Regional Skills Demand Snapshot - South East Melbourne July 2019
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Regional Skills
Demand Snapshot
South East Melbourne
July 2019
South East Melbourne
Monash
Mulgrave Emerald
Gembrook
Kingston
Dandenong
Mordialloc
Narre Warren
Dandenong Cardinia
Currum Casey Pakenham
Nar Nar Goon
Seaford
Bunyip
Frankston Cranbourne
Frankston
Langwarrin
Mount Eliza Koo Wee Rup
Warneet
Mornington
Lang Lang
Tyabb
Portsea Mornington
Sorrento Peninsula
Blairgowrie
Rosebud
Merricks
Shoreham
Flinders
Prepared by the Office of the Victorian Skills
Commissioner for the Minister for Training
and Skills, the Hon, Gayle Tierney MP.
Contents
1. Executive Summary 2
2. Introduction 7
3. Economic overview 8
4. Workforce characteristics 12
5. Common challenges and opportunities 14
6. Manufacturing 16
7. Construction 20
8. Food and Fibre 24
9. Retail, Business, Hospitality and Tourism 28
10. Community Services and Health 32
11. The training system must support industry needs 36
Regional Skills Demand Snapshot - South East Melbourne 1
1. Executive Summary
The South East Melbourne Region of metropolitan Melbourne, South East Melbourne is the largest and fastest growing
encompassing the City of Dandenong, City of Frankston, City region in metropolitan Melbourne
of Monash, Cardinia Shire, Mornington Peninsula Shire, City of
The South East Melbourne Region has approximately 83,500
Kingston and City of Casey is growing rapidly. A supply of highly
businesses and approximately 500,000 full-time and part-time
skilled local workers is critical to underpin this growth and the
jobs, which accounts for 18% of all jobs in Victoria. As of 30 June
Vocational Education and Training (VET) system has a key
2017, the population of the South East Melbourne Region was
role to play. However, the VET system and training delivery is
estimated at just over 1 million people, approximately 16.7%
not always aligned with the current and future skills needs of
of the Victorian population.
local employers. An employer-informed response can improve
this alignment and help address current and emerging skills The economic profile of the region reflects strengths in four
shortages, thereby ensuring that workers in the South East key sectors: Manufacturing, Construction, Retail Trade, and
Melbourne Region are skilled, productive and employable. Community Services and Health (CS&H). The logistics and
tourism sectors are also expected to support future growth,
The Victorian Skills Commissioner (VSC) recognises the
particularly due to the geography of the region (proximity to
importance of working locally to identify job opportunities,
well-connected transport routes, port access and cheap land)
create pathways and gear the Victorian VET system, through
and its rich natural environment. The region is also seeing
Skills First, to support and promote future local careers. This
growing demand for locally produced high-value agricultural
includes working with regions to identify skills gaps and thin
goods (including high-quality wines and other foods), giving
markets and, where appropriate, support the creation of
local Food and Fibre businesses the opportunity to expand
partnerships with local employers to address these.
operations.
This skills analysis of the South East Melbourne Region was led
Expectations for growth are strong across all industries. Two
by the VSC in late 2018 and followed a survey process which
thirds of employers surveyed expect to grow over the next five
sought feedback from over 1,000 local businesses on skills
years, with 29% of employers expecting to increase staff by more
needs, engagement with the training system and barriers to
than 40% in the next three years. Business growth is expected
employment. Employers representing the regions key industries
to come from current products and services, diversification
were further engaged through a series of roundtables and
and the adoption of new technology. While new technology
individual consultations to identify current skills related issues
will offer efficiencies, adoption is not expected to negatively
that their businesses were facing, and where future jobs in their
impact staffing levels. Over 80% of surveyed employers believed
industry may come from. From that, the appropriateness of
technology would lead to the same or increased staff numbers.
existing qualification pathways and related skills and training
requirements were explored. This report incorporates findings While the outlook of local industries across the South East
from the survey and consultation process to provide a Regional Melbourne Region is positive, its economic potential is
Skills Snapshot (Snapshot) for the South East Melbourne Region. dependent on the region’s capacity to address existing
workforce challenges and shortages.
This Snapshot is the first of its kind undertaken by the VSC and
is based on elements of the VSC’s successful Regional Skills
Taskforces conducted in the Mallee and the Great South Coast Skill shortages are having a material effect. However,
regions. The key difference is that the snapshot focuses only investment in skills by employers’ lags.
on current skills needs and does not attempt to estimate the The workforce of the South East Melbourne Region is unique.
magnitude of future skills demand. However, it still provides a Consistent with its leading role in manufacturing, the South
valuable resource for Governments, local employers, education East Melbourne Region has a higher proportion of labourers,
providers and other stakeholders who seek to understand the machinery operators and drivers, and technicians and trade
current and emerging skills and training needs of the South East workers than the rest of Victoria. Conversely, the region is under
Melbourne Region and opportunities to address them. represented in professionals and managers, which is reflected in
feedback from employers who reported challenges in recruiting
Industry, TAFE, other training providers, schools and government staff at those levels.
will be integral to providing the skills and pathways required to
meet future economic demand in the South East Melbourne Engaged businesses reported shortages in a range of
Region. Strong partnerships, linkages and sustained occupations including, but not limited to labourers, technicians,
collaboration are needed to address systemic challenges and machine operators, sign writers, hospitality professionals,
ensure the efficacy and equity of training and alignment to traditional trades and pharmacy dispensary technicians.
employment outcomes for all students. Of note, 80% of consulted employers reported that current skill
shortages are having a financial impact on their business.
Despite employers identifying growing labour and skills
shortages, most indicated that they prefer to hire new workers
to fill skills gaps, rather than invest in training for existing staff.
This attitude extended to programs such as apprenticeships
and traineeships that provide critical training pathways for
the skilled labour they seek. Many highlighted their reliance on
labour-hire firms for their workforce, rather than direct ongoing
employment of new staff.
