vacancies by engineering Unit Group commencing at thebeginning of 2012, using the actual numbers of vacancies. It is only for 2332 CivilEngineering Professionals that any sustained increase in job vacancies has occurred

  • OversupplyoftheEngineeringLabourMarket 11

    during the last five years. The slowly rising trend for this Unit Group began in early2015,andisrelatedtoactivityintheresidentialconstructionsector(DoE2016a).ChartsshowingvacanciesforindividualUnitGroupsarepresentedinAppendices2to8.Figure2MonthlyinternetjobvacanciestoDecember2016forengineersbyANZSCOUnitGroup(actualnumbersbasedonthreemonthmovingaverage,notindexed)(DoE2017c)

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    Chemical&materials Civil

    Electrical Electronic

    Industrial/mechanical/producHon Mining

    Otherengineering

    Because the Unit Group vacancies in Figure 2 are based on a three month movingaveragecalculation,theUnitGroupchartsaremoresensitivetorecentchangesthanthebroadervacancy chartspresented inFigure1,whicharebasedon a trend calculationaveragedoverasignificantlylongertimeperiod.3.2 Understanding vacancies It is important to understand what a job vacancy represents. When a companyadvertisesanengineeringjobpublicly,applicantscomefromseveralsources:engineerswhoarealreadyemployedintheprofession;engineerswhohavebeendisplacedfromtheprofessionbutwhoareemployedinotheroccupations;andunemployedengineers.Mostadvertisedjobsareallocatedtoengineerswhoarealreadyemployedasengineers.Ingeneral,itismoredifficultforunemployedengineersandengineersworkinginnon-engineeringjobstowinadvertisedengineeringpositions.When an engineering job is advertised and awarded to an employee of anothercompany, that second companymay then advertise its resulting vacancywhich ariseswhenitsemployeemovesacrosstothefirstcompany.Thejobadvertisedbythesecond

  • 12 OversupplyoftheEngineeringLabourMarket

    companymaybeawarded toanemployeeofa thirdcompany,andsoon.Somewherealong the line an unemployed engineer, or an engineer currently working in anon-engineering occupation,may be appointed to an advertised engineering position.Thus a substantial proportion of the vacancy numbers actually result from churnamongstemployedengineers.Advertised vacancies should not be mistaken for new jobs for the engineeringprofession;onlyaminorityofadvertisedvacanciesarenewlycreatedpositions.Itisforthisreasonthatthenumberofinternetvacanciessometimeslooksveryhighinrelationtothesizeoftheworkforceofanengineeringoccupation.Atthemacrolevel, it isonlynewly created jobswhich allow unemployed and displaced engineers to be absorbedintotheengineeringworkforce.Vacancies can, however, be regarded as an index of opportunity. They represent anopportunity for unemployed and displaced engineers to return to the engineeringworkforce. It is for this reason that it is not the absolute number of vacancies that isimportant,butratherthetrendinvacanciesovertime.Forexample,whenvacanciesarehalf of what they were at a previous time, the opportunities have also been halved.Because it is the trend that is important, in subsequent discussion in this reportvacanciesaregenerallyexpressedasanindexratherthanasabsolutevalues.Notallvacanciesareadvertised.Forthegenerallabourmarket,DoEresearchindicatesthat employers use word of mouth to recruit for about 16% of vacancies. Directapproachestoemployersbyjobseekersaccountforfillingabout10%ofvacancies(DoE2016d). The corresponding numbers for the engineering profession are not publiclyavailable even if they are known, but the DoE takes this hidden jobs market intoaccount when determining whether or not an engineering occupation is in shortage(Table1).Thereasonableassumptionusedinthisreportisthatthenumberofvacanciesinthehiddenjobsmarketforengineersvariesinproportiontothatforadvertisedjobs.4. DoE Labour Market Ratings The DoE surveys a cross-section of engineering disciplines each year to determinewhetherthereis,or isnot,ashortageofengineers inthosedisciplines.Theresults forthelastfiveyearsaredetailedinTable1.Table1Labourmarketratingsforengineersforthefiveyearsto2015-16(DoE2016a)

    ANZSCOCode

    Occupation 2011-12 2012-13 2013-14 2014-15 2015-16

    2332-11,12,14,15

    Civilengineeringprofessionals

    S NS NS NS RD

    233311 Electricalengineer S NS NS NS NS233512 Mechanicalengineer S NS NS NS NS233611 Miningengineer

    (ex.Petroleum)S S NS NS NS

    S=shortage NS=noshortage RD=recruitmentdifficulty

  • OversupplyoftheEngineeringLabourMarket 13

    The recruitment difficulty reported for 2332 Civil Engineering Professionals in2015-16pertainedonly to seniorpositions and roles requiring specialisedexperience(DoE2016a).ItcanbeseenfromTable1thattherehasbeennoshortageofengineersacross most of the assessed occupations from 2012-13 onwards. This assessment issupportedbythedataforthenumberofapplicantspervacancy(Figure3)(DoE2016a).

    Figure3Numberofapplicantspervacancyforengineers(DoE2016a)

    15.1

    30.2

    38.143.7

    48.2

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    The level of competition for engineering jobs is currently the highest among allprofessionsmonitoredbytheDoE(2016f)(seeTable2).

    Table2Applicationspervacancybyprofession2015-16(DoE2016c)Profession Applicationspervacancy

    Engineeringprofessions 48.2Accountants 29.4Informationtechnologyprofessions 29Solicitors 14.6Schoolteachers 10.3Healthprofessions 6.7Nurses 6.7

    TheDoE basesmuch of its information on data collected during its annual Survey ofEmployers Recruitment Experiences (DoE 2013, 2016g). Because no information iscollectedabouttheexperiencesofengineeringjobseekers(employedorunemployed),interpretationssuchas those inTable1about labourmarketshortagesare inherentlybiasedtowardstheemployersperspective,ie.thecircumstanceofnoshortageislikelyto be declared at a later year than if the experiences of all key stakeholders wereaccountedforintheanalysis.Thisemployerbiascanbeseeninthestatisticforthenumberofsuitableapplicantsperengineeringvacancy,whichisgivenbytheDoE(2016a)as2.9onaveragefor2015-16,compared with the average of 48.2 applicants per vacancy. Employers typically

  • 14 OversupplyoftheEngineeringLabourMarket

    interviewatleastthreepeoplepervacancy,butthatdoesnotnecessarilyequatetothenumberofsuitablecandidates.Inthecurrentdifficultmarketconditionsforjobseekers,manyexperiencedengineersseekingworkorseeking tochangeemployerscannotgetaninterviewintheirownareaofexpertise,eventhoughthereisnoquestionabouttheirsuitability.Otherfactorssuchasagecanleadtosomeengineersbeing lesspreferred;and in the modern business environment, with some employers seeking to balancefemale-to-male ratioswithin theirorganisations, gendercanplaya real role inwho isdeemedsuitableandgetsselectedforaninterview.Larger companies commonly use software to screen resumes. Butmany smaller onesdont.Whenfacedwith150-200applicantsforavacancyadvertisedonSEEK(whichisnotuncommonforchemicalengineeringroles,forexample),therecanbeatemptationfor the employer to do an initial screening based on the brief summary informationprovidedbySEEK,whicheffectivelymeansscreeningbasedon job titles.This isnotaparticularlyeffectivetechniquefordeterminingthemostsuitablecandidates.Employer survey responses about the number of suitable applicants per vacancycannot be seen as an objectivemeasure reflecting the real situation. On the contrary,theseassessmentsaresubjective,andareheavilyinfluencedbymarketconditions.Forexample, in 2015-16 in a period of major oversupply of engineering labour, thepercentageofsuitableapplicantspervacancywasreportedtobe6.0%(2.9/48.2).Yetinaperiodofsignificantlabourshortagein2007-08,thenumberofsuitableapplicantswasreportedtobe19.4%(0.7/3.4)(DoE2016a).Despite the wide range in the number of applicants per vacancy across professions(Table2),thenumberof suitableapplicantsisremarkablyconsistent.In2015-16,thehighest number of suitable applicants was recorded for Information TechnologyProfessions(3.1pervacancy),andthelowestwasforNurses(1.6pervacancy).Thattherespective numbers of suitable applicants are so closely clustered, despite the widevariation in the number of applicants per vacancy, is not some highly improbablecoincidence.Itiscloselyalignedwiththenumberofpeopleinterviewedforeachrole.Notwithstanding these criticisms, in the authors opinion the DoE produces the bestavailabledataaboutthestateoftheengineeringlabourmarket.5. Engineering Unemployment ThenationallevelofunemploymentismeasuredbytheABSusingsurveys,accordingtothefollowingcriteria(ABS2013b):

    - the unemployed person is aged 15 or over and was not employed during thereferenceweek(ie.theweekthesurveywasconducted);and

    - hadactivelylookedforfull-timeorpart-timeworkatanytimeinthefourweeksuptotheendofthereferenceweek;and

    - wasavailableforworkinthereferenceweek.A person is considered to be employed if they haveworked at least one hour in thereferenceweek.

