Talking Talent

Strong productivity growth is essential to Australia’s future prosperity. In 2005 Australia ranked number 10 in the World Economic Forum’s Global Competitiveness Report.  This is a global indicator of a country’s potential to attract capital investment and deliver growth on a sustainable basis. In 2008, we are number 18.
In Australia, workforce participation is low. Total workforce participation in Australia is only 64.4 per cent - with the male participation rate at 72 per cent and the female participation rate at 57 per cent.

This workforce participation places Australia at number 11 of the 28 countries examined, way below our trading partners.

In fact, the OECD has suggested that the low participation of women in the Australian workforce should be addressed by the government cutting their entitlement to taxpayer-funded childcare if they remain stay at home mums. 

The Global Competitiveness Report also provides a list of problematic factors for doing business in Australia.  Look what came out number one:

Restrictive labor regulations……………………………….16.3
Inadequate supply of infrastructure …………………….15.7
Inadequately educated workforce………………………..12.9
Inflation ………………………………………………………….11.6
Tax rates …………………………………………………………10.1
Inefficient government bureaucracy………………………8.6
Tax regulations …………………………………………………7.7
Access to financing…………………………………………….6.5
Poor work ethic in national labor force ………………….4.6
Policy instability…………………………………………………4.1
Foreign currency regulations………………………………..1.3
Crime and theft ………………………………………………….0.5
Corruption………………………………………………………….0.2
Government instability/coups ………………………………0.0
Poor public health………………………………………………..0.0

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In its latest economic snapshot of Australia, the Organisation for Economic Cooperation and Development (OECD) has warned that the nation cannot afford to overlook any potential workers, given the chronic skills shortage and ageing population.

“Priority should be given to improving incentives to work for groups with the greatest scope to raise supply, such as women with families and lone parents, disability benefit recipients and older workers over 55,” the report says.

A paid maternity leave scheme would also encourage women to return to work sooner after giving birth, the OECD says.

It also suggests tightening the eligibility for disability pensions, as well as abolishing incentives for people to retire at 55.

“Immigration remains an important contributor to labour supply, helping to alleviate skill shortages. Given the high skill level of Australia’s immigration intake, the adequate use made of immigrants’ human capital is a matter of key importance.

“A significant challenge lying ahead is to remove potential barriers to increased immigration,” the OECD says, arguing that there should be a simpler process to recognise overseas qualifications of migrants and recommending greater use of temporary migration schemes, such as the 457 visa.

In recent years I have written opinion pieces, blogged and spoken at a number of conferences on the ‘talent crunch’ and, at the risk of converting a demographic science into a sound-byte, I spoke predominantly about the effects that an aging population, low fertility rates and a difficult migration landscape had in meeting the skills required by employers in Australia. Then there was the added complexity of generational change in the workforce and a lot of focus was on the new entrants to the workforce - Y Genners - and how they were causing angst for employers. Talent attraction and retention was as much about the quantity of people as it was about the quality. 

Today, I am reminded of Albert Einstein when he was a professor at Zurich University. While crossing the quadrangle one day towards the end of the academic year he was stopped by the master of the College who asked if he had set the examination questions for his students. He replied that he had decided to use the same questions as the previous year.

The master was clearly agitated and spluttered that this would allow the students to cheat. “No,” said Einstein.  “While the questions being asked is the same – the answer is different.”

So it is for us - we find ourselves in a situation we could not have imagined two months ago, let alone two years ago. Global recession, banks being nationalised, the end of free deregulated markets and rising unemployment. Many organisations thought the current economic uncertainty would give see a slight loosening in the candidate market. While unemployment is forecast to rise to 6 per cent and the lack of job creation in September means that there is some short-term relief, the skills shortage is here for the long haul. This means organisations must continue to look at how they recruit and retain people, especially the best performers in their industry.

The recruitment and retention challenge is a leadership challenge that every business leader – small or large – faces today. My tips are:

• Foster an open environment with alignment between recruitment and retention;
• Create an atmosphere of mutual trust and respect. Focus on the outcomes and give people the freedom to make their own decisions;
• Inspire a vision by describing the kind of future you can create together and communicate a positive and helpful outlook;
• Encourage the heart by praising people for a job well done, celebrating project milestones and linking rewards to achievements; and
• Remember the four Rs: be real in who you are, relate to them on their level and respect their needs especially their desire to undertake relevant work.