2 Victorian Skills Commissioner
Fewer employers offering ongoing direct employment risks Industries share common opportunities to unlocking the
a subsequent further reduction in employers’ willingness potential of the region
to invest in on-the-job training for their staff, which is an Consultations identified a series of collective challenges
important mechanism for developing a skilled workforce. across the region. In response, several opportunities have
These preferences in response to a growing demand for labour been identified, that through sustained collaboration between
are leading employers to compete for an ever-diminishing industry, trainers and educators, can help unlock the region’s
skilled labour pool. Combinewd with the introduction of new potential. Five key opportunities are outlined below, and further
technologies that are disrupting roles that previously provided opportunities are discussed in detail in later sections.
entry level pathways, there is a need for employers to consider
the role they play in collaboration with the VET sector to secure • Increase exposure of high school students to local careers in
the required future workforce. Employers have a choice to the classroom and on-the-job
compete for staff from other local businesses, look outside the
• Support young workers to acquire the skills expected of them
region for talent, or to invest in support and mentoring for new by employers to be considered work ready
workers. An investment approach will, however, likely require
an adjustment in expectations on the skills and attributes to • Simplify the Funded Course List through prioritisation of
be developed by the employer in the workplace and the level of common high value qualifications
productivity for a VET graduate on their first day.
• Deliver meaningful pathways for new workers through
Collaboration with training providers will be essential to stronger employer support and mentoring for new entrants
rebuild and promote entry level career pathways (including to the workforce, including apprentices and trainees
apprenticeships and traineeships) that meet the needs of • Improve collaboration between providers and employers
employers and provide a springboard for further progression to support the transition of workers into supervisory and/
and success in their preferred industry. Without meaningful or managerial roles through contextualised leadership and
pathways, skill shortages will only continue to grow. management training.
Regional Skills Demand Snapshot - South East Melbourne 3
Each industry in the South East Melbourne Region has unique skills and training needs
Industry leaders across the South East Melbourne Region identified a series of opportunities unique to each industry group.
The VET system, in collaboration with industry, must play an important role in capturing these opportunities to ensure the nuanced
training and skilling needs of industry are met. Key opportunities for each industry are outlined below, and further opportunities
are discussed in detail in later sections.
Table 1: Key opportunities in VET by industry
Industry Opportunity
Rebrand manufacturing as a dynamic sector with opportunities to work in highly technical areas.
Manufacturing
Partner with RTOs to design and accredit tailored courses in areas of specialist skills.
Increase trade apprenticeships, particularly electricians, concreters, carpenters and brick layers.
Construction
Investigate independent assessment of competence at the completion of a trade qualification.
Improve career advice delivered to local school students to better reflect career opportunities.
Food and Fibre
Regularly review local training in OH&S and food safety standards to ensure industry compliance.
Investigate flexible programs/skill sets that can be easily tailored to specific worker cohorts.
Retail, business,
hospitality and tourism
Explore opportunities to rotate workers across multiple employers with similar skill requirements.
Encourage flexible delivery of CS&H courses by local training providers to meet workforce need.
Community Services and
Health
Review and adapt training for key roles to include emerging skills such as technology skills.
Action is required by all stakeholders to address the findings outlined in this Snapshot
Industry is a key stakeholder in Victoria’s training system. This report outlines their understanding of the skills needs and challenges
for the South East Melbourne Region and where the focus is required to ensure the economic potential of the region is realised. Action
by key stakeholders to address the findings raised in this Snapshot represents the next step in capitalising on the opportunities,
to align the provision of VET in the region with the current and future demand of industry.
4 Victorian Skills CommissionerRegional Skills Demand Snapshot - South East Melbourne 5
6
2. Introduction
Demographic, policy, technological and industry change will The Snapshot included a survey of over a thousand businesses
impact the nature of work and the skills required across all in the South East Melbourne Region. To validate and
regions in Victoria. It is an economic imperative that the VET contextualise this information, a series of broader consultations,
system is aligned with the current and future skills demands including roundtables with industry and individual consultations,
of industry. The first step to address current and emerging were conducted to provide a richer industry perspective on the
skills shortages and ensure workers are skilled, productive and challenges and opportunities for the region. Industry workforce
employable is to understand the needs of local employers and forecasts were also developed to support future policy
their views on how they will change. and planning.
As part of the Victorian Government’s Industry Engagement The process for the Snapshot draws on the rich level of data
Framework, the Office of the Victorian Skills Commissioner and information held by governments and industry. Employer
(OVSC) has engaged directly with industry leaders across perspectives, made possible through the independence of
the South East Melbourne Region to seek advice from local this process, have been important for providing a snapshot
employers on the regional outlook as well as the future skills of the region’s current and future skills and training need and
and training needs. The overarching aim of this Snapshot is to identifying misalignment between the supply and demand sides
provide an overview of the skill and training needs within the of the VET system.
South East Melbourne Region. This can in turn inform actions
As student choice remains a key feature of the VET system,
by Government, employers, education providers and other
it is important to present a profile of the region’s future,
stakeholders to ensure the training system is able to support
including demand, to allow local students the opportunity to
industry’s skills needs, both now and into the future.
make informed decisions about their pathways. This Snapshot
The Snapshot is the first metropolitan focused place-based represents a step to better align VET provision with the current
project delivered under the Industry Engagement Framework and future needs of local industry. While achieving alignment
and has been based on elements of the VSC’s successful is an important step in maximising local job opportunities,
Regional Skills Taskforces conducted in the Mallee and the Great the onus remains on all stakeholders to sustain ongoing
South Coast regions. collaboration to ensure continued success.
The Snapshot, developed in consultation with local employers,
provides an economic outlook for the South East Melbourne
Region, including a short to medium term view on labour, skills
and training requirements by key industry groups. It is intended The overarching aim of this
to provide an evidence base, from the perspective of industry, on:
Snapshot is to provide an overview
• how the training system can better support the local
economy and jobs; of the skill and training needs
• potential interventions to meet the South East Melbourne within the South East
Region’s skills demand and development; and Melbourne Region.
• opportunities to address pathways, thin markets and skills
gaps to improve employment outcomes.