  • OversupplyoftheEngineeringLabourMarket 15

    Occupational unemployment statistics differ from the national labour forceunemployment statistics in that the occupational statistics exclude two groups ofpeople:thosewhohavebeenunemployedforlongerthantwoyears;andthoseseekingtheir first job (DE&T 2015b). In this report the term labour force refers to bothemployed and unemployed engineers, as per the Australian Bureau of Statisticsdefinition(ABS2017b).Thetermworkforcereferstotheemployedcomponentofthelabourforce.AsdescribedinSection2,thefocusofthecurrentreportisonthe21occupationsintheANZSCOMinorGroup233EngineeringProfessionals(Appendix1).ThedatarelatingtoengineersusedinthisreportareforthoseinthisMinorGroup.UsingFederalGovernmentdatanotpublicallyavailable,EngineersAustraliaperiodicallyreports theestimatedunemployment rate for theengineering labour force (EngineersAustralia2015b,2016e,2017).ItdoesthisbyutilisingtheannualSurveyofEducationand Work (SEW) conducted by the ABS. Full details of the methodology used byEngineers Australia to determine the unemployment rate associated with theengineeringlabourforceonlyrecentlybecameavailable(EngineersAustralia2017).Engineers Australia has determined that 51 ANZSCO occupations represent itsengineeringteam,whichincludesnotjustdegree-qualifiedengineersbutalsoassociateengineers with lower level qualifications. Having determined the educationalqualifications associatedwith these 51 occupations, Engineers Australia then extractsaggregateddata from the SEWabout engineering supply, demandandunemploymentbasedonpeoplewiththeseeducationalqualifications.Thiscohortincludespeoplewhoareworkinginengineeringoccupationsandthosewhoarenot.Thedataareaggregatedbecause the small sample sizes of engineering occupations in the SEW make thestandarderrorshigh, and tomaintain statistical validity a larger grouping is required(EngineersAustralia2017).Engineers Australia thus basis its engineering labour force on educationalqualificationsratherthanonoccupationalgroupings.Bythismeasure,in2014justover40% of the engineering labour force was not working in engineering occupations(Engineers Australia 2015b), and in 2016 this percentage had increased toapproximately43%(EngineersAustralia2017).Fromtheabovediscussionitcanbeseenthatitisimpossibletousetheunemploymentdata calculated by Engineers Australia to make any conclusions about theunemployment rate for the occupations or occupational groupings considered in thecurrentreport.Atpresent therearecompeting forces impacting theunemploymentrateofengineers.Theriseinthenumberofvacanciesfor2332CivilEngineeringProfessionals(Figure2)willhelptoreducetheunemploymentrate,recognisingthatthisUnitGroupcomprisesapproximately30%ofallEngineeringProfessionalsconsideredinthisreport(Table4).Incontrast,otherengineeringUnitGroupscontinuetobenegativelyaffectedbyarangeofcountervailingfactorssuchas:

  • 16 OversupplyoftheEngineeringLabourMarket

    the oil price collapse which commenced in August 2014, affecting capitalexpenditure by oil and gas companies, with flow-on affects to employment inserviceandsupplycompaniesinsubsequentyears

    the completion of the construction and commissioning of LNG plants inQueenslandandWesternAustralia

    continuingcostcuttingintheminingindustry difficulties in the manufacturing sector, with ongoing layoffs in the steel,

    automotiveandpowerindustries subduedconditionsinotherindustriesinwhichengineerswork.

    Theimpactofallthesefactorsisspreadwidelythroughouttheeconomy.Ontopofthis,themigrationofengineerstoAustraliahasremainedatveryhighlevels(Figure4).Thisalso contributes to the tally of unemployed engineers. Engineering migration is thesubjectoffurtheranalysisinSection9.When engineers lose their jobs nearly always through retrenchment there areseveral possible outcomes. Some engineers find full-time or (increasingly) part-timeworkelsewhere in theiroccupation.Others,whocannot findwork in theirprofession,findfull-timeorpart-timeworkinanotheroccupation,nearlyalwayslowerskilledandlower paid. In this report these engineers are called displaced engineers. And otherengineersremainunemployed.Table 3 documents the average size of the professional engineering workforce inAustraliaeachyearforthelastfiveyears.

    Table3Averageworkforcesizefor233EngineeringProfessionals(ABS2017c)

    2011-12 2012-13 2013-14 2014-15 2015-16Workforce(thousand) 134.9 144.7 140.6 142.3 130.6

    BasedonthedatainTable3,between2011-12and2015-16theengineeringworkforcesize decreased by 3%. The difference between themaximum andminimum values inTable 3 is about 10%. Yet, as shown in Figure 3 the number of applicants per jobvacancy increased by 219% over the time period covered in Table 3. Using thereasonableassumption that thenumberofapplications fromengineersemployed full-time in the profession varies in proportion to the size of the workforce of full-timeemployedengineers,thecontinualincreaseinthenumberofapplicationspervacancyisthereforearesultofacontinualincreaseinthesizeofthecohortofengineerswhoareunemployed, underemployed and displaced from the profession. It is not possible toidentifytherelativemagnitudesofthesethreegroups.For unemployed and displaced engineers, it is very difficult to findwork outside theprofession at a skill level and salary level comparable to that which they had in theengineeringprofession. This is because tomove to anotherprofession, or even into askilled trade, requires amajor commitmentof time (years) and financial resources toobtain suitable qualifications. This is frequently not possible for people with familyand/orfinancialcommitments.Othersmaynothavetheinterestordesiretocomplete

  • OversupplyoftheEngineeringLabourMarket 17

    yetanotherdegree.Whenengineersapplyfor jobsoutsidetheirfieldofexpertisetheyare competing against others who have qualifications and experience more directlyrelevanttotheposition.Experiencedengineersmayhaveskillsinprojectmanagementand generalmanagement, andmight find roles in these areas. Other than that, in theabsence of further qualifications, alternative career options requiring the skillspossessedbyengineersareverylimited.There is a belief among bureaucrats in Canberra that displaced engineers areappropriatelyutilisedinthegeneralskilledlabourmarket,andthatthecountrybenefitsfromthisdiffusionofskills.Inthecurrenteconomicclimateemployersensurethatthisbelief remains a fantasy, as they are very focused on recruiting candidates withqualificationsandexperiencedirectlyrelevanttotheirneeds.Theimpactofunemploymentonindividualsissignificant.InAustralia,asofNovember2015,theaveragedurationofunemploymentfor25-54yearoldswas49weeks,andforthose55yearsandoveritwas68weeks(AustralianHumanRightsCommission2016).Thecorrespondingnumbers forengineersareunknown,but inanextremelysubduedemploymentmarketwherecompetitionforeachvacancyisintense,manythousandsofengineers face a longwait to get back into theprofession, assuming they can achievethatoutcome.Commentingonskilledmigrantswhocantgetworkintheirprofession,theProductivityCommission(2016)observedthat:

    after several years in a low-skilled job, professional skills are likely todegenerate,agapinthecurriculumvitaeappears,andthelikelihoodofeveracquiring a job at the previous skill level decreases (ProductivityCommission2016,p.268).

    ThiscommentalsoappliestoAustralianswhocantgetworkintheirprofession.Oneofthe principal aims of the current report is to prevent this undesirable outcome fromhappening to Australian professional engineers, Australian graduate engineers, andrecentmigrantengineerswhohavebeengrantedpermanentresidency.6. Outlook until November 2020 The DoEs (2016d) predictions for the change in the engineeringworkforce betweenNovember 2015 and November 2020 are presented in Table 4. The far right-handcolumn represents the total projected growth in the employment levels over thefive-yearperiodtoNovember2020.Overall, the outlook ranges from very subdued to very poor, except for 2332 CivilEngineering Professionals for which modest annual growth is predicted. This isreflectedintheincreaseinvacanciesforthisUnitGroup(Figure2andAppendix3).Thesmallgrowthpredictedfor2333ElectricalEngineershasnotyeteventuated,basedonvacancies(Figure2andAppendix4).

  • 18 OversupplyoftheEngineeringLabourMarket

    Table4ProjectedemploymentlevelsinNovember2020byengineeringUnitGroup(DoE2016b)ANZSCOCode

    Unitgroup EmploymentlevelNovember2015(thousand)

    ProjectedemploymentlevelNovember2020(thousand)

    ProjectedemploymentgrowthtoNovember2020(%)

    2331 ChemicalandMaterialsEngineers

    7.2 7.2 -0.4

    2332 CivilEngineeringProfessionals

    43.0 47.2 9.8

    2333 ElectricalEngineers 20.8 21.9 5.42334 ElectronicsEngineers 3.8 3.7 -3.42335 Industrial,Mechanical

    andProductionEngineers

    31.4 29.5 -5.9

    2336 MiningEngineers 11.7 9.0 -22.72339 OtherEngineering

    Professionals23.2 23.9 3.4

    Total 141.0 142.5 1.0The task of predicting employment levels and labour market requirements forindividualUnitGroups is difficult, andbecomes less accurate for each additional yearintothefuturethatprojectionsaremade.TheprojectionsinTable4reflecttheviewofDoEin late2015that therearenoforeseeabledriversofgrowthformostengineeringUnitGroups.TheDoEsJobOutlookwebsiteprovidesdetailedinformationonoccupations,includingpredictedfuturegrowthandjobopenings,listedbyUnitGroups(DoE2016e).Thisisacomprehensiveresource.Becauseofthesmallsamplesizesforengineeringoccupationsin the ABS Labour Force Survey and its associated SEW, standard errors are high(Engineers Australia 2015b). This makes unemployment data and labour force dataunreliable for engineering occupations and Unit Groups. For example, employmentlevels for 2331 Chemical and Material Engineers did not increase by 57% between2013and2014asclaimedonthe JobOutlookwebsite(DoE2016f);andemploymentlevelsfor2334ElectronicsEngineersdidnotdecreaseby54%between2014and2015asclaimed(DoE2016g).Thesenumbersarenonsensical.7. The Picture So Far EngineeringjobvacanciesinDecember2016werejust34%ofwhattheywerewhentheengineering jobsmarket commenced itsprecipitous collapse inearly2012 (Figure1).The jobmarkethas remainedat low levels sinceat leastmid-2013 forall engineeringUnit Groups considered here, except for 2332 Civil Engineering Professionals whichhasshownamoderateupturnsincethebeginningof2015(Figure2).The DoE monitors the labour market status of a cross-section of engineeringoccupationseachyear,andconcluded that therehasbeennoshortageofengineers intheassessedoccupationsafter2011-12,withtheexceptionof233611Miningengineers

