State-nominated Occupation List
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1 State-nominated Occupation List Industry skills requirement through state-nominated skilled migration APRIL 2016 Page 1
2 RESTAURANT & CATERING AUSTRALIA Restaurant & Catering Australia (R&CA) is the national industry association representing the interests of 35,000 restaurants, cafes and catering businesses across Australia. R&CA delivers tangible outcomes to small businesses within the hospitality industry by influencing the policy decisions and regulations that impact the sector s operating environment. R&CA is committed to ensuring the industry is recognised as one of excellence, professionalism, profitability and sustainability. This includes advocating the broader social and economic contribution of the sector to industry and government stakeholders, as well as highlighting the value of the restaurant experience to the public. Cover images courtesy of Tourism Australia Page 2
3 CONTENTS EXECUTIVE SUMMARY 4 THE VALUE OF THE TOURISM & HOSPITALITY SECTOR 5 SA VISITOR ECONOMY & MIGRATION 6 CURRENT SKILLS SHORTAGES 7 LOCATION & LENGTH OF SKILLS SHORTAGES 8 STATE-NOMINATED OCCUPATION LIST 10 CHALLENGES USING THE LOCAL LABOUR FORCE TO ADDRESS SKILLS SHORTAGES 10 International students and working holiday makers 11 Aging population 11 Reform of the VET system 11 Difficulty retaining staff 12 CONCLUSION 13 Page 3
4 EXECUTIVE SUMMARY Restaurants, cafes and hospitality providers are an important part of South Australia s economy. Cafes, restaurants and takeaway businesses are the largest employer across all tourism-related sectors in the visitor economy; employing 32,600 South Australians in 2,000 businesses. These businesses are small businesses; with 92 per cent of café and restaurant owners employing 19 people or less. Tourism and hospitality businesses rely heavily on labour for productivity, efficiency, and growth. However, the sector is currently experiencing a shortfall of 38,000 workers nationally, with this gap expected to increase to 123,000 jobs by The café and restaurant sector is expected to lead tourism demand for staff out to 2020, with an additional 93,600 jobs needed across the café, restaurant and takeaway businesses, an increase of 16.9 per cent. South Australia will not be immune to this phenomenon, with significant shortfalls and difficulties in sourcing staff reported across the state. This shortage of skilled and unskilled labour constricts growth and productivity of many small businesses in regional and metropolitan South Australia. R&CA also remains concerned over the impact of defunding VET qualifications that are in extreme need by the sector, and the subsequent flow-on affect this will have on the sectors reliance on the migration system to address skills shortages. The availability of skilled labour through Australia s temporary migration system is therefore of critical importance to the productivity of South Australia s tourism and hospitality sector, as well as achieving the state s tourism objective of doubling overnight visitor expenditure to $8 billion by R&CA s comments to the State-Nominated Occupation List (SNOL) remain largely unchanged since its submission in R&CA s position remains that Cooks, Chefs and Café and Restaurant Managers must be retained on the SNOL as a matter of priority. The extension of the SNOL to include a greater number of hospitality positions including the recently endorsed occupation of Trade Waiter is necessary to meet chronic shortfalls in labour that already exist, as well as meet the demand for skilled staff well into the future. Page 4
5 THE VALUE OF THE TOURISM & HOSPITALITY SECTOR Australia s visitor economy is a $113 billion industry, employing close to 1 million people and supporting 267,000 businesses across metropolitan and regional Australia. Deloitte s Positioning for Prosperity? Catching the next wave report identifies tourism as one of Australia s five super growth industries, with the sector expected to grow more than 10 per cent faster than global gross domestic product (See Figure 1). Australia s top five super growth industries including tourism have the potential to deliver an additional $250 billion to the national economy over the next 20 years if these growth projections are realised 1. The café, restaurant and takeaway sector is the largest contributor to SA s tourism industry; employing 32,600 Australians across 2,000 businesses. The sector generates $2.0 billion in turnover, of which $850 million