Regional Skills Demand Snapshot - South East Melbourne 73. Economic overview
The South East Melbourne Region is the largest and fastest growing region among the six metropolitan regions that make up
Melbourne’s economy. The South East Melbourne Region is home to more than 500,000 jobs and 83,500 businesses.1 The economic
profile of the region reflects strengths in four key industries: Manufacturing, Construction, Retail Trade, and Community Services and
Health (CS&H). As shown in Figure 1, the industry profile of the region is distinct from the Victorian economy in that the manufacturing
and construction sectors account for approximately 28 percent of the region’s total employment, compared to 21 percent of Victoria
overall, highlighting the importance of these industries to the region. Health care and social assistance and retail trade are also
significant contributors to the region’s total employment numbers.
Figure 1: Share of employment by industry sector (South East and Mornington Peninsula Region), 2017/18
Agriculture, Forestry and Fishing
Mining
Manufacturing
Electricity, Gas, Water and Waste Services
Construction
Wholesale Trade
Retail Trade
Accommodation and Food Services
Transport, Postal and Warehousing
Information Media and Telecommunications
Financial and Insurance Services
Rental, Hiring and Real Estate Services
Professional, Scientific and Technical Services
Administrative and Support Services
Public Administration and Safety
Education and Training
Health Care and Social Assistance
Arts and Recreation Services
Other Services
0 2 4 6 8 10 12 14
Victoria South Eastern Region
1
Ao. 8165, June 2017 release and ABS cat. No. 6291.0.55.003, August 2018 release.
Note: South East Melbourne Region is defined as the Melbourne - South East (SA4) geographical region and the Mornington Peninsula (SA4) geo
graphical region to align with the Commonwealth Australian Bureau of Statistics employment by industry data sets.
8 Victorian Skills CommissionerDespite a decline in automotive production, manufacturing Figure 3: Year on year population growth 2011-21
remains the major driver of the region’s economy, representing
almost a third of the total output, centred around key industrial 2.00%
hubs in Dandenong, Frankston and Kingston. These areas are
Year on year population growth
significant producers of exports (more than 300 businesses
in the South East Melbourne Region), enabled by proximity
to strong transport networks and port facilities. Key products 1.50%
include metal fabrication, pharmaceuticals, plastic & chemicals,
automotive and transport, and windows and doors, with the local
construction industry being a significant driver of demand.
1.00%
Other key industries are largely supported by strong population
growth in the region. Figure 2 and Figure 3 below show population
growth in the South East Melbourne Region from 2011 to 2021
is occurring at a faster rate than wider Victoria. Demand for 0.50%
residential dwellings has increased significantly, particularly in
the City of Casey and Cardinia Shire, where relatively cheaper
land is available than in other Melbourne metropolitan areas.
Major public infrastructure projects support this increased 0.00%
2011 -2016 2016-2021
population, including upgrades to the rail system and hospital
redevelopments, providing the construction sector with a strong SEM Victoria
outlook over the medium-term. Several of these infrastructure
projects aim to cater for higher demand for community and Source: Department of Environment, Land, Water & Planning, Victoria in
healthcare services in the region, such as the $560 million Future 2016.
redevelopment of the Frankston Hospital and the $540 million A growing agricultural and tourism focus in the region supports
development of the new Victoria Heart Hospital in Monash. the retail and hospitality sectors. The region produces high-value
agricultural goods (including high quality wines and other foods)
Figure 2: Population of South East Melbourne Region 2011-21 and is home to rich natural assets that support the attraction of
more than seven million visitors annually, predominantly to the
Mornington Peninsula area, adding more than $1 billion to the
1400
local economy. Hospitality businesses, such as luxury
vineyard-hotels, increasingly leverage tourism numbers and
demand for local agriculture to attract customers.
1,200
The economy of the South East Melbourne Region benefits from
proximity with strong industries in neighbouring areas. Melbourne
City is one of Australia’s most popular tourism destinations,
1,000 for both domestic and international visitors.2 The South East
Melbourne Region, particularly the Mornington Peninsula,
Total population (000’s)
benefits from being close to the city, providing the option for day
trips or overnight stays. Combined with improvements to local
800 infrastructure, this resulted in an increase in international visitor
numbers by 25 percent in 2018. Proximity to strong agricultural
industries in Gippsland and wider South East Victoria also
600 benefits the region. For large corporate food entities in the South
East Melbourne Region, access to agricultural produce and
skilled workers from these areas, with good transport and freight
linkages, is a key competitive advantage.3
400 Continued public investment will also contribute to the region’s
economy and productivity. In addition to public infrastructure
projects, the Government has included a range of measures in
200 the Plan Melbourne 2017 – 2050 blueprint that will help create
foundations for strong economic growth over the coming
decades. 4 These include the establishment of Metropolitan
Activity Centres and National Employment and Innovation
0 Clusters (NEIC) to provide hubs for businesses and government
services, as well as the creation of a Southern Industrial Precinct
2011 2016 2021
and Port of Hastings Industrial Precinct.
2
Budget Direct. Australian Tourism Statistics 2018. Accessed via: https://www.budgetdirect.com.au/travel-insurance/research/tourism-statistics.html
3
South East Melbourne, Driving growth and prosperity in one of Australia’s most economically significant, diverse and liveable regions. Accessed via:
http://southeastmelbourne.org/wp-content/uploads/2017/12/South-East-Melbourne-SEM-5-Year-Vision-web-version-v3.pdf
4
Victoria State Government – Metropolitan Planning Strategy, Plan Melbourne 2017 – 2050, 2017. Accessed via:
https://www.planmelbourne.vic.gov.au/__data/assets/pdf_file/0007/377206/Plan_Melbourne_2017-2050_Strategy_.pdf
Regional Skills Demand Snapshot - South East Melbourne 9Underpinning the South East Melbourne Region’s economy is a large number of smaller employers, with more than eighty percent
of businesses in the region employing fewer than 20 employees (see Figure 4).5 Almost half (46 percent) of these businesses have a
revenue of less than $1 million, and only 14 percent have revenue above $5 million (see Figure 5). The exception in both cases is the
manufacturing industry, which has 32 percent of businesses with 20 or more staff, and 29 percent of businesses with revenues greater
than $5 million.