  • OversupplyoftheEngineeringLabourMarket 19

    (ex petroleum), for which there has been no shortage after 2012-13 (Table 1). Thisoverall assessment is supported by the fact that the number of applicants perengineering vacancy has increased each year since 2011-12 (Figure 3), and that theapplicants-to-vacancy ratio for engineering is now significantly higher than for anyoftheotherprofessionsmonitoredbyDoE(Table2).Collectively unemployment, underemployment and displacement among Australianengineershavebeenrisingsince2011-2012.Globaleventssuchas theoilpricecrash,andsignificantnationaleventssuchasthecompletionofmassiveresourcesprojectsandthe decline ofmajormanufacturing industries have helped to ensure that throughoutthecountrytherehasbeen,andcontinuestobe,asubstantialcohortofengineerswhoareseekingtorejointheprofession.The projected employment growth until November 2020 is negative for four of theseven engineering Unit Groups listed in Table 4. The greatest positive growth isexpected for 2332CivilEngineeringProfessionals,withanannualgrowthrateof just1.9%perannum.8. Factors Influencing the Ability to Rejoin the Profession Engineersoverwhelminglyworkasemployeesasstafforcontractorsforthreemainreasons:1)manyengineeringprojectsoroperationsrequiremultidisciplinaryinput;2)the work is of a scale or complexity that is too great for an individual engineer tocomplete in the required timeframe; and 3) the cost of engineering software is oftenprohibitiveforanindividualtopurchase.Therefore, from the perspective of an engineerwho is unemployed orwho has beendisplaced from the engineering profession, the ability to return to the profession is afunctionof thenumberofavailablevacancies, and theextentof competition for thosevacancies(ie.thenumberofapplicantspervacancy).

    =f{ }

    The number of vacancies is largely a function of the state of the economy. Evenwithinfrastructure spending, governments cannot significantly influence the number ofvacanciesformostengineeringoccupations.The competition for vacancies comes from several sources: from those already in theengineering workforce; from unemployed or displaced engineers; and from migrantengineerswho have been granted entry toAustralias skilledmigration program. TheFederal Government has complete control over the number of migrant engineersenteringtheprogram.

    Ability to rejoin

    profession

    Number of

    vacancies

    Level of competition

    for those vacancies

    ,

  • 20 OversupplyoftheEngineeringLabourMarket

    Mechanismsexistwithintheskilledmigrationprogramthatcanpreventthejobmarketfrombeingoversuppliedwith applicants throughexcessive levelsof immigration.Themajor impact of an oversupply of migrant engineers is felt by unemployed,underemployedanddisplacedAustralianengineers,aswellasbythemigrantengineers,whoareallcompetingforthesamelimitednumberofengineeringvacancies.9. Migration Oversupply 9.1 Total engineering migration The mechanisms that exist within the skilled migration program to prevent theengineering job market as a whole from being oversupplied with migrant engineershavenotbeenexercisedby theFederalGovernment.TheGovernmenthasmaintainedvery high levels of engineering immigration despite the huge fall in the number ofengineering vacancies, along with significant unemployment, underemployment anddisplacementfromtheprofessionintheAustralianengineeringcommunity.Theannual levelofengineeringmigrationencompassingbothpermanentskilledandtemporary skilled migration is shown in Figure 4. The available permanent skilledmigration data cover all relevant permanent visas, whereas the temporary skilledmigrationdataareforthesubclass457visaonly.Informationaboutthenumberofvisasissued to graduate migrant engineers in the following visa categories is not publiclyavailable:

    - Temporary Graduate visa (subclass 485)(Graduate Work Stream) visas (seeFigure6)

    - Temporary Graduate visa (subclass 485)(Post-Study Work Stream) visas (seeFigure8)

    - SkilledRecognisedGraduatevisa(subclass476)(seeFigure8).Some commentators (eg. Sloan 2017) have stated or implied that internationalgraduates from Australian universities (ie. migrants with degrees but minimal workexperienceintheirrespectivefields)arebeinggrantedanincreasingproportionofthevisasavailableforthegeneralskilledmigrationprogram.Littlehardevidencehasbeenpresentedtosupportorrefutethiscontention,whichisnotsurprisingsincetheFederalGovernmentkeepsthe informationoutof thepublicdomain.Thepercentageofrecentgraduatesintheannualpermanentskilledmigrationschemeandthesubclass457visaschemeisunknown.Ithasbeenreported thatabouthalfofmigrantengineerswhoarepoints-testedcomefromoverseas(Birrelletal.2016).Thesepeopleareprimarilygrantedthesubclass189permanent residence visa for independent migrants (Figure 6 and Table 11 inSection10) and to a lesser extent the State and Territory-nominated subclass 190permanentresidencevisa(Figure7andTable11inSection10).Points-testingfavoursmigrantswhoarebetween25and39yearsofageandwhohavehadfive-to-tenyearsrelevantexperiencewithintheprevioustenyears(ProductivityCommission2016,Box13.1).

  • OversupplyoftheEngineeringLabourMarket 21

    Engineers in this age bracketwho haveworked for eight-to-ten years are potentiallycompetitiveforseniorandleadengineerroles.Thosewhohave12-15yearsexperiencecanpotentially compete forprincipal engineer roles,dependingon thenatureof theirexperienceandthecompanyadvertisingthevacancy.Figure4Engineeringmigrationpermanentandtemporary(actualnumbers,notindexed)(EngineersAustralia2017;DIBP2017a)

    0

    2000

    4000

    6000

    8000

    10000

    12000

    14000

    2005-2006

    2006-2007

    2007-2008

    2008-2009

    2009-2010

    2010-2011

    2011-2012

    2012-2013

    2013-2014

    2014-2015

    2015-2016Num

    bero

    fVisasGranted

    toM

    igrantEngineers

    EngineeringMigra@on:PermanentResidence+457Visas

    Somemigrantengineersreceiveanemployer-sponsoredtemporarysubclass457visatowork in Australia, then at a later date move onto a permanent residence visa whilemaintainingthesamejob.FromtheperspectiveofanAustralianengineertryingtore-entertheengineeringworkforce,thisisthesameasiftheengineeronthesubclass457visahadreturnedhomeandanothermigranthadcomeintothecountryonapermanentvisa.Consideringtheextentoftheoversupplyoftheengineeringlabourmarket(Section9.4),it isreasonabletoexpectthatamigrantengineeronasubclass457visashouldreturnhomeat theexpiryof thevisa, and that thevacated job if still available shouldbeadvertisedtotheAustralianengineeringlabourmarket(seeSection10.5).Basedonthisreasoning,whenamigrantengineertransitionsfromasubclass457visatoapermanentresidence visa, both occasions when a visa was granted should be included in theengineeringmigrationstatistics.ThisisthecaseinFigure4wheresubclass457visaandpermanentvisastatisticsarecombined.9.2 Flagged occupations and the Medium and Long-term Strategic Skills List (formerly the Skilled Occupation List) AsshowninTable1,in2012-13therewasnoshortageofengineersinallbutoneoftheengineeringoccupationsassessedbytheDoE,andbythefollowingfinancialyeartherewasnoshortageinanyofthem.

  • 22 OversupplyoftheEngineeringLabourMarket

    TheDepartmentofEducationandTraining(DE&T)reviewstheMediumandLong-termStrategicSkillsList(MLTSSL)eachyear.PriortoApril2017,thislistwasknownastheSkilledOccupationList(SOL).Ifanoccupationisonthelist,thenpotentialmigrantsinthatoccupationcanbeconsideredforapermanentresidenceSkilledIndependentvisa(subclass189),aswellasfortwotemporaryvisas(Figure6inSection10).TheSkilledIndependent visa (subclass 189) is currently the visa most commonly granted tomigrantengineers.IfanoccupationisnotontheMLTSSL,therecanbenoadmissionviathisroute.AftereachMLTSSLreview,someoccupationsareflaggedforremovalfromtheMLTSSLinthefuture.AccordingtoDE&T,

    Generally, occupations are flagged when there is emerging evidence ofexcesssupplyinthelabourmarket(DE&T2016a).

