Transcript Rio Tinto Australia Plan

Demographic pressure: Skilling
challenges in the mining sector
Discussion paper: Prepared by Damien Woods L&PD
In this presentation
People challenges – the macro picture in Australia
Resources sector challenges – the global shift
Strategies to consider
Australia: A macro view of the labour force
The challenges of an ageing population:
•
In the last 80 years, we have added 20 years to life expectancy, however, we continue to retire at the same
age (roughly aged 60) – meaning retirement today is measured in decades rather than years.
•
In 1970, there were 7.5 people in the working aged population to support every one over 65 (the dependency
ratio). Today there are 5, by 2050 there will be just 2.7.
•
Due to the ageing of the population, real GDP in Australia is projected to fall from 3.3 to 2.7 over the next 40
years.
•
Participation of mature-aged Australians is lower than many other comparable economies – we have much
room to improve this aspect of our economic performance as a country. Many mature-aged Australians are at
a significant disadvantage to younger workers in today’s labour market.
Responding to the implications of ageing:
•
Economic growth is a result of productivity, participation and population. Rio Tinto can’t do much about
population growth, however we can make great inroads to support labour force participation of underrepresented groups (with a focus on employment, education & training).
Challenges: Australia’s ageing population
Whereas people aged under 35 once made up the most significant proportion of those in society,
shortly it will be those aged 50 and over.
Whilst our working age population grew by 180,000 per annum in the 1980’s and 1990’s, it
will fall to just 175,000 for the entire decade of the 2020’s.
 The mature-aged
participation rate in
Australia is below that of
many comparable countries –
including the United States,
United Kingdom, Canada and
New Zealand. *
 Australia must improve the
productive participation of
mature aged workers to
maintain a healthy economy.
Historically, there have
been many more
younger people then
those aged 45 and over
in the Australian labour
force.
* Data sourced from The Intergenerational Report 2010.
Population ageing in
Australia will radically
alter the structure of
the labour force – we
are ageing rapidly and
significant challenges
need to be addressed
to maintain a
productive economy.
The impact of demographic
change on labour supply in the
mining sector
A Global Perspective
Challenges: Working age population
Historical population growth compared to projections out to 2050.
Australia can still expect modest population growth (though only due to net migration). Countries such as
Germany, Japan, Spain, Italy & Russia can all expect a shrinking working age population.
As available talent becomes more scarce, employers like Rio Tinto have to compete more aggressively to attract
and retain a suitably skilled and motivated workforce. Our remote operations add a layer of complexity to this
challenge, as does our skills profile and the competitive nature of our sector.
200%
1970-2010
150%
2010-2050
Australia can
expect moderate
labour force
growth
100%
Many economies are faced
with a significant reduction
in their working age
population. These
countries will be likely to
target overseas workers
more aggressively.
50%
0%
-50%
Mexico
Brazil
India
China
South Australia Canada
Korea
US
Netherland Spain
France
UK
Russia
Italy
Japan
Germany
Source: Deloitte Research/UN Population Division (http://esa.un.org/unpp/) It’s 2008: Do You Know Where Your Talent Is? Why Acquisition and Retention Strategies Don’t Work, p.6
Dramatically Different Patterns of Growth
by Age
80%
Percent Growth in U.S. Population by Age: 2000-2010
3. Rapid growth in the over-55 workforce
60%
48%
40%
18%
20%
5%
0%
15%
5%
2. Few younger
workers entering
-9%
-20%
16-24
25-34
35-44
45-54
55-64
65+
Age of Workers
1. Declining number of mid-career workers
Source: U.S. Census Bureau International Data Base
A Pattern Found ‘Round the Industrialized
World
Italy
The United Kingdom
Change in Population by Age Group: 2000-2010
Change in Population by Age Group: 2000-2010
80%
80%
60%
60%
40%
40%
20%
11%
14%
9%
22%
20%
13%
1%
0%
14%
8%
3%
-9%
-20%
0%
-1%
-2%
-24%
-40%
-10%
-20%
Under 25
Under 25
25-34
35-44
45-54
55-64
65+
25-34
35-44
45-54
65+
Total
Age
Age
Source: US Census Bureau International Data Base
2005 © All Rights Reserved.
55-64
Total
Source: US Census Bureau International Data Base
11
Germany
13
2005 © All Rights Reserved.
Change in Population by Age Group: 2000-2010
80%
60%
40%
27%
24%
20%
0%
0%
-7%
-20%
-7%
-11%
-19%
-40%
Under 25
25-34
35-44
45-54
55-64
65+
Total
Age
Source: US Census Bureau International Data Base
2005 © All Rights Reserved.
12
Source: Demography is De$tiny, The Concours Group and Age Wave, 2003
In 2000, A Fairly “Young” World . . .