Figure 4: Number of employees per business in South East Melbourne Region
100%
Percentage of businesses
80% Number of
employees
60% 1-19
20-99
40%
100+
20%
0%
Construction Professional Food and Fibre Manufacturing Retail Community
Services
Industries in SEM region
Figure 5: Total annual revenue per business in South East Melbourne Region
100%
Percentage of businesses
80%
$0-1 M
60% $1-5 M
$5-40 M
40%
Unknown
20%
0%
Construction Professional Food and Fibre Manufacturing Retail Community
Services
Industries in SEM region
In addition to driving industry growth, the increasing population has been a source of challenges in the South East Melbourne Region.
The rate of population increase has exceeded the increase in employment opportunities to date, with some new residents unable to
source employment in the local economy. Figure 6 shows that the region has consistently reported higher levels of unemployment
than Victoria overall. The unemployment rate of those aged 15 and over in the South East Melbourne Region is 5.6 percent, which is
over 1 percent higher than the Victorian unemployment rate of 4.5 percent.6 However, as at September 2018, the youth unemployment
rate for people aged 15 to 24, was 11.1 percent in the South East Melbourne Region. This is below the Victoria-wide youth unemployment
rate of 12.1 percent.
5
ABS cat. No. 1410, Data by Region, 2012-2017
Note: this estimate contains data relating to only the LGAs in the South Eastern Region as defined by the ABS. It is defined as the percentage of total
businesses that report less than 20 employees (including non-employing businesses) in 2017.
6
Unemployment data is not available specifically for the South East Melbourne Region. However, the Commonwealth Department of Employment provide
unemployment data for the Melbourne - South East (SA4) geographical region and the Mornington Peninsula (SA4) geographical region.
This is a close approximation of the South East Melbourne Region.
10 Victorian Skills CommissionerFigure 6: Unemployment rate by age group (South East Figure 7: South East Melbourne population over 65 2011-21
Melbourne Region), September 2018
250,000
14.0
12.0 200,000
Population over 65 yrs
10.0
150,000
8.0
100,000
6.0
4.0
50,000
2.0
0
0.0 2011 2016 2021
Unemployment Youth Unemployment
Rate (15+) Rate (15-24)
South Eastern Region Victoria
Figure 8: Year on year population growth over 65 2011-21
The South East Melbourne Region has an ageing population,
4.00%
roughly in line with overall demographic trends across Victoria.
In 2016, 180,000 people in the South East Melbourne Region
(approximately 15 percent of the population) were aged 65 or
Year on year population
over (see Figure 7).7 Those aged 65 years or over also constituted
the fastest growing element of the population in the region 3.00%
growth over 65 yrs
between 2011 and 2016, with year on year growth of 3.32 percent
(see Figure 8), compared to an overall population growth of 1.92
percent. Population growth forecasts for 2016 to 2021 from the
Victorian Department of Environment, Land, Water and Planning 2.00%
show that the over 65 age group is predicted to continue to
grow at 3.05 percent year on year to 2021, slightly lower than
wider Victoria. Growth in this age group is the main driver of
anticipated increase in demand for health and community 1.00%
services in the region. Employers across different industries in the
region acknowledge the challenges presented by
an ageing workforce.
0.00%
2011-2016 2016-2021
SEM Victoria
Source: Department of Environment, Land, Water & Planning, Victoria in
Future 2016.
7
ABS cat. No. 3235 Estimated Resident Population by Age, June 2017 release.
Regional Skills Demand Snapshot - South East Melbourne 114. Workforce characteristics
The South East Melbourne Region has a unique profile of workers. Analysis of labour market data indicates that the South East
Melbourne Region has a higher proportion of labourers, machinery operators and drivers, and technicians and trade workers than the
overall figures for Victoria (Figure 9). However, the region is under-represented in professionals and managers, which is reflected in
feedback from employers who reported challenges recruiting staff at these levels.
Figure 9: Employment by occupation (South East and Mornington Peninsula Region), August 2018
Labourers
Machinery Operators And Drivers
Sales Workers
Clerical and Administrative Workers
Community and Personal Service Workers
Technicians and Trades Workers
Professionals
Managers
0 5 10 15 20 25 30
Victoria South Eastern Region
Source: Department of Employment, Employment Region – Employment by Occupation, August 2018.
Note: South East Melbourne Region is defined as the Melbourne - South East (SA4) geographical region and the Mornington Peninsula (SA4)
geographical region to align with the Commonwealth Australian Bureau of Statistics employment by industry data sets.
The current skills shortages faced by employers in the South East Melbourne Region are largely focused around technical,
job-specific skills, including emerging requirements such as technology-related skills (75% percent of respondents) and innovation
(67% of respondents). Engaged employers reported current skills needs in a range of occupations including, but not limited to
labourers, technicians, machine operators, sign writers, hospitality professionals, traditional trades and pharmacy dispensary
technicians. Table 2 below describes the roles that each industry has the most difficulty filling.
12 Victorian Skills CommissionerTable 2: List of positions reported to be the most difficult to fill Most employers (69 percent of respondents) reported a
preference to hire new workers to fill skills gaps, rather than
provide access to training for existing workers. Many highlighted
Industry Role their reliance on labour-hire firms for their workforce, rather
than direct ongoing employment of new staff. This recruitment
practice limits the willingness of employers to invest in their staff
Manufacturing Machine operators
with either formal training or ongoing career development. As
a potential by-product of this practice, one tenth of businesses
Construction Labourers and Supervisors
in the South East Melbourne Region experience annual staff
Retail Salesperson/retail sales turnover above 20 percent, which makes recruitment an ongoing
challenge (compared to an average of 8.1 percent
Wholesale Marketing and sales across Australia).8
Except for the manufacturing industry, most employers
Engineers (civil/software/ (70 percent of respondents) feel they receive enough applications
Professional services
structural) for advertised jobs. However, more than half stated that they
do not receive applications from those with the right skills or
Community Services and qualifications to be able to hit the ground running without
Nurses
Health immediate on the job training. Across industries, employers
expressed that they are looking for applicants who have the right
Primary industry Labourers and supervisors attitude and fit, and they often value these qualities over formal
qualifications. Two thirds of employers reported that they prefer
Source: Survey responses to Q4.8: Positions experience most difficulties in to recruit staff as graduates (from TAFE, university, or trainees
recruiting? Base: All businesses (n=908) and apprentices) or mature aged workers aged 45-64
Across the entry-level workforce, employers identified demand for (57 percent of respondents). One fifth of staff are recruited
additional communication, self-management, customer service through Job Active providers and, notably, employers in the
and social intelligence. Another common skills gap was a lack of South East Melbourne Region are just as likely to recruit recent
leadership and management capabilities (e.g. in supervisor roles). school leavers as they are individuals with a VET qualification.