    Table 5 documents engineering Unit Groups and the years in which their respectiveoccupations were flagged for removal from the SOL by the DE&T and the previousFederal Government departmentswhich undertook this task, including theAustralianWorkforceProductivityAgency(AWPA).Table5EngineeringUnitGroupsflaggedontheSOLANZSCOCode

    UnitGroup 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

    2331 ChemicalandMaterialsEngineers(Note1)

    2332 CivilEngineeringProfessionals

    2333 ElectricalEngineers

    2334 ElectronicsEngineers

    2335 Industrial,MechanicalandProductionEngineers

    2336 MiningEngineers Note22339 OtherEngineering

    Professionals

    =flagged =notflagged

    Note1:Only233111ChemicalengineerhasbeenflaggedforremovalNote2:2336MiningEngineerswasremovedfromtheSOLfor2016-17SourcesforTable5:(EMSA2013)for2011-12and2012-13;(Iscah2013)for2013-14;(NoBorders2014)for2014-15;DE&T2015aandIscah2015for2015-16;andDE&T2016bfor2016-17.It is noteworthy in Table 5 that the single occupation covered by 2333 ElectricalEngineershasneverbeenflaggedforremovalfromtheSOL,eventhoughvacanciesforthisoccupation(ie.233311Electricalengineer)haveremainedatlowlevelssinceearlyin 2013 and immigration has remained high (Appendix 4). As per Table 1, thisoccupationwasassessedbytheDoEashavingnoshortagefrom2012-13onwards.

  • OversupplyoftheEngineeringLabourMarket 23

    Similarly,UnitGroup2336MiningEngineerswasnotflaggedforremovalfromtheSOLuntil2015-16,whereas itcanbeseenfromTable1thatoneofthetwooccupations inthisUnitGroup,thatis 233611Miningengineer(ex.Petroleum),wasdeemedtohaveno shortage from 2013-14 onwards. This Unit Group had suffered a huge drop invacanciesbymid-2013,anddemandhasdeterioratedfurthersincethen(Appendix7).Discrepancies suchas these canbeexplainedat least inpartby theway inwhich therespective federal departments do their assessments. The DoE, whose assessmentsappear in Table 1, does its evaluation in-house, utilising information from its annualSurvey of Employers Recruitment Experiences (DoE 2013, 2016d). TheDE&T on theotherhand,likeitspredecessordepartments,seekssubmissionsfromstakeholders:

    Tohelpinformitslabourmarketanalysis,theDepartmentisseekingexpertadviceandevidenceonthesuitabilityofoccupationsforinclusionontheSOL.Relevantstakeholders,includingrepresentativesofindustry,employee,tradeandprofessionalorganisationsarewelcometomakeasubmission(DE&T2016a).

    The submission process presents an opportunity for lobby groups to influence theoutcome of the MLTSSL review. Lobby groups include the powerful assessingauthorities (DE&T2016c)thatevaluatetheprofessionalqualificationsandexperienceofmigrants fora fee,andmakesubstantialsumsofmoneyfromthisactivityandfromanysubsequentannualmembershipfeespaidbynewmigrants.Once the DE&T has completed its annual review of the MLTSSL, it makes arecommendationabout theoccupations tobe includedon theMLTSSL to theMinisterforImmigrationandBorderProtection.TheMinisterdecideswhatthefinalcontentsoftheMLTSSLwillbe.9.3 Migration and vacancy index trends TakingintoaccounttheassessmentsoftheDoE(Table1),theDE&T(Table5),andthecommentaryaboutdiscrepancies, it isreasonabletotaketheyear2012-13asthefirstpointatwhichtherewasnoshortageofengineersintheprofessionasawhole.InFigure5, theengineeringmigrationdatashowninFigure4areplottedasan index,withtheyear2012-13beinggiventhevalueof100.Thisisachievedbydividingthedataforeachyear inFigure4bythevaluefor2012-13,thenmultiplyingby100.Onlydatafrom2011-12onwardsareshown.Also shown in Figure 5 are the engineering vacancies, as per Figure 1, but this timeplottedasanindexusingannualdataratherthanmonthlydata(toenablecomparisonwithmigrationdatawhichareonlyavailableonanannualisedbasis).Thevacancyindexhasalsobeencalculatedsothatithasavalueof100intheyear2012-13.Thisenablesthe trend in engineeringmigration to be easily comparedwith the trend in vacanciesafter2012-13.Given that unemployment, underemployment and displacement from the engineeringprofession have collectively increased since 2012-13, the divergence of themigration

  • 24 OversupplyoftheEngineeringLabourMarket

    andvacancyindexcurves(Figure5)indicatesthattheprofessionhasbeenoversuppliedwithmigrantssincethen.Innumericalterms,theratioofthemigrationindextothevacancyindexin2012-13was1(ie.100/100).In2015-16,theratiowas2.26(93.0/41.1).Thismeansthatin2015-16,thecountryadmitted126%moremigrantengineersperengineeringvacancythanitdidin2012-13when,onbalance,therewasnoshortageofengineersinthecountry.Notethatthesameratioisarrivedatwhentherawdata(ie.non-indexeddata)areused.Thenumberofengineeringmigrantsadmitted in2012-13was8559. Inthesameyearthenumberofengineeringvacancieswas71623,yieldingamigrant-to-vacancyratioof0.1195.In2015-16,thenumberofengineeringmigrantswas7962,andthenumberofengineering vacancies was 29431, yielding a migrant-to-vacancy ratio of 0.2705. Theratioofthesetworatiosis2.26(0.2705/0.1195).Figure5Totalengineeringmigrationandvacancies,indexed(2012-13=100)(EngineersAustralia2017;DIBP2017a;DoE2017a)

    0.0

    20.0

    40.0

    60.0

    80.0

    100.0

    120.0

    140.0

    160.0

    2011-2012

    2012-2013

    2013-2014

    2014-2015

    2015-2016

    Inde

    x

    EngineeringMigra7onandVacanciesTotalSkilledMigra7onIndex VacancyIndex

    Table6adocumentsthechangeintheratioofthemigrantindextothevacancyindexforeachengineeringUnitGroupbetween2012-13and2015-16.Onthismeasure,2331ChemicalandMaterialsEngineers,2334ElectronicsEngineersand2336MiningEngineersarethemostoversuppliedUnitGroups.Asofmid-2016,theratio for 2332 Civil Engineering Professionalswasmoving closer towhere itwas in2012-13afteraperiodofdivergence(Appendix3).

  • OversupplyoftheEngineeringLabourMarket 25

    Table6aRatioofengineeringmigrationindextovacancyindexforengineeringUnitGroupsin2012-13and2015-16ANZSCOCode

    UnitGroup Ratioin2012-13

    Ratioin2015-16

    2331 ChemicalandMaterialsEngineers

    1.00 3.23

    2332 CivilEngineeringProfessionals 1.00 1.35

    2333 ElectricalEngineers 1.00 3.14

    2334 ElectronicsEngineers 1.00 3.26

    2335 Industrial,MechanicalandProductionEngineers

    1.00 2.40

    2336 MiningEngineers 1.00 4.282339 OtherEngineering

    Professionals 1.00 1.65

    Forcompleteness,Table6bdocuments thechange in theratioof themigrant indextothevacancyindexfromthetimeeachUnitGroupwasfirstflaggedforremovalfromtheSOLuntil2015-16.

    Table6bRatioofengineeringmigrationindextovacancyindexforengineeringUnitGroupsfromthetimetheywereflaggedontheSOLuntil2015-16ANZSCOCode

    UnitGroup YearfirstflaggedontheSOL

    RatiowhenfirstflaggedontheSOL

    Ratioin2015-16

    2331 ChemicalandMaterialsEngineers(Note1)

    2013-14 1.00 1.59

    2332 CivilEngineeringProfessionals 2011-12 1.00 1.43

    2334 ElectronicsEngineers 2011-12 1.00 3.00

    2335 Industrial,MechanicalandProductionEngineers

    2011-12 1.00 3.29

    2339 OtherEngineeringProfessionals 2011-12 1.00 2.07

    Note1:Only233111ChemicalengineerhasbeenflaggedforremovalfromtheSOLIt is astonishing that the ratios for 2334 Electronics Engineers and 2335 Industrial,MechanicalandProductionEngineershaveincreasedsomuchsincetheseUnitGroupswerefirstflaggedontheSOL,ie.whentherewasthefirstemergingevidenceofexcesssupplyintheseUnitGroups;yettheystillremainontheMLTSSLtoday.

  • 26 OversupplyoftheEngineeringLabourMarket

    Table7showstheactualnumbersofmigrantsandvacancies in2012-13and2015-16foreachUnitGroup.Table7NumberofengineeringmigrantsandvacanciesinengineeringUnitGroupsin2012-13and2015-16

    2012-13 2015-16 ANZSCOCode

    UnitGroup No.ofmigrants

    No.ofvacancies

    Ratioofmigrantstovacancies

    No.ofmigrants

    No.ofvacancies

    Ratioofmigrantstovacancies

    2331 ChemicalandMaterialsEngineers

    396 493 0.80 490 189 2.59

    2332 CivilEngineeringProfessionals 2443 28284 0.09 1934 16605 0.12

    2333 ElectricalEngineers 759 6197 0.12 791 2058 0.38

    2334 ElectronicsEngineers 706 1083 0.65 837 394 2.12

    2335 Industrial,MechanicalandProductionEngineers

    2150 12110 0.18 2092 4900 0.43

    2336 MiningEngineers 583 19296 0.03 375 2901 0.132339 Other

    EngineeringProfessionals

    1522 4160 0.37 1443 2384 0.61

    For the year 2012-13, at which time there was no shortage of engineers in mostengineering Unit Groups, the numbers in Table 7 are consistent with the discussionabout internetvacancies inSection3:mostvacanciesarecreatedbypeoplewhohavemovedfromaonejobtoanother,andarethereforemostlyfilledbypeoplewhoalreadyhaveajob.Asaresult,inmostinstancesthenumberofvacanciesforaUnitGroupisfargreaterthanthenumberofmigrantengineers(Table7)orthenumberofunemployedengineers.In2012-13,thedifferencebetweenthenumberofmigrantengineersandvacanciesfor2331ChemicalandMaterialsEngineersand2334ElectronicsEngineerswasrelativelysmall.By2015-16,thenumberofmigrantengineersinUnitGroup2331waslargerthanthenumberofvacanciesbyafactorofnearly2.6.ForUnitGroup2334,thenumberofmigrant engineerswas larger than thenumber of vacancies by a factor of 2.1. This isevidenceofmassiveoversupplyinthesetwoUnitGroups.9.4 Estimating the extent of the oversupply of engineers MigrantEngineersUsing the ratio ofmigrant engineers to vacancies for each engineering Unit Group in2012-13when therewas, for the first time since the GFC, no general shortage in theengineering labourmarket, it is possible to estimate the theoretical intake ofmigrantengineers in subsequent years that would not oversupply the labour market. This isdonebymultiplyingthe2012-13ratioforeachUnitGroupbythenumberofvacanciesineachsubsequentyear.Thenumberofmigrantengineerscalculatedinthisfashionfor