While the talk around town continues to focus on ‘the war for talent’, the ICT jobs market remains reasonably stable.

The Australian Computer Society’s 2008 Remuneration Survey is just out, revealing a 5.1 percent increase for ICT professionals in the private sector, up half a percentage point from 2007.

And the society predicts similar results next year.  So much for all the worry about recession.

Public sector remuneration experienced an increase of 4.1 percent, but education sector employees reported an average increase of 3.6 percent, slightly lower than last year.

According to the ACS, most ICT professionals salaries have increased marginally faster than general cost of living increases in Australia. The Australian Bureau of Statistics reported an increase in the consumer price index of 4.2 percent over much the same period.

The positive salary results for ICT professionals reflect the strength of the ICT sector, and the ongoing demand for skilled ICT workers.

The Australian Government has posted new information on skills in Australia’s ICT industry.  Aside from a list of skills in demand (if you’re skilled with CISSP, Java or SIEBEL, for example, then the world’s your oyster!) there’s also some fascinating insights into the future employment prospects in the industry. 

In May 2008 there were 176,200 “Computing Professionals” and 42,600 “IT Managers” in Australia – a total of 218,800 ICT professionals.  Within five years, the ABS is predicting we’ll need 32,700 extra computing professionals (a growth of 3.3% per annum) and another 10,300 IT managers (4.4 % growth per annum).  So if you’re looking for a career change, then look no further than ICT!

It’s a sign of the times that, as teleworking becomes more popular, companies are stepping up their electronic monitoring of tens of thousands of home-based independent contractors.

The Wall Street Journal reports that employers are taking photos of workers’ computer screens at random, counting keystrokes and mouse clicks and snapping photos of them at their computers. “They’re plying sophisticated technology to instantaneously detect anger, raised voices or children crying in the background on workers’ home-office calls. Others are using Darwinian routing systems that keep calls coming so fast workers have no time to go to the bathroom.”

Peter Weddle, an author, consultant and researcher on employment Web sites, calls the trend “21st Century Big Brotherism” that risks being “horribly intrusive.” Skilled workers “don’t need someone looking over their shoulders,” he says. But while the monitoring can put a damper on home life, many people are so eager to avoid commuting hassles that they see the practice as an acceptable tradeoff.

The article makes an interesting point.  While this sort of monitoring has so far been mainly restricted to freelance IT workers, writers, graphic-design artists and call-center agents, the monitoring itself may speed teleworking growth, because it tears down one of the biggest obstacles to working at home - employers’ fear that remote workers will slack off.

As fuel costs soar and we come to grips with the greenhouse challenge, and as skills shortages continue to bite, we must find creative ways to keep talented people in the workforce - and teleworking is one of them.  And as teleworking becomes a mainstream choice, we’ll find that people shrug off domestic sounds of barking dogs, children and lawnmowers, just the way we now accept that some people hold teleconferences in taxis and write briefs on airplanes and take client meetings in cafes.

It would be impossible to talk about labour shortages and not comment on the appalling lack of women in many of the high technology professions.  For example, a quick scan of almost any IT department, IT conference or vendor environment from the trenches to the corner office confirms that women who embrace technology as a life long career remain a rare breed.

There is no doubt that the opportunities for women in technology have advanced in the past few decades as have education initiatives aimed at leveling the playing field and attracting women into the industry. However for every woman rising to prominence or embarking on a career in IT or undertaking an IT course at university, as my daughter is, there is another opting out.

The number of women in the industry continues to decline and the reasons women give for leaving are the same ones I heard two decades ago; they are the micro inequalities such as wage discrimination, the boys club and the lack of work/life balance.

Restricting women’s job opportunities costs the Asia Pacific region up to $47 billion each year.

This startling figure was revealed in a report by the United Nations Economic and Social Commission for Asia and the Pacific, released last year, which also suggests that, as a nation’s female employment rate rises, so does its GDP.

With that in mind, Australia’s industries have a golden opportunity to increase our productivity by increasing the participation rate of women.

The “glass ceiling” (where women feel they have to work harder than male colleagues to achieve success) and the “old boys club” (with its informal male networking) contributes to the perceived or real exclusion of women from many high performance job opportunities.

So, what can we do to turn the tide?