Approximately half of employers reported difficulties in both
To support the right people apply for the right job based on their
training and hiring to address challenges at this level. However,
skills and qualifications, it is important that employment related
of interest is that 87% of surveyed employers (over 1,000) in the
services in the region such as Job Active and other work and
South East Melbourne Region indicated that they believe they
learning centres provide a more streamlined service. This should
have the skills they need today with remaining employers split
be focused on better coordinating their roles to connect job
evenly between those who are either concerned or confident that
seekers with employers and vice versa.
they will have the skills they need in the next 5 years.
Some businesses across the regions have pursued the option
Two-thirds of employers expect to grow over the next five
of recruitment of overseas workers to fill skill gaps, through
years, with 29 percent of employers anticipating an increase in
Temporary Work (Skilled) visas (subclass 457), rather than
staff of more than 40 percent in the next three years. Growth
sourcing local skilled workers. This recruitment approach is
through diversification and technology are the two capabilities
higher in the community services and health industry and
that employers in the South East Melbourne Region are most
manufacturing industry. Significant engagement with overseas
concerned about meeting over the next five years. These
workers in the South East Melbourne Region is illustrated through
concerns are very real for businesses, with the majority stating
VET training data, which shows high enrolment levels in general
that the impact of a skills shortage on their business would
education and English literacy courses, and refugee Job Active
be moderate (52 percent of respondents) or high
caseloads, which are the fifth highest across all regions
(31 percent of respondents). Over 80 percent of consulted
in Australia.
employers also reported that skill shortages would have a
financial impact on their business. This lack of skills is expected
to increase the workload on existing staff and reduce the
businesses ability to meet customer demands and grow.
Two-fifths (38 percent) of respondents have already started
to adopt new technology and more than half have plans to
introduce it. The primary driver of this is efficiency purposes.
Despite improving efficiencies, new technology is not expected to
reduce staffing levels. Nearly a third (28 percent of respondents)
of those planning to implement new technology stated it would
lead to an increase in staff, and half (55 percent of respondents)
stated it would have no impact.
8
AI Group, Economics fact Sheet – Labour Turnover in 2018. Accessed via: https://cdn.aigroup.com.au/Economic_Indicators/Fact_Sheets/2018/Labour_
Turnover_in_2018_Fact_Sheet.pdf
Regional Skills Demand Snapshot - South East Melbourne 135. Common challenges and opportunities
Employer engagement has identified several key challenges Preference of employers for non-accredited in-house
and opportunities that are consistent across each of the key training across most industries
industry groups in the South East Melbourne Region. The VET Across all industries, only 37 percent of employers reported that
system, in collaboration with industry, can play an important role training is a priority for their business, with 16 percent providing
in addressing these challenges to ensure the nuanced training no training at all. Almost half of employers consulted (48 percent)
and skilling needs of industry are met. However, one of the invest less than 5% of their annual payroll in training and
most important opportunities for businesses within the South two thirds do not make use of government subsidies.
East Melbourne Region, and for the VET system, is to realign A quarter of employers who provide training still feel that staff are
employers’ understanding and expectations of the skills a VET undertrained in the skills required to perform their role. As shown
graduate is likely to have and what skills and attributes are to be in Figure 10 below, most employers provide in-house training
developed by the employer in the workplace. Many employers and only 38 percent use accredited or certified training through
highlighted an expectation that VET graduates should be ready external providers. Employers in the construction industry are
to work productively on their first day. This may be a result of a most likely to favour accredited training, as many of the trades
misunderstanding of the skills developed through Vocational have traditional pathways through the apprenticeship system.
Training, however is most likely an issue that is compounded by In 2017, there were a total of approximately 71,000 enrolments
the increased reliance of employers in the South East Melbourne in VET courses, with a year on year decrease from 2014-17 of
Region on hiring staff through labour hire arrangements. 15 percent. The latest apprenticeship and traineeship data
With fewer employers offering ongoing direct employment shows that in 2018, there were approximately 3,900 enrolments
relationships with their staff, a consequential reduction in the in apprenticeships with 1,500 completions, as well as 4,650
willingness of employers to invest in on-the-job training for their enrolments in traineeships with 3,350 completions.
staff has resulted.
Developing a skilled workforce is a two way street. It requires
the coming together of the supply and demand side of the
labour market to deliver on the skills required by industry and
the alignment of opportunities for VET graduates and existing
workers. Industry has an enormous responsibility to plan and
articulate common sectoral skilling requirements by occupations
to ensure the supply side - the training provider - can deliver
against this requirement.
In a period where the ageing workforce continues to dominate
as a significant demographic, industry must do more to create
opportunities for apprenticeships, traineeships and other
entry level jobs necessary to allow young people to transition
successfully from school to work.