  • OversupplyoftheEngineeringLabourMarket 27

    each subsequent year can then be subtracted from the actual number of number ofmigrant engineers in that year to provide an estimate of the number of migrantengineers inexcessof labourmarket requirements.Thisapproachassumes thatotherfactors such as the extent of unemployment and the displacement of engineers remainastheywerein2012-13,whereasinfacttheyhaveincreased.Table8documentstheresults.Table8NumberofmigrantengineersinexcessoflabourmarketrequirementsforeachengineeringUnitGroupANZSCOCode

    UnitGroup Excessin2013-14

    Excessin2014-15

    Excessin2015-16

    Total PercentofWorkforce(Note1)

    2331 ChemicalandMaterialsEngineers

    206 244 338 788 10.9

    2332 CivilEngineeringProfessionals 786 804 500 2090 4.9

    2333 ElectricalEngineers 350 479 539 1368 6.6

    2334 ElectronicsEngineers 176 408 580 1164 30.6

    2335 Industrial,MechanicalandProductionEngineers

    831 1114 1222 3166 10.1

    2336 MiningEngineers 255 318 287 860 7.42339 OtherEngineering

    Professionals 230 549 571 1350 5.8

    Total 2834 3916 4037 10787

    Note1:WorkforceemploymentdatafromTable4forNovember2015.AustralianGraduateEngineersThenumberofdomestic(ie.Australiancitizenandpermanentresident)bachelordegreegraduate engineers surplus to full-time engineering labourmarket requirements after2012-13canbeestimatedbyutilisingdatafromseveralsources.For the years 2014 and 2015, the number of engineering bachelor degree graduates(ACED2015,2017)canbemultipliedbythepercentageofengineeringbachelordegreegraduateswhoareavailableforfull-timework(GCA2015,2016),toyieldthenumberofengineeringbachelorgraduateswhoareavailableforfull-timework.Usingaweightedaverage percentage of those available for full-time work who are working in a jobbroadlyrelatedtotheirfieldofstudy,allowsthenumberofbachelorgraduatesworkingin a broadly related job to be calculated. From this, the number of bachelor degreegraduateengineerswhoareavailableforfull-timeworkbutwhocannotfindabroadlyrelatedjobcanbeestimated(seeTable9).ItisclearthatanyinternationalstudentwhograduatesinAustralia(oroverseas)andisgrantedaccesstotheengineeringlabourmarketissurplustorequirements.ThenumberofinternationalengineeringgraduateswhoaregrantedworkvisasisnotmadepubliclyavailablebyDIBP.

  • 28 OversupplyoftheEngineeringLabourMarket

    Table9Estimateofthenumberofdomesticbachelordegreegraduateengineersinexcessoffull-timeengineeringlabourmarketrequirements 2014 2015 2016

    (Note1)Total

    Numberofengineeringbachelorgraduatesavailableforfull-timework

    5720 5756 5756

    Weightedpercentageofthoseinbroadlyrelatedfull-timework

    61.5 61.7 61.7

    Numberinbroadlyrelatedfull-timework 3519 3550 3550

    Numbernotinbroadlyrelatedfull-timework 2201 2206 2206 6613

    Note1:Numbersarenotavailablefor2016,sothepreviousyearsnumbershavebeenused

    Unemployed,UnderemployedandDisplacedEngineersAs discussed in Section 5, the number of unemployed, underemployed and displacedengineersisunknown.Theevidenceisthatthecollectivesizeofthiscohortofengineershascontinuedtogrowsince2011-12.Table10summarisestheestimates.

    Table10SummaryofestimatesCategory NumberMigrantengineersinexcessoflabourmarketrequirementsafter2012-13 10800

    Domesticgraduateengineersinexcessofrequirementsafter2013 6600

    Internationalgraduateengineersgrantedworkingvisasafter2013 Unknown

    Unemployed,underemployedanddisplacedengineers Unknown

    10. Understanding Skilled Migration To understand the mechanisms used by the Federal Government to create theoversupplyofengineers,itisnecessarytounderstandhowAustraliasskilledmigrationprogramoperates.Skilledmigrationconsistsofpermanentandtemporarycomponents.Through a number of pathways, migrant engineers can be granted permanent ortemporaryresidencevisasallowingthemtoworkinAustralia.Manyofthevisasrequirethemigrantsparticularengineeringdiscipline(asdenotedbyanANZSCOoccupation)tobecontainedononeoftwolists.ThefirstistheMediumandLong-termStrategicSkillsList(MLTSSL)alreadymentionedinSection9.2above;andthesecondistheShort-termSkilled Occupation List (STSOL). Prior to April 2017, the MLTSSL was known as the

  • OversupplyoftheEngineeringLabourMarket 29

    SkilledOccupationList(SOL)andtheSTSOLwasknownastheConsolidatedSponsoredOccupationList(CSOL). 10.1 Medium and Long-term Strategic Skills List Introduced in 2010 as the SOL (Azarias et al. 2014), the MLTSSL currently listsapproximately 180 occupations, including all engineering occupations in the ANZSCOMinorGroup233EngineeringProfessionals,withtheexceptionofthetwooccupationsinUnitGroup2336MiningEngineerswhichwereremovedfromthelistforthe2016-17year(CommonwealthofAustralia2016a),aswellas233999Engineeringprofessionals(notelsewhere classified)whichwasnot listedafterApril2017.TheMLTSSL itself ismaintained and updated by the DE&T, but its final composition for each year isdetermined by the Department of Immigration and Border Protection (DIBP).Applications forvisasareassessedandgrantedbytheDIBP.Thevisas thatrequireanoccupationtobelistedontheMLTSSLareshowninFigure6.FortheSkilledIndependentvisa(subclass189),DIBPimposesanannualoccupationalceiling, which limits the number of visas in this subclass that can be issued for eachoccupation.Theceilingforeachoccupationisdeterminedasapercentageofthenumberofpeopleemployed in theoccupation inAustralia,but it isnever less than1000visas(DIBP2017e).Noaccountistakenofthelevelofunemploymentornumberofavailablevacanciesforanoccupation.

    Figure6VisaswhichrequireaskilledmigrantsoccupationtobelistedontheMLTSSL

    MediumandLong-termStrategicSkillsList(formerlySkilledOccupationList)

    SkilledIndependentvisa(subclass189)Thisisapermanentresidencevisaavailableforpoints-testedskilledworkerswhoarenotsponsoredbyanemployerorfamilymember,andwhoarenotnominatedbyaStateorTerritoryGovernment.Applicantsmustbeunder50yearsofage,haveatleastcompetentEnglish,andmusthaveobtainedasuitableskillsassessmentfortheiroccupation.(DIBP2017b)

    SkilledRegional(Provisional)visa(subclass489)Thistemporaryresidencevisaallowsskilledworkerstoliveandworkinspecifiedregionalareasforuptofouryears.Thevisaapplicantmustsponsoredbyaneligiblerelativelivinginadesignatedarea,ormustbeseekingtorenewanexistingvisa.(DIBP2017d)

    TemporaryGraduatevisa(subclass485)GraduateWorkStreamThisisatemporaryresidencevisaforinternationalstudentswhohavegraduatedfromanAustralianinstitution,allowingthemtoworkinAustraliafor18months.ApplicantsmustbeinAustralia,beunder50yearsofage,andmeettheEnglishlanguagerequirement.(DIBP2017c)

  • 30 OversupplyoftheEngineeringLabourMarket

    HowtheCompositionoftheMLTSSLisDeterminedEachyeartheDE&Tusesa two-stageprocesstodetermine ifanoccupationshouldbelistedontheMLTSSL.Thefirststageinvolves identifyingoccupationstobeshortlistedforfurtherconsiderationinthesecondstage.Fourcriteriaareused,withtheaimbeingto identifyoccupationswhicharesusceptible tosupplyconstraintsand/orwhichmayneedgovernment intervention to address supply constraints.Occupationswhichhavemulti-year training requirements and/or for which a labour shortage will have asignificant impact on the economy or the community are typically shortlisted at thisstage(DE&T2016d).Fortheshortlistedoccupations,thesecondstage

    involvesassessingthemediumto longtermskillneedsoftheeconomyforeach occupationto determine if it would benefit from skilled migration(DE&T2016d).

