Why Labor needs to be worried about labour shortages: Kohler

There’s been a dramatic shift in sentiment among Australia’s chief executives that puts what’s going on in Canberra today into sharp relief.

CEOs are now much more optimistic about the economy than they have been since the mining tax was announced and Kevin Rudd was sacked, but they are increasingly being kept awake at night by skills shortages.

As Australia’s politicians start going at each other today, the nation’s CEOs are saying that the two most important people in Parliament are the Immigration Minister, Chris Bowen and his predecessor Chris Evans, who is now Minister for Tertiary Education, Skills, Jobs and Workplace Relations.

The issues that will dominate the biffo in Parliament – climate change and tax – are virtually irrelevant to those running businesses.

The word from the CEOs is that the greatest danger they face is not being able to grow their businesses because they can’t find the managers and skilled staff they need.

And the critical danger for the economy, and one that the Reserve Bank is clearly alert to, is that they will eventually respond to the pressure by paying higher salaries, leading to a wages blow out and inflation.

The issue most likely to keep CEOs awake at night all year, according to the Business Spectator Accenture CEO Pulse surveys, has been sourcing skilled staff. But in the latest one, the number citing this as the most important has jumped 55 to 64%. At the start of the year it was 48%.

By comparison, climate change and tax are at 20 and 18% respectively. Access to credit is declining as an issue, and the IR laws and corporate regulation are also relatively minor.

But 84 per cent of CEOs report that they are having trouble finding staff with technical or specialist skills and 72% are finding it difficult to hire managers. On the other hand hiring unskilled staff is relatively easy – 75% report that that’s not very hard.

And this has led to a big difference in CEOs’ mood about the economy generally – optimism about the next 12 months is up from 54 to 70% – and about their own companies, where optimism down from 82 to 77%.

It means Chris Bowen’s task as Immigration Minister is critically important, and in particular the way he handles 457 visas. These were introduced in 1996 by the Howard government to allow businesses to get temporary skilled staff offshore, but the unions hated the scheme.

The Labor government has now wound back the quota and the 457 visa intake has fallen 20%. Immigration expert, Alan Chanesman, the CEO of the immigration strategy firm Lipman James, told a conference last week that the current quota is inadequate and that the policies of both major parties are “not supportive” of opening up Australia to more skilled immigration.

As access to skilled migrants declines, firms are turning more to internal training: more than half (57%) are focusing on new internal training and skill development.

Research design and analysis for the CEO Pulse was conducted by GA Research and fieldwork by AFS. The sample comprised 56 CEOs of organisations with an Australian turnover of $100 million or more who opted to participate in a five minute survey conducted over the phone or online between Tuesday September 14 and Friday September 24, 2010.

This article first appeared on Business Spectator.