Figure 10: Type of training provided by employers in the South East Melbourne Region
Accredited Non-accredited in-house
100%
Percentage of employers
80%
60%
40%
20%
0%
Construction Professional Food and Fibre Manufacturing Retail Community
Services
14 Victorian Skills CommissionerIn-house training is usually provided when employers perceive The preference for in-house training may also stem from low
that their requirements are more specialised and industry- awareness of the VET system. Employers in the professional
specific than courses offered by external providers, and services (62 percent of respondents), retail (51 percent of
due to the costs associated with external training providers respondents) and manufacturing (46 percent of respondents)
(e.g. backfilling staff). Therefore, there is some demand from industries reported limited or no awareness of what training
employers to increase the customisability of training products, providers offer. The construction, manufacturing and retail
offering employers the flexibility to customise content and sectors were most likely to know of the government subsidised
delivery method in their training courses. For employers that VET system, with a third of employers reporting awareness of
provide accredited training, the majority use a private RTO most or all qualifications offered. Importantly, many employers
(61 percent of respondents) with TAFE the second most popular also reported that there were either no local training providers
(43 percent of respondents), and the majority (81 percent of (29 percent of respondents) or no training providers in the area
respondents) stated that they have no issues with the current delivering the skills they required (44 percent of respondents)
qualifications offered. which indicates a potential misalignment between the offerings
of local VET providers and the skills required by local businesses.
Common challenges and opportunities for employers exist
Figure 1: Share of employment by industry sector (South East and Mornington Peninsula Region), 2017/18 below provides an outline of
the identified challenges and opportunities which are common across industries. The VET system, in collaboration with industry, will
play an important role in addressing these challenges to ensure the nuanced training and skilling needs of industry are met.
Table 3: Common challenges and opportunities for the VET system
Current challenges to vocational training and skills Opportunities for the VET system
Simplify the Funded Course List through prioritisation of
common high value qualifications.
Employers across key industries find that navigating the
training system is difficult and often struggle to identify Develop a high-level menu of training options for different
training solutions that will meet their needs. industries. This could be achieved through direct engagement
of the South East Melbourne Councils and existing industry
networks.
Increase exposure of high school students to local careers in
Many employers reported challenges to attracting workers to the class room and on the job. This may be through adoption
their industry due to outdated perceptions on the nature of of the Victorian Government’s new Careers Education model
work and the potential for a future career. which combines work experience, industry tasters and
improved information provision for students.
Improve advice and information to employers about how they
can best support graduates to build on the skills developed
Employers identified a lack of job-readiness in new entrants through a VET qualification by way of induction and ongoing
across the entry-level workforce. This includes skills such as mentoring in the workplace.
communication, self-management, customer service and Explore options to increase the delivery of apprenticeships
social intelligence. and traineeships (incl. through the HeadStart program) to
allow students to experience practical engagement with key
industries.
Dependence on mature workers is creating an ageing Deliver meaningful pathways for new entrants though
workforce problem, which will significantly increase demand stronger employer support and mentoring for new entrants to
for replacement staff who will need to be upskilled. the workforce, including apprentices and trainees.
Work with employers to contextualise leadership and
There is demand for increased leadership and management
management training offered by local training providers to
skills in experienced workers across all industries (e.g. difficulty
the relevant sector/industry and support workers to transition
recruiting workers into supervisory positions).
into supervisory and/or managerial roles.
Regional Skills Demand Snapshot - South East Melbourne 156. Manufacturing
Strong links to local industries and global connections will As part of the movement away from automotive manufacturing,
support continued growth the industry has transitioned from a small number of very large
Manufacturing is a major driver of the South East Melbourne employers, to an industry comprised of many small employers
Region’s economic output and generates $12 billion annually. with an increased focus on advanced or niche manufacturing13.
Manufacturing products and services represent over 30% of the While several large employers remain in the region, currently 80%
South East Melbourne Region’s total output (including associated of manufacturers employ less than 20 people and 90% employ
wholesale trade, transport and warehousing services), which less than 30 people.14 Links to the automotive manufacturing
translates to about 44 per cent of metropolitan Melbourne’s sector still exists in the region however, with Volgren, Australia’s
manufacturing product.9 Key products include technical largest bus body builder, having its manufacturing head office in
equipment, metal fabrication, plastic & chemicals, automotive Dandenong and recently putting its first ever electric bus
and transport, pharmaceuticals, windows and doors. into production.
More than 300 exporters are based in the region, which reflects One of the South East Melbourne Region’s largest manufacturing
strong international links and the international competitiveness employers, Jayco, employs more than 1,100 people in the region
of local manufacturers. Manufacturing activity is centred around to produce recreational vehicles.15 Jayco’s target market are
several current industrial hubs including Dandenong, Frankston Australians with families and grey nomads, and they anticipate
and Kingston, enabled by strong connections with the local consistent growth due to an ageing population demographic in
construction industry, transport linkages including the Monash the region and across Australia, as well as an increased number
Freeway and EastLink, proximity to the Port of Hastings and a of baby boomers retiring.
growing warehouse and logistics sector. The development of Victoria is already a world-leading location for the development
new industrial hubs such as the Pakenham South Employment and manufacturing of biotechnology and medical technology,
Precinct and the Carrum Downs Industrial Precinct mean with international manufacturers having set up major operations
manufacturing in the South East Melbourne Region is predicted in the South East Melbourne Region, including Pfizer and Aspen
to continue to grow.10 Pharmacare (over 300 employees in the region).16 In 2018,
Following the decline of automotive manufacturing, the industry Nutribiotech, a nutritional supplement producer with factories in
has come under substantial pressure to adapt to changing China, Korea and the US, also chose the South East Melbourne
local and global conditions, and this is likely to continue to affect Region as the location of its fourth global manufacturing
manufacturers across the South East Melbourne Region. The facility. The new factory in Dandenong created 150 new full-time
CSIRO Advanced Manufacturing Roadmap Report notes that the jobs.17 Again, a key driver of the pharmaceutical industry is the
transformation of global supply chains, the growth in bespoke proportion of the population aged 50 and older.
