The skills shortage is already here - and with baby boomers exiting the workforce quicker than gen Y replaces them, it's only going to get worse. Leon Gettler investigates the issue and looks at some possible solutions.

Over the next decade, Australian managers will struggle to find the talent to fill key positions. The skills shortage is getting worse and that will create enormous challenges for managers and force organisations to restructure work. The problem is exacerbated in Australia by a big skills shortage looming because of the pipeline of projects in the resources sector and related infrastructure, and the needs of other sectors that risk losing out to fast- growing, high-paying industries. At the same time, the skills shortages, particularly on the west coast, are happening at a time when people on the east coast are losing jobs in struggling sectors such as manufacturing and retail, as well as from government cutbacks. The skills crisis is likely to shape politics. The debate over the Gillard government's decision to allow 1700 foreign workers to be employed at Gina Rinehart's $6.5 billion Roy Hill iron ore mine is a taste of things to come. The reality is that Australia has had a skills shortage for the past decade. According to Engineers Australia, about 40 per cent of engineering companies had been complaining about a skills shortage for the five years to 2010. In 2006, it was causing monetary problems for 39 per cent of employers who were being forced to pay extra to recruit talent. This had increased to 54 per cent by last year. One of the big forces helping create the crisis is the ageing population. Global KPMG research shows that boomers are now leaving the workforce faster than generation Y will be entering. KPMG demographer Bernard Salt calls it the "baby bust". He says the boomer hegemony saw 200,000 enter the workforce each year. This has now fallen to 100,000 and will continue scaling down, slipping to 50,000 by 2025. One way to address the issue is for companies to start recruiting older workers. A survey by the Australian Institute of Management Victoria and Tasmania shows it's not happening. Employers are overlooking this group.

The annual survey, Australia's Skills Gap, found that 77 per cent of organisations were short on workforce skills but few of these organisations were to trying to fill the skills gap by using the experience of mature-aged workers to mentor younger members of staff. Only 3 per cent of organisations with a skills gap said they were using baby boomers in mentoring or coaching roles. AIM VT chief executive Susan Heron says the survey found that only 21 per cent had programs in place to access the skill sets of retirees or former long-term workers. "The pattern revealed by our survey is that companies are placing great reliance on training and other mostly internal means to try to close their skills gap but the one potential resource they are overlooking are their older and experienced staff. It's a skills blind spot,'' Heron says. "So, there's a huge upside for our nation's skills-hungry employers if they can better tap into the experience and capabilities of older Australians. Mature-aged Australians, whether they're in the workforce or have retired in recent years, have a wealth of knowledge and job know-how that can provide savvy employers with a competitive edge." All this leads to profound challenges for managers. The NSW- ACT branch of the Australian Institute of Management has published a Green Paper for managers on this issue.

The paper, Managing In A Flexible Work Environment, shows how managers will have their work cut out juggling rosters, ensuring sufficient coverage for client- facing tasks, creating detailed forecasts of work volumes, engaging additional staff where necessary, identifying staff that want to job share and working with clients to manage expectations. Managers considering teleworking arrangements will need to look at the nature of the tasks being performed, the resources required to make sure they get performed, the employee's style of work, the availability of communications and other technology and legal issues around health and safety. They will also have to ensure sufficient lines of communication for flexible workers to "stay in touch". Robyn Clough, AIM NSW-ACT's manager for public policy and thought leadership, says increased workforce participation through flexible work "These projects like Roy Hill need labour now and they need it quickly and if they can't get it locally, where else are they going to get it?" According to the latest Clarius Skills Index, there is a shortage of 5500 ICT professionals in Australia. Other big shortages are in trades, particularly for chefs and hairdressers. Clarius CEO Kym Quick says companies will have to look at developing more flexible work practices. That means more part-timers, telecommuting and extended leave periods, for example. She says it's not just important for attracting women - it's now a drawcard for gen Y as they blend work and life, or mix work with study. "They will forego $10,000 in their base salary to be able to go surfing, or work from home or telecommute two days a week," Quick says. Willox says the education system needs to be overhauled. "What we've had in the past is a model driven by the demands of students, rather than the needs of industry," he says. "We have this classic case of having more personal trainers and gym instructors than we would ever possibly need but we can't find boiler makers, electricians and plumbers. "Look at the way kids are taught and what they're taught. We only have 300 non-Chinese students learning Chinese in Year 12 across Australia." Little interest in making a move The fly-in, fly-out phenomenon is a sign of change with the skills shortage: workers no longer live where jobs are expanding. Getting people to relocate for work is one of the biggest drivers of skills shortages in regional Australia. According to the Australian Bureau of Statistics, 7000 people came to Western Australia from the east in the 12 months to last September. This is little for a state that has attracted up to 48,000 people from overseas. A federal government discussion paper released by the Australian Workforce and Productivity Agency - which replaced Skills Australia - found that lack of labour mobility was a big problem in regional areas. A government scheme to encourage people to move attracted only 584 relocations to regional areas and 60 per cent of them moved within (or to) New South Wales or Queensland. By way of contrast, only 8 per cent of applicants were willing to move from the east to Western Australia and only 8 per cent of people were willing to move for jobs in the mining industry.