Impact of Labour Shortage on Economic Growth of Australia


20 Mar 2018

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Impact of Labour Shortage on Economic Growth of Australia






The Impact of Labour Shortage on Economic Growth of Australia


Purpose of the Study

The present study will aim to address the labour shortage in Australia that ultimately affects the economic growth of the country. From this perspective, Gavin (2010) points out that “The minerals and energy industry continues to make a significant contribution to employment and wider economic activity in the communities of regional Australia, and to governments directly through taxes and royalties. Skilled labour shortages; however, will continue to have an impact on the nation’s future growth and development prospects, especially in the minerals and energy industry” (p. 1).

It would not be wrong to state that the labour shortages coexist with the “high levels of unemployment,” as these shortages are considered as restrictions for the occupations required experienced workers as well as specialist skills. Nevertheless, the labour shortage is widely considered to be the consequence of various factors such as changes in technology, high levels of wastage, low levels of training, increased demand of new skills, and locational difference (Labour Market Research and Analysis Branch Department of Employment, 2014). This is particularly because workers do not have the skills required by the employers.

Context of the Study

It is generally recognized that Australia has been experiencing the lack of skills in certain industries. This can end up being a deterrent in the budgetary development of the economy. There are different courses for business and government to address this issue. Costs, welfare and superannuation systems all need examination in light of the way that they offer impulses to backing in the work power. The nonappearance of suitable staff hampers the development of the Australian economy (Tan & Lester, 2012; McLean, 2012).

The businesses are not ready to discover suitable staffs which prompt undertaking postponements, moderate generation. Thusly, money related advancement is slower than it would in general be. In reality, aptitude insufficiencies diminish beyond what many would consider possible for the economy. Remuneration improvement in business ventures standing up to exceptional capacity inadequacies (particularly mining) is normal and not strange. On the other hand, a greatly basic threat happens if wage advancement specifically territories decodes into no matter how you look at it remuneration improvement (Brennan & Castles, 2002). There is noteworthy lack of staff in commercial ventures, for example, mining, accommodation, wellbeing, building, hospitality and farming.

Problem Statement

Skills shortage hampers the financial growth of the country and it is a great challenge for the Abbott government, currently the “federal executive government” of Australia. The government is led by Tony Abbott, the Prime Minister of Australia. Nevertheless, a large number of industries are requesting for the increased rate of migrant intake due to the labour shortage in Australia. Work deficiency in Australia has long been a subject in money related and political rounds (Brennan & Castles, 2002; McLean, 2012). It was even gathering of the Hawke government's arrangement in 1987. In the late years, Australia has been welcoming the skilled migrants to fill the gaping-holes in the Australian workforce. In 2012, there was remarkable trade when the Gillard government left the relocation rules (ACCI, 2007).

Research Questions

As Australian Industry Group has recently released its settlement to the organization on boosting the movement permit by 30,000 a year to “meet capacities insufficiencies,” the aim and objectives of this study will be:

  • When are the labour shortages to be addressed through labour immigration?
  • Which industries are experiencing the labour shortages?
  • How can be the current labour motivated and improved its skills?


The Concept of Skilled Labour

The term “skilled labour” refers to work force that has “high skill level” to create a noteworthy economic value with the help of work performance, also known as human capital (Dyster & Meredith, 2012). Skilled labour is usually characterized as high expertise, as well as high education with high wages, as it involves complicated tasks, which usually need specific education, skill sets, experience and training. From this perspective, Mitchell and Quirk (2005) point out that “The term skill refers to a specific ability, and is generally used where the ability is assumed to have been in some sense developed through experience or training. Skill is one of several terms used to express the concept of ability, the mental or physical power to do something, that variously distinguish how the ability was acquired, and to what standard. For example, aptitude implies an inherent capacity for acquiring ability, whereas talent often infers ability is inborn. Competence generally suggests an ability to do something satisfactorily but not outstandingly. Proficiency suggests significant competence. Skills are also often classified according to the method of their development, as ‘formal’ (derived through a process of structured training and documented assessment), non-formal (training was structured but no certification issued) or informal (obtained through practice, experience, self-education, etc)” (p. 3).

