Forecasting Rail Workforce Needs: A Long-term Perspective

Prepared for the Cooperative Research Centre for Railway Engineering and Technologies

by

Anusha Mahendran and Alfred Michael Dockery Centre for Labour Market Research

(CLMR) Curtin Business School

Curtin University of Technology GPO Box U1987, Perth WA 6845

Tel: (08) 9266 1744 Fax: (08) 9266 1743 http://www.business.curtin.edu.au/clmr

and

Fred Affleck Planning and Transport Research Centre

(PATREC) Curtin University of Technology

GPO Box U1987 WA 6845 Tel: (08) 9266 3295 Fax: (08) 9266 1377

http://www.patrec.org/index.html

August 2007

PPAATTRREECC

2

3

About the organisations The Centre for Labour Market Research (CLMR) is a research consortium of the Curtin University of Technology, the University of Western Australia, Murdoch University and the University of Canberra. It has branches in Perth and Canberra with its administrative office located at the Curtin Business School in Perth. The Centre's objectives are to further the knowledge and understanding of labour markets and related issues, particularly in the Asia / Pacific region and to promote the exchange of knowledge and expertise on labour economics and industrial relations between the academic community, governments, industry organisations, business and trade unions. CLMR also produces the Australian Journal of Labour Economics. Planning and Transport Research Centre (PATREC) is a collaborative program involving Curtin University of Technology, Edith Cowan University, Murdoch University and the University of Western Australia. PATREC also receives financial funding from the State Government of Western Australia through the Department for Planning and Infrastructure and Main Roads WA. Based in Perth Western Australia and established in May 2003, PATREC pools resources from all four public universities in the State to facilitate research in a wide range of issues. PATREC’s strongest areas of educational and research focus are: integrated transport and land use planning transport economics logistics management and business logistics systems and tools transport modelling and data management transport sustainability, and transport safety and risk management

4

TABLE OF CONTENTS

EXECUTIVE SUMMARY........................................................................................................................7

RAIL REFORMS.........................................................................................................................................7 ANALYSIS OF RAIL WORKFORCE..............................................................................................................7

State by State profiles..........................................................................................................................8 MODELLING PROJECTIONS .......................................................................................................................9 TRAINING OVERVIEW...............................................................................................................................9 MEASURES TO ADDRESS WORKFORCE ISSUES .......................................................................................10

SECTION 1: INTRODUCTION.............................................................................................................12

1.1 BACKGROUND TO THE REPORT .........................................................................................................12 1.2 THE OBJECTIVES OF THE STUDY ..............................................................................................13 1.3 OVERVIEW OF THE METHODOLOGY..........................................................................................14

SECTION 2: OVERVIEW OF THE AUSTRALIAN RAIL INDUSTRY ..........................................16

2.1 BACKGROUND ..................................................................................................................................16 2.2 ECONOMICS OF THE RAIL INDUSTRY ................................................................................................17

2.2.1 Rail Industry Reforms ..............................................................................................................17 2.2.2 Ongoing reform issues .............................................................................................................19 Rail Infrastructure ............................................................................................................................20 Monopolistic Structure of Rail Markets............................................................................................21 Competition.......................................................................................................................................22

2.3 CURRENT STRUCTURE OF THE RAIL INDUSTRY.................................................................................23 Providers of Rail Infrastructure Access............................................................................................24 Rail Train Operators ........................................................................................................................24 Maintenance and Other Related Service Providers..........................................................................25

SECTION 3: THE RAIL WORKFORCE .............................................................................................26

3.1 ANALYSIS OF ABS CENSUS DATA ....................................................................................................26 3.1.1 Aggregate employment.............................................................................................................27 3.1.2 Employment by occupation and qualification..........................................................................28 3.1.3 The age profile of the rail workforce .......................................................................................30

FIGURE 3.1: AGE PROFILE OF THE RAIL WORKFORCE; 1991 AND 2001....................................................31 FIGURE 3.2: AGE PROFILE OF THE WORKFORCE; RAIL INDUSTRY AND ALL INDUSTRIES, 2001 ................31

3.1.4 Employment By Gender ...........................................................................................................32 3.1.5 Employment by State and Territory .........................................................................................33

3.2 OVERVIEW OF WORKFORCE FROM SURVEY RESULTS ........................................................................34 3.2.1 Employment by occupation ......................................................................................................34 3.2.2 The age profile of the rail workforce .......................................................................................35 3.2.3 Employment by gender.............................................................................................................37