I’m a strong advocate of providing women with the skills to succeed in a male-dominated working environment.  Some of those skills are:

1. Negotiation. Women employees across Australia’s economy earn just 83 cents for every dollar their male counterpart earns, so clearly, women can benefit from enhanced skills to enable them to negotiate salary packages and working conditions.
2. Self-promotion. Women often take the modest approach where they believe they will be rewarded for good work without self-promotion. Instead, they need to learn to not just “stand there” but “stand out”.
3. Work/life balance. The fast pace of life has become frantic for many women. We need to provide skills and training to help women gain and maintain work/life balance.

Is all this effort designed to get women into the workforce just for the sake of getting women into the workforce?

As the UN study shows, women are extremely valuable contributors to economic growth. As we confront rapidly changing patterns of paid work opportunities and work time arrangements, it is often those companies and industries perceived to care about the “people” aspect of business - such as work/life issues - that attract and retain the best talent.

Boosting the skills in the ICT industry is a particular passion of mine.  One of my primary roles as CEO of the Australian Information Industry Association was to advocate policies and programs to alleviate Australia’s ICT skills squeeze.

I was talking about the impact of 457 visa restrictions in October 2007, and since then, nothing’s been done to change a disastrous situation.

12 months ago companies in the on-hire labour industry could bring independent contractors into Australia when their clients required it.  They’d been doing it for many years. Now they can’t - and it’s having a terrible impact on Australia’s ICT industry.

These legacy labour laws of the Howard Government are causing great difficulty for technology sector recruiters, who haven’t been able to bring foreign workers into the country on 457 visas since 1 October.

Just before the November 2007 election, then immigration minister Kevin Andrews toughened the training provisions in labour agreements for the 457 visa, but recruiters have been unable to meet the new requirements.

For example, the new laws require on-hire labour companies – most of them small businesses - to spend 2 per cent of their payroll on the training of contractors they do not manage.  Why is this unreasonable?  Because they do not manage their contractors!  They merely place them with their clients who, in turn, manage their day-to-day activities. Yet, without such a commitment in a labour agreement application, an on-hire company cannot bring 457 visa holders into the country for their clients.

As a result of these changes (that were pushed through with very little industry consultation, I might add) the Information Technology Contractors and Recruitment Association (ITCRA) claims more than 1,500 foreign workers have been prevented from entering the country.

And the Recruitment Contract and Services Association (RCSA) recently surveyed 150 companies, and estimated that more than 3,000 457 visa applications would be jeopardised over the next two years.

It’s interesting to note that, while the Australian on-hire industry is prevented from upskilling the national workforce, such discrimination does not exist in other countries.  Around the globe, the on-hire industry recruits and places Australian trained contractors with their clients.  The result is an ICT skills ‘brain drain’ which is affecting the Australian workforce – and our economy.

The Australian Government must remember this: IT work can easily be exported and development projects can be simply shifted to other countries.  As Australian companies find it increasingly difficult to find skilled ICT professionals for specialist roles, they’ll simply move those requirements offshore.  And that means goodbye Australian ICT industry.

David Knox, Worldwide Partner at Mercer, has published a paper exploring Australia’s position on the age pension.

As our population ages and a larger percentage of people sit in that over 65 age bracket, he asks whether a pension at 65 is still appropriate.

Knox outlines a number of adjustments to pensions around the world, including:

• The US is gradually increasing its normal retirement age for Social Security from 65 to 66 between 2002 and 2009 and then increasing it again from 66 to 67 between 2020 and 2027; 
• The UK announced in a 2006 White Paper discussing their new pensions system that they will gradually increase their State Pension age from 65 in 2024 to 68 in 2046; 
• Germany is gradually increasing its pension age from 65 in 2012 to 66 in 2024 and then to 67 in 2029; 
• Denmark is increasing the age threshold for the public old-age pension from 65 in 2024 to 67 in 2027. Furthermore from 2025, the eligibility age will be directly linked to changes in life expectancy at age 60; 
• Japan is increasing its age for access to the earnings-related component of its pension from 60 to 65 by 2025 for males and by 2030 for females; 
• Increases in pension age that affect both men and women are being implemented in the Czech Republic, Greece, Hungary, Italy and Korea (OECD, 2007).

What’s my point?  I’m certainly not suggesting that people don’t deserve the aged pension.  What I’m suggesting is that we need to look at the fact that, as our population ages, we are going to lose a pool of high skilled, knowledgeable and experienced workers who will retire when they still have many good years in them.  Is 65 really still the right age to retire?