is attributed to State Gross Value Added and $243 million to the SA tourism industry. Ensuring this sector continues to prosper is essential for the growth of the broader economy. Figure 1: Projected annual global industry output growth, Gas Tourism Agribusiness Health International education Wealth Management Water and waste services Retail and wholesale Other education and training Public administration Transport and logistics Business and property services Telecommunications Oil Banking Mining Construction ICT Manufacturing Media Global growth rate (%) % GGDP GGDP - 10% GGDP Source: Deloitte Access Economics 1 Deloitte (2013) Positioning for Prosperity? Catching the next wave Page 5
6 SA VISITOR ECONOMY & MIGRATION The availability of appropriately skilled staff is critical to the growth and productivity of the tourism and hospitality sector. Service Skills Australia s Tourism, Travel and Hospitality Environmental Scan 2014 highlights that strong domestic demand and a growing tourism base is expected to lead to phenomenal employment growth in the visitor economy over the next five years, particularly in the café, restaurant and takeaway food sector 2. The Department of Employment indicates that employment in the cafe, restaurant and takeaway food sector has a projected five-year employment growth rate of 16.9 per cent, requiring an additional 93,600 workers by November This is a considerable revision from the 8.9 per cent growth rate or 43,900 jobs projected in It also represents a significant proportion of the tourism employment demand expected to 2020 (approximately 123,000 jobs 4 ). In addition, the Department of Employment projections indicate phenomenal employment growth for key hospitality occupations including chefs, which has a projected employment growth rate of 20 per cent to November 2019 (See Table 2) 5. Table 1: Employment growth projections by hospitality occupation Occupation Code Occupation Employment Level Nov 14 ( 000) Projected employment level November 2019 ( 000) Department of Employment Projections Projected employment growth five years to November 2019 ( 000) ( 000) (%) 1411 Café & Restaurant Manager Chef Cook Bar attendants and Baristas Café Workers Waiters The ability of the sector to meet growth in employment will not be met by the local labour force alone. The design and operation of Australia s national and state-based migration programmes has a significant impact on the sectors ability to meet growth targets and projected employment demand. Chronic shortages of skilled and unskilled labour continues to be a major concern for the sector and requires due consideration in the design of the SNOL. 2 Service Skills Australia (2013) Tourism, Travel and Hospitality Environmental Scan 2014 DRAFT, p.21 3 Department of Employment (2015) 2015 Employment Projections, Industry projections to November Deloitte Access Economics (2015) Australian Tourism Labour Force Report: , Australian Trade Commission, Austrade, October Department of Employment (2015) 2015 Employment Projections, Industry projections to November 2019 Page 6
7 CURRENT SKILLS SHORTAGES In 2015 Deloitte Access Economics released the Australian Tourism Labour Force Report: This report succeeds the Australian Tourism Labour Force Report 2011 which quantified and identified the major skill and labour shortages within the sector. The 2015 report highlights the café and restaurant sector still has the highest level of deficiencies in relation to skills, retention and recruitment of staff than any other tourism-related sector (See Table 2 below). The proportion of restaurant and café businesses identifying recruitment deficiencies is nearly double that of other sectors. The main reason given for recruitment difficulties was the lack of access to workers with the required skills. Further, 81 per cent of restaurant and café businesses identified skills deficiencies in potential staff, 12 percentage points above the national average. Moreover the report revealed that South Australia had the highest number of businesses reporting skills deficiencies at 75 per cent 6. The sector also employs a larger proportion of international workers than the national average with 15 per cent of workers being from overseas compared to the national average of 10 per cent 7. Table 2: Recruitment, retention and skill deficiencies across tourism sub-sectors Metric Accommodation Attractions Restaurants & Cafes Other Businesses reported as seasonal 44% 49% 59% 47% Average # employees Vacancy rate 5% 4% 9% 10% Turnover rate 51% 42% 88% 61% % identifying recruitment deficiencies 39% 36% 71% 38% % identifying retention deficiencies 27% 22% 52% 30% % identifying skills deficiencies 66% 59% 81% 64% Top deficiency identified Top occupation affected by deficiency Capability management Experience opportunities Capability misalignment Experience Cleaner Tour guide Chef Hospitality Worker 6 Deloitte Access Economics (2015) Australian Tourism Labour Force Report: , Australian Trade Commission, Austrade, October 2015, p Deloitte Access Economics (2015) Australian Tourism Labour Force Report: , Australian Trade Commission, Austrade, October 2015, p. ix-x. Page 7