solutions, and technological advances have shifted the local Steel and glass manufacturers also forecast growth due to
manufacturing landscape to favour the production of high-value, expanding demand in the residential and commercial building
customised, sustainable manufacturing products. Manufacturers markets. Viridian Glass has 310 employees across multiple
will require connections to an increasingly global customer, locations in the South East Melbourne Region.18 BlueScope,
and seek opportunities to differentiate their product offering to Australia’s largest steel manufacturer, has operations in
remain competitive.11 The Victorian Government has taken steps Dandenong producing roofing, steel building frames, and flooring
to support the transition of manufacturing businesses, through among other products.19 Surdex Steel, another of Australia’s
the provision of $2 million of capital funding through the Local leading steel providers has a plate processing plant located in
Industry Fund for Transition (LIFT) for businesses who look to Dandenong South.20
expand in the outer Melbourne regions.12
9
South East Melbourne Manufacturers Alliance (SEMMA) – Response to Inquiry into Manufacturing in Victoria. Accessed via: https://www.parliament.vic.
gov.au/archive/edic/inquiries/manufacturing_in_victoria/submissions/VMI_Sub_36_SEMMA.pdf
10
South East Melbourne, Driving growth and prosperity in one of Australia’s most economically significant, diverse and liveable regions. Accessed via:
http://southeastmelbourne.org/wp-content/uploads/2017/12/South-East-Melbourne-SEM-5-Year-Vision-web-version-v3.pdf
11
CSIRO Advanced Manufacturing Roadmap – Executive Summary. Accessed via: https://www.csiro.au/~/media/1critical/IndustryRoadmap_AdvancedMan-
ufacturing.pdf?la=en&hash=A76BB5633AEC92207ADEC859D08D4403540F4949
12
Business Victoria - Local Industry Fund for Transition – Program Overview. Access via:
http://www.business.vic.gov.au/support-for-your-business/grants-and-assistance/local-industry-fund-for-transition#
13
ABC News, 2018. Car-manufacturing jobs in Victoria give way to new high-tech industries. Accessed via:
https://www.abc.net.au/news/2018-11-22/victorian-manufacturing-jobs-rebound-into-high-tech-industy/10520342
14
South East Melbourne Manufacturers Alliance. South East Region. Accessed via: https://www.semma.com.au/region
15
South East Melbourne, Driving growth and prosperity in one of Australia’s most economically significant, diverse and liveable regions. Accessed via:
http://southeastmelbourne.org/wp-content/uploads/2017/12/South-East-Melbourne-SEM-5-Year-Vision-web-version-v3.pdf
16
Herald Sun, 2015. Aspen Pharmaceuticals workers’ strike over pay and conditions extends to a third day. Accessed via:
https://www.heraldsun.com.au/leader/south-east/aspen-pharmaceuticals-workers-strike-over-pay-and-conditions-extends-to-a-third-day/news-sto-
ry/778cd00a7267c8449602c689e0bf0493
17
Invest Victoria, 2018. Korean manufacturer Nutribiotech chooses Melbourne for new plant. Accessed via:
http://www.invest.vic.gov.au/news-and-events/2018/jan/korean-manufacturer-nutribiotech-chooses-melbourne-for-new-plant
18
IBIS World. Major Companies. Accessed via: http://clients1.ibisworld.com.au/reports/au/industry/majorcompanies.aspx?entid=206#MP10
19
BlueScope Australia. Our Company. Accessed via: http://www.bluescopesteel.com.au/our-company
20
Suredex Steel. About Surdex Steel. Accessed via: http://www.surdexsteel.com.au/about/
16 Victorian Skills CommissionerNew skills required to enable industry to adapt and remain Employers also report that the public perception is that the
strong in the region industry is in decline, due to publicity surrounding the closure
The South East Melbourne Region has approximately 5,000 of the automotive industry and a lack of awareness of new
manufacturing enterprises with 72,000 full-time and opportunities in advanced manufacturing. Competition with
part-time manufacturing jobs, which accounts for one quarter the construction industry (due to increased demand from major
of all manufacturing jobs in Melbourne21 and 14.2 percent of infrastructure projects) for skilled workers who would traditionally
the total employment in the region. Metal fabrication be attracted to the manufacturing industry is exacerbating the
(17 percent) and transport technologies (16 percent) are the challenge. Several employers stated they would double their
biggest employers. Top occupations include ICT workers, headcount if they had access to staff with the right qualifications.
Managers, Designers, Engineers, Scientists, Machine operators, If not addressed, this skills gap is likely to lead to increased
Drivers and Factory workers. The average annual salary for operating costs (76% of respondents), product withdrawals and
manufacturing workers is $73,000, with the top paying sectors, delays (70% of respondents), and, in some cases, deciding to shift
chemical manufacturing and metal product manufacturing, processes off-shore.
paying $111,000 and $94,000 respectively.22 Conservative Looking ahead, only 33 percent of employers feel they have the
estimates show that for every manufacturing job, four more skills required for the next five years. Seventy percent reported
are dependent in connected industries, meaning the region is that they are concerned about the technology skills gaps that are
dependent on manufacturing to remain strong.23 likely to emerge over the next five years, as the broader adoption
of technology-intensive processes and service-integrated
Table 4: Employment in the manufacturing sector – South business models will drive demand for STEM capabilities.24
East Melbourne Region 2018 In addition, employers anticipate increased demand for
innovation skills to improve product and service design. When
considering leadership and management capabilities, most
South East manufacturers reported examples of difficulties in training
Manufacturing
Melbourne Region workers to be ‘solution focused’, and to gain an understanding of
the supply chain and customer relationship management. These
Proportion of total
skills were identified as important so that workers can make
employment in the South 14.2%
business decisions which take into account the impact on other
East Melbourne Region
parts of the supply chain and, ultimately, their customers.
Number of individuals
72,159
employed
Number of businesses 4,961 Victoria is already a world-leading
Source: ABS cat. No. 8165, June 2017 release and ABS cat. No. 6291.0.55.003,
location for the development and
August 2018 release. manufacturing of biotechnology
Note: South East Melbourne Region is defined as the Melbourne - South
East (SA4) geographical region and the Mornington Peninsula (SA4) and medical technology, with
geographical region to align with the Commonwealth Australian Bureau
of Statistics employment by industry data sets. international manufacturers having
Manufacturers in the region have struggled to attract and
retain new workers with the right combination of both technical
set up major operations in the South
and transferrable skills. The technical skills gaps identified by East Melbourne Region
employers appears to be mainly in applied technologies in the
manufacturing setting. Specific skills include machine operators,
assembly operators, press-brake operators, fitting/turning and
plastic extrusion.
