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Tuesday, 07 December 2010 07:58

Skills dip pressures government 457 rules

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Recruitment company Candle has again called on the Government to revise the rules governing 457 visas, in order to allow recruitment companies to bring in skilled people from overseas, and bench them until a suitable position can be found. Only then will major IT projects such as the NBN, e-health initiatives and banking revamps be able to access skills when and where they need them.

While Candle's executive general manager Linda Trevor acknowledged this practice could lead to overseas candidates having better placement prospects than locals if there was another downturn, she argued it was still the best way to avoid the worst effects of a skills shortage.

She believed that at present the market was unbalanced, with a slight deficit in evidence. Organisations would she said, be forced to look offshore for skills to plug the gap. 'The problem is we cannot sponsor people and then on-hire them.'

Candle, which is the ICT recruitment business of the Clarius Group, today released its first Candle Skills Index, which points to a mild ICT skills shortage persisting until 2015. In the past Candle's parent Clarius has tracked a general skills index, but this is the first time that Candle has delved deeply into the various pockets of ICT supply and demand, according to Ms Trevor.

The index, which looks forward and forecasts supply and demand, is a measure of labour demand divided by labour supply. A measure of 99-101 is considered to point to balanced demand.

The Index is analysed for Candle by KPMG Econtech and is based on ABS and DEEWR data.

For the quarter to September 2010 the index stood at 101.6 which is very slightly outside of balanced territory and pointing toward shortage. The report suggests that there is a shortage of 3,200 professionals.

However between now and September 2011, demand is tipped to rise 6.5 per cent, while supply will rise by 6.8 per cent. The mid term forecast for the years to September 2015 is for a largely balanced market albeit with a net shortage of around 2,500 skilled professionals.


More generally the Australian jobs market is starting to slow according to the just released November Advantage Job Index. That Index, which tracks positions vacant on three of the major internet sites, points to a general pre Christmas softening in demand.

Although the number of jobs increased 3.38 per cent during November, demand slowed week by week during the month. According to Bob Olivier, director of global market intelligence for Advantage Resourcing, the indicators are that early 2011 will bring a tighter job market.

The organisation believes that seven consecutive interest rate rises is having a significant impact with the decline in advertisements coming earlier this year than in 2009.

Candle meanwhile believes that although the IT skills shortage will ease somewhat over the coming four years, a mild shortage will persist which is likely to force companies to continue looking overseas for skills.

Under the current rules employers must sponsor 457 applications directly which according to Ms Trevor could lead to delays of up to ten months. She said recruitment firms all wanted to be able to sponsor 457 candidates, bring them to Australia and then hire them out as their skills were needed.

While she acknowledged that if the rules were changed to allow 457 holders to be benched by recruiters, that 457 visa holders might be placed ahead of local candidates during any future market downturn. But she said that since the 457 visa lasted only for four years, it would not be a major or lasting problem.

If the situation was left unchanged she warned that more ICT work would simply be sent overseas, rather than bringing in skills to perform the task locally.


In a prepared statement Ms Trevor noted that; 'Unless we see some changes to 457 Visas and skilled migration policies, the amount of offshoring that companies are forced to do will undoubtedly increase. This will have a significant cost to the economy, not least with money that would otherwise be circulated through the community.

'According to a Capgemini survey earlier this year, 19 per cent of outsourcing undertaken by Australian companies was sent offshore, compared with 14 per cent by their international cohorts.

'The value of offshoring in recent years involving IT projects and related work is reported to have exceeded $7 billion dollars.'

Canberra is already feeling the pinch in terms of access to skills. The State of the Service Report issued by the Australian Public Service Commission in late November found that by the end of June this year the APS had 11,580 ICT employees and 2,706 contractors.

By June next year it will need to find another 1,711 ICT staff.

Yet already more than 50 per cent of agencies are reporting difficulty recruiting or retaining staff. In addition almost 80 per cent said their ability to find ICT staff was having a 'moderate to severe impact on agency capability.'

The Candle index shows that across all sectors in Australia the GFC reversed a four year long sustained ICT skills shortage, knocking the market back into a period of skills oversupply. This latest report indicates that has now been reversed, but having managed with fewer people for the last two years, it appears that business now seems to have more modest expectations in terms of ICT staffing levels.

There are some pockets of shortages, most notably for business analysts, .Net programmers and project managers. But even in these areas the salary increases are again relatively modest.

So for example a contract project manager today might expect $110 an hour. Over the next year that might rise to $120 an hour.

Permanently employed business analysts however could expect somewhat steeper improvements with salaries rising from the average $120,000 a year this September to $150,000 by September 2011.



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