Skills Shortage

The term “skills shortage” is considered to be quite related to the skilled labour. According to Mitchell and Quirk (2005), “Unsurprisingly, analyses of skills shortages by industry and governments invariably consider the issue from the perspective of business and profitability, which places the emphasis on containment of labour costs both in terms of wages and conditions, and hence, whenever possible, externalising the costs associated with developing the skills firms require in their workers” (p. 5). From this perspective, it would be accurate to state that the shortage of skills usually results in the aggravation to organizations, as it hampers both the quantity and the quality of their productivity. According to Richardson (2007), “In a market economy, firms are accustomed to being limited by their capacity to find buyers for their products, not by their capacity to produce those products. When firms have buyers waiting, but cannot produce enough to satisfy the demand because they cannot recruit sufficient skilled workers, they interpret this as a failure of the skills development system” (p. 11).

Skills Shortage in Australia

According to Mitchell and Quirk (2005), “It is evident that from their perspective, Australian businesses feel hamstrung by the present state of the labour market. The Australian Chamber of Commerce and Industry (ACCI) cite skills shortages as one of the most significant barriers to investment in Australia. The Business Council of Australia (BCA) notes that the increasing average population age necessitates a range of training measures to head of future broad based skills shortages. Although the labour market has tightened in recent years, there is still only anecdotal evidence that a skills shortage is becoming a growth bottleneck” (p. 5).

On the other hand, the national government office responsible for Australia's tourism and hospitality needs around 56,000 skilled workers from now unless more remote staff is used in nearby ranges. Government needs to relax the 457 visa plan to enable employers to hire skilled staff from overseas (Brennan & Castles, 2002; Dyster & Meredith, 2012). Skilled positions such as Chef, cooks, Dentists are in huge demand employers are constantly looking overseas as they are not able to hire suitable skilled staff locally. Table 1 shows the “survey of employers who have recently advertised” for the vacancies in Australia.

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Table 1: (Proportion of vacancies filled (%), average number of applicants and suitable applicants per vacancy (no.), All SERA occupations, 2007 to 2014 (%))

Source: (Labour Market Research and Analysis Branch Department of Employment, 2014, p. 5)

Table 1 also demonstrates that there is a deficiency of skilled workers in Australia from 2008 to 2013. It is quite difficult for the employers to fill the number of overall vacancies. Most number of candidates are not suitably met all requirements for the employment. Employers are willing to sponsor skilled workers but the long and costly legal process is a problem .The number of businesses confronting staff deficiency have tumbled to a new low with managers neglecting to contract staff with proper capabilities (Brennan & Castles, 2002). New figures released by the Department of Employment yesterday show insufficiencies were more disposed to be for trades than reasons for living (Argent & Tonts, 2015).

Kitchen staff, hair stylists and auto mechanics were the hardest positions to fill, while Accountants and teachers were the easiest position to fill. Over the past budgetary year, considerable amounts of applicants competed for available businesses in Australia’s regional areas. McGrath (2014) points out that “Boston Consulting Group has released a report predicting a shortfall of 2.3 million workers by 2030. The firm says Australia's economic growth risks losing momentum in the years ahead unless the country can find ways to plug the gap. With Australia’s unemployment rate at an 11 year high of 6 per cent, it may seem like a strange time to be talking about a shortage of people looking for work, but Brad Noakes from Boston Consulting Group says it is a prospect worth taking seriously” (p.n.d).


This study will use the mix research methodology that will be followed to address the hypotheses or propositions and research questions that will put forward as possible solutions to the problems mentioned in the literature review section.

Data Collection and Analysis Methods

As mentioned above this study will use the mix research methodology, mix research methodology refers to the approach of research that contains the both methodologies i.e. qualitative and quantitative. Creswell (2013) suggests that “Truth is what works at the time; it is not based in a strict dualism between the mind and a reality completely independent of the mind. Thus, in mixed methods research, investigators use both quantitative and qualitative data because they work to provide the best understanding of a research problem” (p. 12).

Quantitative Data Collection

In the “quantitative data collection method” an investigator relies upon the random sampling as well as upon the structured “data collection instruments.” These two tools of investigation fit the diverse experiences into predetermined response categories. In other words, they produce results that are easy to summarize, compare, and generalize. According to Creswell (2013), “In quantitative studies, researchers advance the relationship among variables and pose this in terms of questions or hypotheses” (p. 8). The quantitative data gathering methodologies include:

  • Experiments/clinical trials
  • Observing and recording all around characterized occasions (e.g., tallying the quantity of patients holding up in crisis at indicated times of the day)
  • Obtaining applicable information from administration data frameworks
  • Administering overviews with interviews e.g., vis-à-vis and phone interviews, polls an