21
South East Melbourne, Driving growth and prosperity in one of Australia’s most economically significant, diverse and liveable regions. Accessed via:
http://southeastmelbourne.org/wp-content/uploads/2017/12/South-East-Melbourne-SEM-5-Year-Vision-web-version-v3.pdf
22
South East Melbourne, Driving growth and prosperity in one of Australia’s most economically significant, diverse and liveable regions. Accessed via:
http://southeastmelbourne.org/wp-content/uploads/2017/12/South-East-Melbourne-SEM-5-Year-Vision-web-version-v3.pdf
23
South East Melbourne Manufacturers Alliance. South East Region. Accessed via: https://www.semma.com.au/region
24
The Victorian Labour Government - Advanced Victorian Manufacturing – A Blueprint for the Future September 2017. Accessed via:
https://www.business.vic.gov.au/__data/assets/pdf_file/0007/1544335/10764-DEJTR-EIT-Advanced-Manufacturing-Statement-WEB-V2.pdf
Regional Skills Demand Snapshot - South East Melbourne 17Increased training is required for new entrants to replace One third of manufacturers identified training as a priority within
an ageing workforce their business, and over half reported some focus on training but
Due to a preference to hire mature workers for key positions, that it is not a priority. Due to the specialised nature of training
rather than training inexperienced new entrants, a large requirements, more than three quarters of manufacturers
proportion of the skilled workforce in manufacturing is above provide in-house non-accredited training to staff, and only
60 years old. The replacement of these workers will eventually 41 percent reported use of external accredited or certified
require an increase in the number of entry level staff joining the training. Of the employers who provide accredited training,
sector, who will need to be upskilled progressively. Consulted the most common qualifications were technical job-related
businesses reported to frequently opt to employ workers on qualifications (61 percent of respondents), VET Certificate Level
short-term contracts and/or rely on labour hire to provide the II, III or IV (51 percent of respondents) and apprenticeships
opportunity to observe the performance of the individual (50 percent of respondents). Table 5 below shows the top
on-the-job, before they offer a permanent role. Employers are 10 most popular VET qualifications (by enrolment) for the
less likely to invest in training for individuals employed manufacturing industry in 2017.
in a labour hire capacity.
Table 5: Top qualifications in 2017
Course Code Top qualifications 2017 enrolments Trend since 2015
MSS40316 Certificate IV in Competitive Systems and Practices 783 Decrease
AUR30616 Certificate III in Light Vehicle Mechanical Technology 737 No change
MEM40105 Certificate IV in Engineering 603 No change
MSS30316 Certificate III in Competitive Systems and Practices 567 Decrease
MSM40116 Certificate IV in Process Manufacturing 487 Decrease
MEM30205 Certificate III in Engineering - Mechanical Trade 353 No change
MEM30305 Certificate III in Engineering - Fabrication Trade 278 No change
MSF31113 Certificate III in Cabinet Making 221 No change
AUR20716 Certificate II in Automotive Vocational Preparation 211 N/A (new)
22470VIC Certificate II in Engineering Studies 198 No change
In addition to current training offerings, employers highlighted potential opportunities for vocational training product development
in key skills areas including plastic extrusion, computer numerical control (CNC) machining and OH&S courses aligned
to global standards.
18 Victorian Skills CommissionerVET can support employers to provide hands on experience to develop entry level workers
Manufacturers within the South East Melbourne Region identified additional specific challenges and opportunities for the sector
in vocational training, as outlined in Figure 1: Share of employment by industry sector (South East and Mornington Peninsula Region),
2017/18 below.
Table 6: Identified challenges and opportunities
Current challenges to vocational training and skills Opportunities for the VET system
Rebrand the manufacturing industry as a dynamic sector
with opportunities to work in highly technical areas.
Manufacturers identify difficulties in attracting new entrants
to the industry due to perceptions that the manufacturing Build awareness around the attractiveness of the
industry is in decline. manufacturing industry and potential career pathways
through partnerships between industry and RTOs, local
councils, employment service providers and schools.
Increase delivery of pre-apprenticeships and
Employers reported shortages in machine operators, School-Based Apprenticeships and Traineeships in
assembly operators, press-break operators, fitters/turners, engineering qualifications in South East Melbourne to support
plastic extrusion, welders, and roles linked to prefabrication a workforce pipeline.
and electronics. Improve alignment of training delivery within South East
Melbourne to occupational need.
Improve capability of local employers to support and mentor
Traditional training pathways are being disrupted from new entrants to the workforce and apprentices to gain the
increased skill requirements for entry level roles (due to new necessary skills.
technologies) and the preference of employers to target Review training products and apprenticeship pathways to
mature aged workers. ensure employees have the skills to respond to changes in
work as new and emerging technologies are adopted.
Training for specialist skills (e.g. plastic extrusion, computer
numerical control (CNC) machining and OH&S aligned to Partner with industry to ensure that available training
global standards) is difficult to obtain locally. Consulted offerings meet the needs of local employers and update or
employers reported sending staff overseas for develop relevant training product where required.
tailored training.
Engage with industry to ensure there are meaningful training
and employment pathways for individuals to obtain the
Many workers experience challenges with language and technical and general skills they need either before or once
literacy due to manufacturer dependence on migrant workers they have commenced employment.
(including 457 visas) and long term unemployed for labour. Improve access to non-accredited training in English and
communication for workers already employed who have low
levels of literacy.
Increase number of providers delivering the Certificate IV in
Employers reported a lack of training providers and suitably Electrical – Rail Signalling to boost rail workforce in South East
skilled educators to meet future training needs of the Melbourne metropolitan region.
rail sector. Explore alternative teacher development models to identify
and skill rail educators and assessors for the industry.
Regional Skills Demand Snapshot - South East Melbourne 19You can also read