    The Department advises that an occupation would generally not be included on theMLTSSLifitwasdeterminedthatitislikelytobeinsurplusinthemediumtolongterm.Conversely,anoccupationgenerallywouldbeincludedontheMLTSSLifasurpluswasunlikelyinthemediumtolongterm(DE&T2016d;DE&T2016a).Itwasemphasisedby theDepartment in its2016onlineSOLreviewsubmission formthat:

    TheSOL is concernedwith medium to long-term skillsneeds rather thanimmediate skills shortages where medium to long-term is defined as aperiodoffivetotenyears(DE&T2016e).

    TherearetwoprimaryproblemswithwaythecompositionoftheMLTSSLiscurrentlyestablished:

    1. Intermsof identifyingwhichoccupationsshouldbeexcluded fromtheMLTSSL,there is significant practical difficulty in determining which individualoccupations are likely to be in surplus (or balance or shortage) in five-to-tenyearstime.Giventhedifficultiesinmakingpredictionsaboutthelabourmarketstatusofindividualoccupationssofarintothefuture,itmakesnosensetofocuson medium- to long-term requirements when the time frame for bringing inskilledmigrantsissomuchshorter.Theprocessingtimeformostvisasforskilledmigrants is between three and 12 months (DIBP 2017k), and the majority ofthese are finalisedwithin sixmonths (Productivity Commission 2016). A focusfortheMLTSSLofone-to-twoyearsintothefuturewouldallowmuchimprovedlabour market predictions, and skilled migration flows could then be bettermatchedtoareasofneed.

    2. ThemajorflawinthelogicofdeterminingthecompositionoftheMLTSSListhe

    assumption thatbringing in skilledworkers in thenext12monthswillhelp toalleviatepotential skilled labourshortages five-to-tenyears in the future.Forasituationwhere an occupation is currently in substantial oversupply (as is thecase with all engineering occupations), bringing in more skilled migrants to

  • OversupplyoftheEngineeringLabourMarket 31

    competeforalimitednumberofvacanciesresultsinadditionalunemploymentordisplacement,forbothmigrantsandAustralians.Onceanindividualhasnotbeenable to secure a position in their occupation for a couple of years or more, itbecomes increasingly difficult for that individual to compete for job vacancieswith people who are employed or who have more recent relevant experience(AustralianHumanrightsCommission2016;ProductivityCommission2016;ABS2016d).Forengineers,thisprocesshasbeenongoingsince2012-13.Manythousandsofengineers remain unemployed or displaced from the profession. If there is asignificantincreaseindemandforengineersin,say,sevenyearstime,employerswill not look to employ those who have not practiced as engineers for theprevious seven years. Rather, they will employ engineers whose experience ismorecurrent,orseektobringinmigrantengineersfromoverseas.TheDE&Tsubscribes towhat is labeledhere as the StockpilingTheory of thelabourforce.Thatis,skilledworkerscanbeimportedinthenearterm,regardlessofwhetherornottheycansecureemploymentintheirareaofexpertise,soastoprovideskilledlabourfive-to-tenyearsinthefuturewhenthereisananticipatedupsurge in demand. Unfortunately, the labour market does not work in thisfashion,andpeoplewhohavenotbeenabletopractiseandcontinuedevelopingtheir area of expertise for a period of years are nearly always at an extremedisadvantagewhentryingtore-entertheiroccupation.Itonlymakesrationalsensetobringskilledmigrantsintothecountrywhenthelabourmarket for their occupation is in shortage or balance, and they have areasonable likelihood of securing employment in their area of expertise soonaftertheyarrive.Initsdiscussionofpoints-basedskilledmigration,DIBPstatesthat:Independentmigrants are selected on the basis of their skills, attributesand suitability for employment so they are in a position to contributequicklytotheAustralianeconomy(DIBP2017l).Chief among independent, points-based skilled migrants are those who aregrantedthesubclass189SkilledIndependentvisa,thepermanentresidencevisathat requires the applicants occupation to be listed on the MLTSSL (seeFigure6).ClearlyDIBPviewstheMLTSSLasameansofidentifyingmigrantswhocanassistwiththeimmediateneedsoftheeconomy,ratherthanwithpotentialneedswhichmayariseinfiveormoreyearstime.

    TheirrationalfocusoftheMLTSSLonpotentialmedium-to-longtermskillneedsgivescredencetotheviewsofsomeimmigrationresearchersthattheMLTSSLhaslittletodowith future skills shortages. Rather it is contended that its dual purposes are to helpmeet Australias massive population growth targets, and to provide support to thelucrative overseas student industry by facilitating post-studywork for these studentsthrough the subclass 485 visa. This then subsequently opens to the students thepossibility of obtaining a much sought-after permanent residency visa (Birrell et al.2016).

  • 32 OversupplyoftheEngineeringLabourMarket

    10.2 Short-term Skilled Occupation List TheSTSOLcameintoeffectinJuly2012(Azariasetal.2014)astheCSOL.ItisusedforvisasapplicabletomigrantswhoaresponsoredbyaStateorTerritoryGovernment,orbyanemployer.Prior toApril2017, therewere ineffect twoCSOLs.Eachyear, as anamendment to theMigrationRegulations1994,DIBPpublishedaSOLandaCSOL.Thelatter was the legislated CSOL (Commonwealth of Australia 2016a). However, whenappliedinpractice,DIBPsCSOLconsistedofalltheoccupationslistedonthelegislatedSOL,plusthoseonthelegislatedCSOL,givingatotalofabout680occupationsin2016.Thepracticewasrevealedbyaquestiononnotice toDIBP fromtheSenateEducationand Employment References Committee (The Senate Education and EmploymentReferencesCommittee2016,p.65).ThisapproachwasformalisedinApril2017withtheadventoftheMLTSSLandSTSOL.Employer and State and Territory Government nominations are now available to anyoccupation that is on the combined MLTSSL and STSOL. Some occupations arespecificallyexcludedfromthecombinedlist.Theseinclude:233111 Chemicalengineer233112 Materialsengineer233411 Electronicsengineer233511 Industrialengineer233513 Productionorplantengineer233612 PetroleumengineerThefirstfiveofthesenonethelessremainonthestandaloneMLTSSL.In general, employers and governments can recruit skilled migrants via the visasassociatedwiththecombinedlist(seeFigure7)withoutanymarkettesting,ie.withoutever advertising the jobs in Australia, if they so choose. This means that Australiancitizens and existing permanent residents can be denied the opportunity to apply forthesejobs.Thereiscurrentlysomemarkettestingrequiredforsubclass457visas,butthisislimited(seeSection10.5below).TheSTSOLismaintainedandupdatedbyDIBPtakingintoaccountadvicefromtheDoEand,unliketheMLTSSL,itscompositionisdeterminedin-house(DIBP2017r).Overtheyears,thecompositionoftheCSOLhasdrawnconsiderablecriticism,nearlyallofitinrelationtothesubclass457visa.Forexample,theCSOLhasbeendescribedas

    an indiscriminate listingofavast rangeofskilledoccupationswhich takesnoaccountofthestateofthelabourmarket(Birrell&Healy2012,p.12).

    TheIndependentReviewintotheIntegrityoftheSubclass457Program(Azariasetal.2014)recommended thata tripartiteministerialadvisorycouncilbe formed toadvisetheFederalGovernmentonskilledmigrationingeneral,andonthesubclass457visainparticular,includingadviceonwhichoccupationsmaybeinoversupply.

  • OversupplyoftheEngineeringLabourMarket 33

    Figure7Visaswhichrequireaskilledmigrantsoccupationtobelistedonthecombinedlist

    CombinedList:MediumandLong-termStrategicSkillsList,plus

    Short-termSkilledOccupationList

    SkilledRegional(Provisional)visa(subclass489)Thistemporaryresidencevisaallowsskilledworkerstoliveandworkinspecifiedregionalareasforuptofouryears.Itisavailableforpoints-testedskilledworkerswhohavebeennominatedbyaStateorTerritoryGovernmentagency.ThisisknownastheInvitedPathway.FortheInvitedPathway,applicantsmustbeunder50yearsofage,haveatleastcompetentEnglish,andmusthaveobtainedasuitableskillsassessmentfortheiroccupation.(DIBP2017d)

    SkilledNominatedvisa(subclass190)Thisisapermanentresidencevisaavailableforpoints-testedskilledworkerswhoarenominatedbyaStateorTerritoryGovernmentagency.Applicantsmustbeunder50yearsofage,haveatleastcompetentEnglish,andmusthaveobtainedasuitableskillsassessmentfortheiroccupation.(DIBP2017g)

    EmployerNominationScheme(subclass186)Thisisapermanentresidencevisaavailableforskilledworkerswhohavebeennominatedbyanemployer.Itincludes457visaholderswhoaretransitioningtopermanentresidence.Applicantsmustbeunder50yearsofage,andmeetspecifiedskills,qualificationsandEnglishlanguagerequirements.(DIBP2017f)

    TemporaryWork(Skilled)visa(subclass457)Thisisatemporaryresidencevisawhichallowsskilledworkerstoworkintheirnominatedoccupationforuptofouryears.Applicantsmustbesponsoredbyanapprovedbusinessandhavetherequiredskillsfortheposition.(DIBP2017h)

  • 34 OversupplyoftheEngineeringLabourMarket

    Inresponse,theFederalGovernmentsupportedtherecommendationandre-establishedthe Ministerial Advisory Council on Skilled Migration (MACSM) (Commonwealth ofAustralia 2017). The Council held its inaugural meeting in June 2015. The CouncilstermsofreferenceincludeprovidingadvicetotheMinisterforImmigrationandBorderProtectionaboutthecompositionoftheCSOL

    with a view to increasing the productivity contribution of sponsoredmigration(DepartmentofFinance2017).