Under 5%
5% to 12.4%
12.5% to 20%
Percent of Population Age 60+
2000
Above 20%
Source: U.S. Census Bureau
. . . Rapidly Aging by 2025
Under 5%
5% to 12.4%
12.5% to 20%
Percent of Population Age 60+
2025
Above 20%
Source: U.S. Census Bureau
Implications for Companies
• Different workforce
– older, more diverse, and more variation in
needs, preferences, lifestyles
• Talent shortages
– as labor markets tighten and there are fewer
educated/ skilled candidates to replace the
"brain drain" of Baby Boomer retirements
• Corporate pressures
– on training and development, HR practices, and
management practices generally
Opportunities: An ageing workforce
The global working age population is ageing, we cannot change this. We can however
respond by focussing on the productive participation of older workers. This makes good
business sense for Rio Tinto, and supports the economies in which we operate.
Rio Tinto is likely to have an ageing workforce today in many job families (engineering, trades,
non-skilled labour), so our focus should be on strategies that support an ageing workforce
profile through maintaining productivity and participation.
Labour force & business risks:
Rio Tinto opportunities:
•
Concentrated loss of people as the baby boomer
generations retires.
•
•
Loss of difficult to replace organisational,
technical and management knowledge and skills.
Focus on targeted improvements in education,
health and attachment to the workforce amongst
older workers.
•
Competing for labour supply as labour market
growth diminishes.
Continue to focus on healthy ageing, to maintain
the productive capacity of our labour force.
•
Attracting and retaining critical skills – the
employer offer.
Investigate ways of supporting more targeted
sourcing of under-represented groups.
•
Wage pressures in a low unemployment
environment.
Invest in training & re-skilling workers to maintain
productive capacity and engagement.
•
Review workplace flexibility and transitions to
retirement for older workers.
•
Invest in the knowledge capture and transfer from
mature-aged employees to our next generation of
leaders.
•
Review Rio Tinto culture and attitudes to mature
aged employees in our workforce.
•
•
•
•
Increasing occupational health and safety risk in
some areas – particularly where manual labour is
require.
Canadian picture
Taken from the report “Prospecting the Future”.
In Canada, workers aged 40 to 54 represent over 50% of the workforce in the mining industry, compared with
38% for the overall labour force. Moreover, certain occupational groups within the mining industry are
experiencing even greater challenges.
For example, in mining, almost 30% of Physical Scientists and Professional Engineers are over the age of
50, but only 12% are under the age of 30. The situation is much the same for skilled trades and
technologist/technicians.
Retirement risk
Employers predict 24.5% will retire in the
next 10 years, whereas 40% of employees
indicated they will.
www.prospectingthefuture.ca
Student enrolments (projected) in mining related tertiary study will not go close to meeting the
demand create by retirement.
Supply-demand gap
Three key drivers shape the size of the skills pool available to the mining sector:
1.
Impending retirements;
2.
Entry of new workers, &
3.
Competition from other sectors.
Competition for skills will remain, employers compete based on EVP to attract
talent. Retaining workers once we have them is critical (especially experienced
older workers.)
Prospecting the future – supply-demand gap scenarios
Canadian research in 2005 examined three future scenarios in the mining sector and the
skills ramifications.
•
No growth - no-growth scenario, the industry will still face a potential labour supply gap of 27,560 workers
over the next 10 years.
•
Low growth - supply gap with a low-growth scenario will be 47,350 workers.
•
High growth - the high-growth scenario, the labour supply gap will be 70,810 workers over the next decade.
Strategies to deal with supply gaps
The report “Prospecting the Future” made a series of recommendations
to mitigate against the risks of an ageing mining labour force:
•
Objective A: Meet current and projected human resource demand by increasing
and making best use of all potential sources of supply.
•
Objective B: Address existing and expected skill gaps in the industry.
•
Objective C: Ensure standardization of skills and consistency of training delivery
in order to facilitate recruitment, establish clear educational requirements and
increase worker mobility.
•
Objective D: Ensure that all stakeholders are aware of and understand the critical
human resources issues currently facing the minerals and metals industry.
Strategic responses
Prospecting the Future
Objective A: Meet current and projected
human resource demand by increasing and
making best use of all potential sources of
supply.
60% of engineering
graduates intend to
work overseas in their
first 3 years. Attracting
them back will be a
challenge. *
China produces 300,000
engineering graduates per
annum with degrees
comparable to a Western 4
year degree. *
The research results suggest that Canada will need to hire as many as 81,000
new employees to meet current and future demands, and to fi ll positions
vacated by retirees.
Strategy A1: Promote the minerals and metals industry to youth as a safe,
modern environmentally friendly and technologically advanced career
option.