Qualitative Data Collection

The research method what is known as “qualitative data collection” plays a significant role to assess the research question, as it provides the researcher with useful information to understand the various processes involved in the observed results. On the other hand, it also helps the researcher to assess changes in the perceptions of people concerning to their well-being. According to Creswell (2013), “Meanings are constructed by human beings as they engage with the world they are interpreting. Qualitative researchers tend to use open-ended questions so that participants can express their views” (p. 9). In addition, the qualitative method is also used for the improvement of the quality of ‘survey-based quantitative evaluations.” This is how it helps the investigator to generate the evaluation hypothesis. It actually strengthens the design of “survey questionnaires” and expands or clarifies the “quantitative evaluation findings.” The approaches used under the qualitative researcher are characterized as following:

  • They have a tendency to be open-finished and have less organized conventions (i.e., researchers may change the information gathering method by including, refining, or dropping systems or sources)
  • They depend all the more intensely on intelligent meetings; respondents may be talked with a few times to catch up on a specific issue, clear up ideas or check the dependability of information
  • They depend on numerous information accumulation systems to check the legitimacy of their outcomes)
  • Generally their discoveries are not generalizable to any particular topic rather every contextual analysis creates a solitary bit of confirmation that can be utilized to look for general examples among diverse investigations of the same issue

Despite the sorts of information included, information gathering in a subjective study takes a lot of time. The specialist needs to record any conceivably valuable information completely, precisely, and methodically, utilizing field notes, sketches, audiotapes, photographs and other suitable means. The information gathering strategies must watch the moral standards of examination.

The subjective techniques most usually utilized as a part of assessment can be characterized in three general classes:

  • In-profundity meeting
  • Observation techniques
  • Document review

Description of the Research Process

The process of the proposed study will put special focus on the approaches including “Exploratory Data Collection” and “Survey.” From this perspective, participant observation will be the core method used to collect and analyse data during fieldwork in Australia. On the other hand, it will also use the survey to collect the data for this study. Nevertheless, survey will be containing two scales such as measuring the transnational behaviour as well as the other integration. The process of the proposed study will take the time of more than 4 months.

Project Plan

The Impact of Labour Shortage on Economic Growth of Australia

Research Paper Project Plan














Labour Shortage in Australia



Title Selection



Understanding of project



Posing research questions



Literature Review



Online research



Online research



Data Collection






Exploratory Data Collection



Data Analysis



Data interpretation



Data interpretation



Data interpretation



Final Business Research



Preparation of final project



Preparation of final project


Expected Research Outcomes

The conceivable answer for this lack is to fast track 457 visa applications so that the business can sponsor the skilled workers to fill the available vacancies. Reducing the bureaucracy involved in the process will help the business in the long term.


Most Australian accompanies are facing issues in hiring skilled staff. Associations are finding it increasingly hard to get the ideal individual for work opportunities, as showed in various reviews. Pulling in more staff to enter the work power and to backing gifted movement ensures that staff shortage does not lead to slow economic growth. I feel that talented relocation is still the best approach if Australia needs to address its staffing deficiencies.



Argent, N., & Tonts, M. (2015). A multicultural and multifunctional countryside? International labour migration and Australia's productivist heartlands.Population, Space and Place,21(2), 140-156.

Brennan, G., & Castles, F. G. (2002).Australia reshaped: 200 years of institutional transformation. Cambridge University Press.

Creswell, J. W. (2013).Research design: Qualitative, quantitative, and mixed methods approaches. Sage publications.

Dyster, B., & Meredith, D. (2012).Australia in the global economy: continuity and change. Cambridge University Press.

Gavin, B. (2010). The Impact of Skilled Labour Shortages on the Pilbara Region. Future Directions International Pty Ltd.

Labour Market Research and Analysis Branch Department of Employment,. (2014). Skill Shortages Australia.

McGrath, P. (2014). Labour shortage predicted to hamper economy. ABC News. Retrieved 17 June 2015, from

McLean, I. W. (2012).Why Australia prospered: the shifting sources of economic growth. Princeton University Press.

Mitchell, W., & Quirk, V. (2005). Skills shortages in Australia: concepts and reality. Centre of Full Employment and Equity.

Richardson, S. (2007).What Is a Skill Shortage?. National Centre for Vocational Education Research Ltd. PO Box 8288, Stational Arcade, Adelaide, SA 5000, Australia.

Tan, Y., & Lester, L. H. (2012). Labour market and economic impacts of international working holiday temporary migrants to Australia.Population, space and place,18(3), 359-383.


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