    What thismeans inpractice isunknown.Another task for theMACSM is to adviseonpolicies:

    to ensure that Australian workers are afforded priority in the labour market(DepartmentofFinance2017).

    Themajorityoftheseven-memberCouncil iscomprisedofrepresentativesof industryandemployergroups.Thereisonememberfromacompanywithafinancialinterestintheimmigrationindustry,andonememberfromtheAustralianCouncilofTradeUnions(ACTU)(CommonwealthofAustralia2017;Clancy2015).Thereisno-onerepresentingthe interests of largely non-unionised groups of professionals such as engineers, ICTprofessionals and accountants; and there is no-one representing the interests ofunemployedanddisplacedAustraliancitizensandpermanentresidentswhoaretryingtofindaplaceintheirprofessionwhenthejobmarketisinastateofoversupply.In December 2016, the Minister for Immigration and Border Protection asked theMACSMtoreviewtheexistingCSOL

    toensureitbetterreflectsgenuinelabourmarketneedsTheCSOLreviewispartofasuiteofreformswhicharebeingprogressedbytheGovernmenttoensurethatAustralianworkershavepriority(Dutton2016).

    InApril2017theFederalGovernmentdetaileditsplanstoscrapthesubclass457visa,and at the same time removed a range of occupations from the new STSOL (the listwhichreplacedtheCSOL).However,theGovernmentdidnotconsulttheMACSMaboutthechanges,effectively rendering it irrelevant.TheACTUrepresentativesubsequentlyresignedfromthecommittee(Patty2017b).10.3 Visas not required to be on either list There are another four visas relevant tomigrant engineerswhich do not require theapplicants occupation to be listed on the MLTSSL or STSOL. These are shown inFigure8. The Skilled Recognised Graduate visa (subclass 476) is unique amongAustralian visas in that it is focused on just one occupational grouping graduateengineers. It was introduced in September 2007when skilled labour shortages werebeing experienced during the first phase of the resources boom (Commonwealth ofAustralia 2007); however, it still remains in place even when the labour market forengineering graduates is very unfavourable due to intense competition for asignificantlydiminishednumberofpositions.

  • OversupplyoftheEngineeringLabourMarket 35

    Figure8VisaswhichdonotrequireaskilledmigrantsoccupationtobelistedontheMLTSSLortheSTSOL

    SkilledRecognisedGraduatevisa(subclass476)Thistemporaryresidencevisaallowsrecentengineeringgraduatesofrecognisedinstitutions(includingoverseasinstitutions)togainupto18monthsofskilledworkexperience.Applicantsmustbeyoungerthan31yearsofageandhavecompletedanengineeringdegreeatarecognisedinstitutioninthepasttwoyears.(DIBP2017i)

    VisasIndependentoftheMLTSSLandSTSOL

    RegionalSponsoredMigrationSchemevisa(subclass187)ThisisapermanentresidencevisaforskilledworkerswhowanttoworkinregionalAustralia.ApplicantsmustbenominatedbyanapprovedAustralianemployerforajobinregionalAustralia.Applicantsmustalsonormallybeunder50yearsofageandmeetskills,qualificationsandEnglishlanguagerequirements,althoughexemptionsexist.(DIBP2017m)

    TemporaryGraduatevisa(subclass485)Post-StudyWorkStreamThisisatemporaryresidencevisaforinternationalstudentswhograduatewithahigherdegree.Thevisacanbegrantedforuptofouryears.UnliketheGraduateWorkStream,theapplicantsoccupationisnotrequiredtobelistedontheMLTSSL.(DIBP2017c)

    SkilledRegionalvisa(subclass887)ThisisapermanentresidencevisaforpeoplewhohavelivedandworkedinspecifiedareasofregionalAustralia.ApplicantsmustbeinAustraliaandholdoneoffourspecifiedvisasorabridgingvisa.Minimumtimeperiodsforhavinglivedandworkedinthespecifiedregionalareasapply,alongwithhealthandcharacterrequirements.(DIBP2017n)

  • 36 OversupplyoftheEngineeringLabourMarket

    10.4 Summary of skilled migration visas Table11summarises thesuiteofskilledmigrationvisas thatareusedto facilitate themigrationofengineersthroughbothonshoreandoffshoreapplications.Table11SummaryofmajorskilledimmigrationvisasVisasubclass

    Visatitle Occupationrequiredtobeonlist

    Permanentortemporaryvisa

    Points-testedvisa

    189 SkilledIndependent MLTSSL Permanent Yes485 TemporaryGraduate

    (GraduateWorkStream)MLTSSL Temporary No

    489 SkilledRegional(Provisional)

    MLTSSL Temporary No

    186 EmployerNominationScheme

    Combined Permanent No

    190 SkilledNominated Combined Permanent Yes457 TemporaryWork

    (Skilled)Combined Temporary No

    489 SkilledRegional(Provisional)(InvitedPathway)

    Combined Temporary Yes

    187 RegionalSponsoredMigrationScheme

    Nolist Permanent No

    476 SkilledRecognisedGraduate

    Nolist Temporary No

    485 TemporaryGraduate(Post-StudyWorkStream)

    Nolist Temporary No

    887 SkilledRegional Nolist Permanent NoThe term regional means anywhere in Australia except Sydney, Newcastle, NSWCentralCoast,Wollongong,Melbourne,Brisbane,GoldCoast,Perthand theACT(DIBP2017o).10.5 Temporary skilled migration OfthesixtemporaryskilledmigrationvisasinTable11,three(subclasses476and485)are for recent university graduates. The number of these visas awarded each year toengineeringgraduatesisnotmadeavailablebyDIBP.Oftheremainingthreevisas,thesubclass457visa is by far themost significant, anddata for thenumberof 457visasissuedeachyearforindividualoccupationsarepubliclyavailable(DIBP2017a).The subclass 457 visa has probably been the most notorious visa in Australianimmigrationhistory.Sinceitsintroductionin1996,thisvisahasbeenthesubjectoftenreviews and inquiries, including the Robust New Foundations report (Azarias et. al.2014) and the recent Senate review into the exploitation of temporary work visaholders (The Senate Education andEmploymentReferences Committee 2016). As theapplicationofthevisahasbroadenedovertimefromitsoriginalintent,controversyhasgrown about the role it plays in the displacement of Australian workers by foreignworkers,andintheexploitationofforeignworkerswhoareworkinginthecountrywiththisvisa.

  • OversupplyoftheEngineeringLabourMarket 37

    ItcanbeseenfromFigure9thatthenumberofsubclass457visasissuedtoengineershasfalleneachyearsince2011-12.Figure10showsthatthedeclineintheissueof457visastracksthedeclineinengineeringvacanciesoverthattime.Figure9Newsubclass457visagrantsforengineers(actualdata,notindexed)(DIBP2017a)

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  • 38 OversupplyoftheEngineeringLabourMarket

    Thesubclass457visacanbeissuedforaperiodofuptofouryears.AttheendofJune2012therewere7303migrantengineersworkinginAustraliaon457visas.BytheendofJune2016,thenumberhadfallento2327(DIBP2017p).Superficiallyitcouldbeseenasappropriatethattheissueofnewsubclass457visastomigrantengineershasdeclinedinproportiontothedeclineinvacancies.Thiswouldbea plausible argument if there had also been a corresponding decline in the levels ofpermanentskilledmigration.However,permanentskilledmigrationhasincreasedandkepttotalengineeringmigrationathighlevels(Figure4);andthenumberofapplicantsperengineeringvacancyhascontinued toriseeachyear (Figure3)asunemployment,underemployment and displacement of engineers has increased. It is thereforereasonabletoquestionwhythereisarequirementforanyengineerstobebroughtintothecountryusingthistemporaryvisa.Engineeringandnursingaretheonlytwoprofessions(asopposedtotrades)forwhichmarkettestingisrequiredbeforea457visacanbeissued(CommonwealthofAustralia2016b;Azariasetal.2014).ThemarkettestingrequirementcanbebypassedifthereisanyconflictwithAustraliasinternationaltradeobligations.Thus,ifthevisaapplicantisa citizen of China, Japan, Thailand, Chile, Korea orNew Zealand, nomarket testing isrequired.Iftheapplicantisacurrentemployeeofabusinessthatisanassociatedentityof the sponsoring business in Australia, then no market testing is required if theassociatedbusinessislocatedinanyofthetenASEANcountriesorChile,China,Japan,Korea or New Zealand (DIBP 2016). With these rules, there is ample scope foremployerstobringinmigrantengineerson457visaswithnomarkettesting,regardlessofthestateoftheengineeringemploymentmarket.For professional occupations, the subclass 457 visa is granted with no independentexaminationofthequalificationsorexperienceofapplicants.AlongstandingconcernofEngineers Australia is that migrants on this visa can work as engineers in Australiabasedontheapprovaloftheirsponsoringemployeralone(EngineersAustralia2015d,2016b).Incontrast,30tradeoccupationsaresubjecttoindependentskillsassessmentifthe applicant comes from any of ten particular countries (Azarias et al. 2014). In theviewoftheauthor,consideringthesafetyandqualityissuesatstake,migrantswhowishtoentertheAustralianengineeringworkforceon457visasshouldundergoformalskillsassessmentbytheassessingauthority,ie.EngineersAustralia.Despite the purpose of the Temporary Work subclass 457 visa scheme being toalleviate temporary skill shortages in the Australian labour market (The SenateEducation and Employment References Committee 2016), this objective has beendistorted,allowingittobecomeatransitionvisaformanymigrantsseekingpermanentresidenceinthecountry(Azariasetal.2014).Forexample,migrantscantransferfromasubclass457visatoapermanentresidencesubclass186visawhentheyhaveworkedfor a sponsoring employer for at least two years in the same occupation, and theemployerwantstoofferthemapermanentpositioninthatsameoccupation.Nomarkettestingisrequired(DIBP2017f;ProductivityCommission2016).This arrangement is satisfactorywhen a labour shortage exists in an occupation. Butwhenanoccupationorgroupofoccupationsisinachronicstateofmajoroversupply(asis the case with engineering occupations), this form of transition to a permanent