Strategy A2: Develop a national strategy that focuses on the engagement,
recruitment and retention of the Aboriginal workforce focusing on
Women make up 20% of
those entering
engineering degrees but
only 9% of the
profession.*
sites and operations that neighbour Aboriginal communities.
Strategy A3: Actively target non-traditional groups in promotion and
recruitment efforts to expand labour supply sources
* Engineers Salaries – Key trends and issues in remuneration of engineers. John Vines OAM 2007
Objective B: Address existing and expected
skill gaps in the industry.
In 2007, 1800 Civil engineers
reached retirement age in
Australia, there were only 900
Civil engineering graduates in
2007.*
We can review and address
professional leakage. Today,
less than 30% of those starting
an engineering degree are still
engineers after 15 years. *
Research findings suggest that the industry (Canada) could lose up to 40% of the existing
workforce in the next 10 years due to retirement and early retirement. This significant loss of
Skills represents a major risk to the sector, especially given that skill gaps currently exist in
The workforce.
Strategy B1: Mitigate the risk to industry associated with an ageing workforce and
pending retirements through proactive human resource-practices and succession
planning (especially for long-life mines).
Strategy B2: Develop programs to bring back retired workers and retain older workers
to minimize the impact of the workforce exodus and facilitate the capture of
As population ageing redefines the
traditional life expectancy, we
need to redefine the concept of
the traditional working age.
Government changes to pension
eligibility is a start, employers
must also restructure to support
people to work longer.
Participation and productivity are
key employer focus areas.
knowledge and experience that will be necessary to maintain skills levels within the
industry.
Strategy B3: Encourage industry to develop mentoring programs to facilitate the
transfer of knowledge from older experienced workers to their replacements.
Strategy B4: Develop a collaborative, cross-industry strategy for educational
preparation, training/educational programs, continuing education/life-long learning, and
employer provided training to facilitate the availability of a skilled labour force.
* Engineers Salaries – Key trends and issues in remuneration of engineers. John Vines OAM 2007
Objective C: Ensure standardization of skills
and consistency of training delivery in order to
facilitate recruitment, establish clear
educational requirements and increase worker
mobility.
Mining-specific occupations are generally not credentialed in Canada (with the exception of basic
common-core training in Ontario and Quebec). In the future, there will be a need for advanced
training and further education to help employees meet increasingly complex tasks. In addition,
there is a need to identify required common-core skills to facilitate the development of career
paths, maintain occupational and professional standards and enhance worker mobility.
Strategy C1: Present a clear case for the potential benefits of occupational standards,
certification and program accreditation to employers and other industry stakeholders.
Strategy C2: Develop and implement occupational standards for key industry occupations.
Strategy C3: Implement national occupational standards and standardize credentialing of
professional occupations within Canada.
Objective D: Ensure that all stakeholders are
aware of and understand the critical human
resources issues facing the minerals and
metals industry.
It is critical that key players in the minerals and metals industry understand the
importance of human resources to the continued success and competitiveness of the
industry, and that they begin proactive, strategic human resources planning.
Strategy D1: Develop and implement a communications strategy that
emphasizes the impending human resource crisis facing the minerals and metals
industry. The strategy is intended to raise awareness and understanding of the
issues and to promote collaboration between the industry stakeholders who have
an important role to play in overcoming the human resource challenges facing the
industry.
Further initiatives to consider
Industry stakeholders can
•
minimize the impact of this ominous retirement wave by working
collectively to:
– attract more people to the vast array of careers in mining,
– increase enrolment in mining post secondary institutions,
– expand the number of co-op placements / summer work terms,
– encourage worker diversity in their organization by recruiting non
traditional employees such as women, immigrants and aboriginal
people, and
– increase the effectiveness and frequency of training,
– focus on targeted retention of workers nearing retirement.
Mining Daily – 18 January, 2010
•
By 2020, the mining sector in Queensland alone will need an additional 41,000
people to support growth in the sector. Many of these will require high skills.
•
The skills in most demand will be tradespeople, labourers, intermediate production
and transport workers.
•
Recent research has indicated the trades and labouring sectors have rapidly ageing
workforce profiles.
•
Demand for additional workers in the coal, bauxite, copper, lead, zinc and gold
sectors in Queensland alone will exceed 23,000 by 2020. Rio Tinto has a high degree
of exposure to these areas, and compete for workers in those we don’t.
•
Total labour force growth for Australia is projected to be just 18,000 per annum by
2020.
•
Managing strategic workforce planning and demographic risks is a critical skill
requirement of Rio Tinto leaders. Operational targets will only be met with the
appropriately skilled workforce, in the right numbers in the right locations.
http://www.miningaustralia.com.au/Common/ContentManagement/Mining/miningaustralia/18_01_2010.pdf