8 LOCATION & LENGTH OF SKILLS SHORTAGES The Deloitte Access Economics Australian Tourism Labour Force Report 2011 indicated that shortages of skilled and non-skilled labour will continue to affect a majority of Australia's top tourism regions, including South Australia. Adelaide, South East South Australia and the rest of South Australia 8 are all expected to experience demand that exceeds the available supply of hospitality workers. While only projected to 2015, R&CA believe these indicative supply shortages are still representative of the shortages experiences by the sector. As the following tables demonstrate, South Australia is experiencing above average vacancy rates, with the Rest of South East South Australia and Rest of South Australia in the top five destinations facing the greatest difficulty in filling vacancies 9. Employment growth projections and current skills shortages identified in this submission will not be met by the local labour force alone. Skilled migration is, and will continue to be, one of the core mechanisms for sourcing labour within the sector now and into the future. Table 3: Indicative supply shortages by tourism region Estimated tourism labour shortages Mega Region Vacancy Rate Diff. to Australian average Employed persons est. Above average vacancies est. Northern Territory 16% 14% 5, Rest of WA 13% 12% 5, Northern and inland NSW 13% 11% 32,780 3,564 Southern NSW including ACT 12% 11% 32,141 3,389 Eastern Victoria 12% 10% 14,617 1,531 Rest of South East South Australia 11% 10% 5, Melbourne and Port Phillip Bay 10% 8% 86,120 7,318 Southern Western Australia 10% 8% 42,668 3,380 Rest of South Australia 10% 8% 4, Western Victoria 9% 7% 18,265 1,307 Rest of Queensland 8% 6% 19,330 1,214 South Coast, Sydney and surrounds 5% 3% 10,8335 3,585 Adelaide and Adelaide Hills 4% 3% 27, South East Queensland 4% 3% 77,692 1,954 Australian tourism industry 9% 7% 500, Source: ABS 2010, DAE forecasting model and survey results 8 Note: Tourism regions as defined by Tourism Research Australia for the purposes of the IVS & NVS 9 Deloitte Access Economics (2011) Australian Tourism Labour Force Report Labour Force Profile (Part 1), p. vi, vii and xi Page 8
9 Table 4: Reported time to fill vacancies in 2010 (where there was a difficulty) Reported time to fill vacancies Mega Region <= 4 weeks > 4 weeks <=8 weeks > 8 weeks Could not fill Total difficulty Eastern Victoria 5.7% 2.9% 1.5% 3.3% 13.4% Rest of South East South Australia 4.4% 2.8% 2.4% 3.3% 12.9% Rest of Western Australia 4.7% 2.9% 1.5% 2.6% 11.6% Rest of South Australia 2.8% 2.1% 1.2% 3.0% 9.1% Western Victoria 2.6% 1.7% 1.4% 2.5% 8.2% Northern and inland NSW 3.2% 2.6% 0.8% 1.6% 8.2% Melbourne and Port Phillip Bay 3.0% 1.8% 0.3% 2.8% 8.0% Rest of Queensland 4.3% 2.0% 0.4% 1.2% 7.9% Northern Territory 3.6% 1.6% 0.5% 1.8% 7.6% Southern NSW including ACT 2.2% 1.8% 0.6% 1.5% 6.0% South East Queensland 2.4% 1.2% 0.7% 1.5% 5.9% Southern Western Australia 1.8% 0.9% 0.7% 1.6% 5.0% South Coast, Sydney & surrounds 1.4% 1.0% 0.3% 1.0% 3.6% Adelaide and Adelaide Hills 1.1% 1.0% 0.4% 0.7% 3.2% Australian tourism industry 2.5% 1.5% 0.7% 1.7% 6.3% Source: DAE survey results. Note: As a proportion of all employees in the region Table 5: Accumulated labour demand by top 10 tourism regions Page 9 Accumulated labour demand for top 10 regions Accumulated demand for skilled workers Accumulated demand to be met through alternative sources Accumulated demand for workers % all demand Sydney (NSW) 8,478 13,037 16,946 30% Melbourne (VIC) 6,337 10,298 13,281 23% Experience Perth (WA) 2,303 4,304 5,396 10% Brisbane (QLD) 1,848 3,450 4,331 8% Adelaide (SA) 1,502 3,123 3,670 6% Gold Coast (QLD) % Greater Hobart (TAS) % Mid North Coast (NSW) % Canberra (ACT) % Tropical North QLD (QLD) % Subtotal (top 10) 21,960 37,031 46,975 83% Total 25,927 45,782 56, % Source: DAE labour force model.