  • OversupplyoftheEngineeringLabourMarket 39

    residencevisadeniesunemployed,underemployedanddisplacedcitizensandexistingpermanentresidentsinthesameoccupationtheopportunityofapplyingforthejob.Inthese circumstances, thevisa regulationsprivilegea foreignnational inAustraliaonatemporaryworksubclass457visa,overandaboveAustraliancitizensandpermanentresidents.ForAustraliancitizenswhoaretryingtofindworkintheiroccupation,thisisaformofdispossession.Theabilityofmigrantsinengineeringoccupationstotransitionfromsubclass457visastopermanentresidencevisasmustend.Oncethe457visatermhasexpired,themigrantengineermustleavethecountryandthejobbemadeavailabletocitizensandexistingpermanentresidents.RemovalofengineeringoccupationsfromtheSTSOLwillfacilitatethis,andwillalsopreventnew457visasbeinggrantedtoengineers.InApril2017,theFederalgovernmentannouncedthatthesubclass457visawouldbescrappedinMarch2018,tobereplacedwiththeTemporarySkillsShortage(TSS)visa.Labourmarket testingwill bemandatory for theTSS, exceptwhere there is a conflictwithAustraliasinternationaltradeobligations(DIBP2017s).TherewillbetwostreamsassociatedwiththeTSS.TheShort-termstreamwillbeavisaofuptotwoyearsduration.Toaccessthisvisa,anapplicantwillberequiredtohaveanoccupation listed on the STSOL. With this stream, there will be no pathway topermanent residency. The Medium-term stream will be a visa of up to four yearsduration.Toaccessthisvisa,anapplicantwillberequiredtohaveanoccupationlistedon the MLTSSL. There is a pathway to permanent residency with this stream (DIBP2017r).10.6 Permanent skilled migration The permanent skilled migration data for engineers used in this report have beenobtainedfromdatasuppliedtoEngineersAustraliabyDIBP(EngineersAustralia2017).Thedatacoverallpermanentvisaclassesforbothindependentandsponsoredmigrantengineers(EngineersAustralia2012).Migrant engineers can obtain permanent residency through any of five major visapathways,asdocumentedinTable11.Between2001and2011,theskilledindependentvisawas themostcommonlygrantedpermanentresidencevisa formigrantengineers(Engineers Australia 2012). This is the Skilled Independent subclass 189 visa inTable11. The next most commonly granted permanent residence visas for engineerswereemployer-sponsored(subclasses186and187inTable11),followedbyStateandTerritory sponsoredvisas (subclass190 inTable11) and thenother visas (EngineersAustralia2012).Permanent residence visas can be granted to both offshore and onshore applicants.OffshoreapplicantsarelivingoutsideAustraliaatthetimeoftheirapplication,whereasonshore applicants apply when they are already in the country. Offshore applicantslargely utilise the subclass 189 (Skilled Independent) visa, available for skilledindependentworkers.Onshoreapplicants,suchas those transitioning fromtemporaryvisas or student visas, can potentially access the subclass 189 (Skilled Independent)and/orthesubclass186(EmployerNomination)visa,amongothers.

  • 40 OversupplyoftheEngineeringLabourMarket

    Permanentengineeringmigrationroseby36%between2012-13and2015-16(Figure11) and permanent visa applicants dominate the annual migrant engineering intakebasedontheavailabledata(Figure12)(EngineersAustralia2017;DIBP2017a).Figure11Newpermanentresidencevisagrantsforengineers(actualdata,notindexed)(EngineersAustralia2017)

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  • OversupplyoftheEngineeringLabourMarket 41

    The preponderance of migrant engineers granted permanent residence makes theengineering employmentmarket evenmoredifficult. Thesemigrantsdonot return totheir countries of originwhen their visas expire, in contrast to someof those on 457visas. Instead, they are able to remain in Australia and compete for engineering jobsindefinitely,shouldtheysochoose.11. Recent Domestic University Graduates Figure 13 shows the number of award completions in the Australian StandardClassification of Education (ASCED)(ABS 2001) category 03 Engineering and RelatedTechnologies inAustralia since2001. Awards cover degrees, diplomas and graduatecertificates. There are two curves in Figure 13: one for domestic graduates (ie.Australiancitizensandpermanentresidents);and theother for internationalstudentswho have graduated from an Australian institution. Both curves indicate an ongoingincreaseingraduatenumbers.Figure13NewgraduatesinEngineering&RelatedTechnologies(actualdata,notindexed)(DE&T2016f;ACED2017)

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    Theemploymentoutcomesforrecentdomesticbachelordegreeengineeringgraduatesare surveyedbyGraduate CareersAustralia (GCA). For graduateswho complete theirdegreestudiesattheendofayear,theGCAsurveyisforwardedtothemattheendofAprilinthefollowingyear(GCA2011).Thisisfive-to-sixmonthsafterthecompletionofthegraduatesfinalexams.Across engineering disciplines, since 2012 there has been a significant decline in thepercentage of recent domestic graduates in full-time employment, according to GCAdata.Theexception isElectronic/ComputerEngineering,whichhasexperienced justasmall decline (GCA 2016. See Table 5 in GCAs Supplementary Tables & Figures).Figure14 illustrates the decline in full-time employment for three engineeringdisciplines.TheX-axisofFigure14referstotheyearinwhichtheGCAsurveywasdone.The shape of the curves for the three engineering disciplines roughly corresponds tothat for engineering vacancies shown in Figure 1; that is, it is likely that domestic

  • 42 OversupplyoftheEngineeringLabourMarket

    graduateengineerfull-timeemploymentoutcomestoanextentreflectthegeneralstateoftheengineeringemploymentmarket.Not all of thesedomestic engineering graduates are employed in jobs related to theirfieldof study.Dependingon thediscipline,between70%and90%of recentgraduateengineers who are employed full-time are working in a job broadly related to theirtraining(GCA2016.SeeTable23ainGCAsSupplementaryTables&Figures).Figure14Bachelordegreegraduatesinfull-timeemploymentasapercentageofthoseavailableforfull-timeemployment,forselectedengineeringdisciplines(actualdata,notindexed)(GCA2016.SeeTable5inGCAsSupplementaryTables&Figures)

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    Table12showsthenumberofrecentdomesticengineeringbachelorgraduateswhoareworking full-time ina jobbroadlyrelated to their fieldofstudy,asapercentageofallrecent domestic engineering bachelor graduateswho are available for full-timework,using 2015 data. It documents a dismal outcome for domestic engineering bachelorgraduates. Note that broadly related means engineering, scientific, technical andmanagerialroles(GCA2016.SeeTable23ainGCAsSupplementaryTables&Figures).Engineeringdegreesareamongthemostdifficultuniversitydegreesinbothcomplexityandworkload, and theyusually take at least four years to finish. Students completingengineering bachelor degrees incur costs of the order of $36,000 if they take out aHECS-HELPloan,basedon2016rates(Norton2016).Itisirrationaltobelievethatanybut a small percentage of students embarking on engineering degrees do sowith theintentionthattheywillnotworkinanengineering-relatedfield.Thedeterioration in jobprospects fordomestic graduateengineershasbeenpartiallyreflected in a 10% decline in acceptances in engineering courses through Tertiary

  • OversupplyoftheEngineeringLabourMarket 43

    Admission Centres (TACs) between 2013 and 2015. However, direct admissions toengineeringcoursesincreasedbynearly33%duringthattime,leavingtheoveralllevelofacceptancesvirtuallyunchanged(EngineersAustralia2016c).

    Table12Numberofrecentdomesticengineeringbachelorgraduatesworkingfull-timeinajobbroadlyrelatedtotheirfieldofstudy,asapercentageofallrecentdomesticengineeringbachelorgraduatesavailableforfull-timeemployment(actual2015data,notindexed)(GCA2016.CalculatedfromdatainTables5and23ainGCAsSupplementaryTables&Figures)Engineeringdiscipline %Workinginrelevantjob

    Aeronautical 42.0Chemical 50.8Civil 68.0Electrical 70.2Electronic/computer 71.0Mechanical 59.9Mining 63.9Otherengineering 57.4

    It is very likely that the domestic market for university engineering courses consistingofhighschool students, theirparentsandcareersadvisers,andmatureagestudents is not well informed about the true state of the Australian employmentmarketforgraduateengineersinparticular,andengineersingeneral.Coupledwiththis,theyareunlikelytobeawareoftheoutlookfortheengineeringprofessionpreparedbytheDoE(Table4).Part of this lack of understandingmay be due to the spruiking ofmisinformation byuniversities. In 2015, the author received a survey from university engineeringacademicswhoweregenui