Main Issues with HR in Australia
Costs - High domestic costs ($) due to our living standards, as well superannuation etc.
Skills - major issue relating to matching the skills possessed by Australian workers and those needed by business. This skills shortage is often blamed on the education system and on some employers who are more intent on importing cheaper labour, outsourcing or recruiting overseas.
Supply - Small population of 25 million. Compared to countries like China & India
Issues such as high domestic labour costs, a skills shortage, especially apparent in some industries, and a relatively small labour pool have made businesses rethink the management of human resources. The globalisation that has affected a number of Australian businesses has brought with it the need for change. Increasing competition, shareholder demands for higher returns, privatisation, outsourcing and restructuring have all forced businesses to analyse their strategic direction. Most of these strategic decisions have at their core matters relating to labour costs, skills and supply.
Countries such as China have factories able to produce goods at very competitive prices. This has attracted the attention of Australian businesses, which have moved production to China because it is cheaper, causing Australian factories to close.
For example, the Australian company Pacific Brands, known for its Bonds and Holeproof products (amongst others), relocated its manufacturing to China at a cost of some Australian 1800 jobs as it was no longer sustainable to keep its Australian factories open.
The airline Qantas also faced scrutiny for its ongoing restructuring of its domestic maintenance facilities that resulted in a loss of 1550 jobs since 2014. Much of the work previously done in regional centres such as Avalon, Victoria, was relocated to lower labour cost countries such as Singapore and Hong Kong.
Other activities such as basic accounting and legal work, including the processing of insurance policies, is being outsourced to countries such as India. It has a large pool of English-speaking, highly literate and tertiary educated workers able to provide the type of services desired by Australian businesses at a much lower rate than if the work was done in Australia.
The issue of labour force skills has also been significant for many Australian businesses. For some time now local managers have expressed their concern that there is a major issue relating to matching the skills possessed by Australian workers and those needed by business. It is a widely held belief by many of these managers that the Australian education system has not produced workers with the necessary numeracy and literacy skills. Estimates are that Australian businesses will need in the vicinity of 2 million workers in the next few years and more than 5 million by the start of the next decade. Moreover, this shortage is seen as a major impediment to improving productivity in the workplace. Australia will have a shortfall of 500 000 workers by the end of the decade and the skills shortage remains an issue as Australia continues to pursue opportunities for economic growth.
What have we done to overcome it?
Short-term initiatives have been used to overcome the shortage of workers. The Temporary Skill Shortage (TSS) visa was introduced in March 2018. It replaced the temporary work (skilled) visa — the 457 visa. The TSS visa program comprises a short-term (up to two years) visa or a medium-term (up to four years) visa and will support businesses in addressing genuine skill shortages in their workforce. It aims to align with the skill needs of the Australian labour market and tightens eligibility requirements for employer sponsored permanent skilled visas.
The supply of workers continues to be a problem for a country of 25 million people. China and India with their huge populations have an abundance of workers keen to find well-paid employment overseas. Australia is allowing skilled workers from these countries to migrate and work here, especially in difficult to fill occupations such as IT, and to replace the 100 000 workers Australia loses to business migration each year. Businesses are sometimes attracted by the lower labour costs on offer in some countries; however, this needs to be more fully explored. Countries like China have a huge supply of labour but much of it is ageing and poorly qualified with low literacy levels. This is compounded by a shortage of younger workers and the limited availability of quality managers. Qualified staff tend to be concentrated in the major cities such as Beijing or Shanghai. Consequently, companies looking to China as a destination for expansion often face higher human resource costs and any benefits derived from such relocation decisions need to be considered in light of these factors
Case study on Foxconn pg 483