10 STATE-NOMINATED OCCUPATION LIST South Australia requires a flexible and responsive migration system that actively addresses the labour and skill shortages of its fastest growing industry sectors, including tourism and hospitality. Addressing these needs through the state-nominated occupation list (SNOL) is necessary to meet expected employment growth, as well as achieve the state s tourism objective of doubling overnight visitor expenditure to $8 billion by Cooks, Chefs and Restaurant & Café Managers must remain on the SNOL as a matter of priority. Further consideration should also be given to the inclusion of Trade Waiter on the SNOL following its recent national endorsement. The reasons for this are threefold: demand currently exceeds supply for these occupations and is expected to do so well into the future, with regional South Australia experiencing a greater level of difficulty sourcing staff; the sector by nature has a high attrition rate, with a declining source of available young workers to fill vacancies; and while reform of the VET system will produce effectively trained staff in the future, the number of apprentices will not be sufficient to meet the sheer volume of vacancies that already exist. Skilled migration will therefore continue to be an important part of addressing labour shortages in the sector. CHALLENGES USING THE LOCAL LABOUR FORCE TO ADDRESS SKILLS SHORTAGES A considerable body of work exists examining alternative sources of labour to alleviate shortages in the tourism and hospitality sector other than skilled migration 10. Alternative sources of labour include international students and working holiday makers, apprentices, and non-traditional workers including mature-age workers, indigenous employees and workers with a disability. However, the ability of these workers to provide a suitable pool of labour to address shortages is contingent upon the number of vacancies that currently exist, visa requirements for overseas students and workers, and the time required to effectively train and develop appropriate candidates. R&CA seeks to outline some of the key challenges faced by the sector in filling current vacancies through alternative sources of local labour: 10 Deloitte Access Economics (2013) Australian Tourism Labour Force Report Labour Force Profile (Part 1) 2011, p. xviii; Service Skills Australia, Tourism, Travel and Hospitality Environmental Scan 2014 DRAFT Page 10
11 International students and working holiday makers The tourism and hospitality sector supports the integration of international students and working holiday makers into the Australian hospitality workforce. However, visa requirements only allow international students to work a maximum of twenty hours per week, with working holiday makers only able to work for an employer for up to six months. Tourism and hospitality professions are not included as one of the industries which allows workers to extend their visa into a second year by working in regional Australia. Aging population The tourism and hospitality sector has traditionally been characterised by a younger workforce, with 45.7 per cent of workers aged 15-24, compared to 16.8 per cent for all other Australian industries 11. However, as a result of an ageing population, the proportion of younger people available to work in the sector is in decline. The availability of staff at the junior or frontline level continues to be an area of great concern among senior tourism executives 12. Reform of the VET system Considerable work is being done to increase local workforce participation through the Vocational Education and Training (VET) system. However, research by the Centre for the Economics of Education and Training suggests that from , Australia will require an additional 2.5 million people with VET qualifications, 1.7 million of which will need to be qualified at Certificate III level or above 13. In addition, a Service Skills Australia survey in 2009 found that some training programs were not providing individuals with the skills and knowledge that employers require 14. While VET reform has addressed some of these issues, the reality remains that the number of qualified workers produced through the VET system will simply not be enough to meet current and future demand for skilled workers. Furthermore, R&CA remains concerned by changes to the VET system in South Australia, and the impact defunding critical qualifications will have on the sector and its subsequent reliance on the migration system. R&CA s position remains that positions funded under the WorkReady program must be based on need and demand by growth sectors such as hospitality. 11 Service Skills Australia (2013) Tourism Travel and Hospitality Environmental Scan 2011, p Tourism & Transport Forum (2009) Tourism Industry Sentiment Survey, October Business Council of Australia (2007) Restoring our Edge in Education, p8 14 Service Skills Australia (2009) Tourism, Travel and Hospitality Environmental Scan 2009, p Page 11
12 Difficulty retaining staff The Deloitte Access Economics report found 46 per cent of businesses experience problems retaining staff. Continual training and the promotion of talent are considered two key aspects in retaining staff, and reducing the cost associated with high staff turnover. However, the Deloitte Access Economics report found that only 20 per cent of businesses pursue structured career paths as a strategy to retain staff 15. A major contributor to the lack of career pathways is the large number of businesses that are small or microsized. 15 Deloitte Access Economics (2013) Australian Tourism Labour Force Report Labour Force Profile (Part 1) 2011, p. iv - v Page 12
13 CONCLUSION R&CA welcomes the opportunity to comment on South Australia s state-nominated occupation list. The tourism and hospitality sector is currently experiencing chronic shortages in skilled and non-skilled labour, with these shortages expected to increase to 123,000 by Current skills shortages are likely to be further exacerbated by employment growth expected in the sector over the coming years. South Australia has not been immune to these labour shortages, with regional South Australia having greater difficulty in sourcing labour. Indeed, the most recent release of the Deloitte Access Economics Tourism Labour Force Report revealed South Australia has the highest level of skills deficiencies amongst its staff than any other state. As a labour intensive industry, the tourism and hospitality sector requires appropriately skilled labour for productivity, efficiency and growth. As the above analysis demonstrates, the demand for skilled hospitality workers will not be met by the local labour force alone. Skilled migration is, and will continue to be, one of the core mechanisms for sourcing labour now and into the future. Migration policy must be at the forefront of solutions to ease labour and skills pressures in South Australia. R&CA advocates retaining Cooks, Chefs and Restaurant Managers on the SNOL, while extending the SNOL to include a greater number of hospitality occupations such as Trade Waiters to address chronic shortages affecting the sector. Page 13
14 RESTAURANT & CATERING AUSTRALIA PO Box 121 SURRY HILLS NSW 2010 T F Page 14
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