3.3 OVERVIEW OF RECRUITMENT AND TRAINING ARRANGEMENTS.........................................................38 3.3.1 Recruitment..............................................................................................................................38 3.3.2 Overview of training in the rail industry..................................................................................39

SECTION 4: CURRENT AND FUTURE WORKFORCE NEEDS....................................................45

4.1 THE CONCEPT OF A SKILLS SHORTAGE ..............................................................................................45 4.2 SKILLS SHORTAGES AND FUTURE EXPECTATIONS – QUALITATIVE EVIDENCE....................................47

4.2.1 Skills shortages by occupation.................................................................................................47 4.2.2 Vacancies and wastage rates ...................................................................................................49 4.2.3 Skill shortages by region..........................................................................................................49

4.3 MODELLING FUTURE WORKFORCE NEEDS.........................................................................................50 4.3.1 A model of labour demand in the rail industry ........................................................................50 4.3.2 A model of labour supply and population ageing ....................................................................53 4.3.3 Modelling results .....................................................................................................................54

4.4 RECRUITMENT AND TRAINING IMPLICATIONS ...................................................................................58 4.4.1 Recruitment implications .........................................................................................................58 4.4.2 Training implications...............................................................................................................60

5

SECTION 5: CONCLUSIONS ...............................................................................................................63

APPENDIX A: FURTHER ANALYSIS OF CENSUS DATA BY STATE.........................................68

A.I: EMPLOYMENT SHARES BY OCCUPATION.......................................................................................68 A.II: EMPLOYMENT SHARES BY LEVEL OF QUALIFICATION.................................................................73 A.II: EMPLOYMENT SHARES BY OCCUPATION & GENDER ...................................................................77

APPENDIX B: DETAILS ON METHODOLOGY FOR PRIMARY DATA COLLECTION ........81

APPENDIX C: SURVEY INSTRUMENTS..........................................................................................82

C.1 MAIL OUT QUESTIONNAIRE...........................................................................................................82 C.2 INTERVIEW QUESTIONS................................................................................................................89

APPENDIX D: MODELLING RESULTS BY YEAR .........................................................................93

REFERENCES.........................................................................................................................................95

6

List of Acronyms ABS Australian Bureau of Statistics AIM Australian Institute of Management ANTA Australian National Training Authority ANZSIC Australian and New Zealand Standard Industrial Classification AQF Australian Qualifications Framework ARA Australasian Railways Association ARRDO Australian Railway Research and Development Organisation ARG Australian Railroad Group ARTC Australian Rail Track Corporation ARTI Australian Rail Transport Industry ASCO Australian Standard Classification of Occupations ASIC Australian Standard Industrial Classification BTCE Bureau of Transport and Communications Economics BTRE Bureau of Transport and Regional Economics CERT Centre for Excellence in Rail Training CLMR Centre for Labour Market Research CQU Central Queensland University CRC Cooperative Research Centre GDP Gross Domestic Product IT Information Technology PATREC Planning and Transport Research Centre PTA Public Transport Authority QR Queensland Rail QUT Queensland University of Technology RMIT Royal Melbourne Institute of Technology RTBU Rail Tram Bus Union RTI Rail Transport International RTO Registered Training Organisation TAFE Tertiary and Further Education TDT Transport and Logistics Industry Skills Council UQ University of Queensland UWS University of Western Sydney

7

Executive Summary The Australian Rail Industry faces significant constraints in the form of emerging labour and skills shortages as a result of current tight labour market conditions, a rapidly ageing workforce and the legacy of a period of substantial reforms and declining employment. The objectives of this study were to construct a current profile of the rail workforce, to generate estimates of future labour demand and supply, and to highlight the requirements in terms of recruitment and training to address the forecasted shortages. The research and modelling methodology uses a combination of analyses of existing data (mainly 2001 Census data) and extensive primary research (surveys and face-to-face interviews) involving rail operators.

Rail Reforms The Australian rail industry has undergone significant changes over the past decade with the implementation of initiatives by the Commonwealth and State/Territory Governments aimed at promoting more competition and efficiency within an industry that had previously been run predominately by state government authorities. Reforms included privatisation, vertical and horizontal separation of networks and the establishment of “open access” regimes which ensured third party access to essential rail infrastructure. The reform process saw the number of rail operators increase from 12 in 1991 to 27 in 1999, and total employment in the rail industry fall by around 50% between 1991 and 2001. The reforms have also been identified as being responsible for reducing freight rates, improving service quality and increasing productivity within the industry.

Analysis of Rail Workforce Two defining characteristics of the rail workforce are its age and male dominance. According to the 2001 Census data, women comprised just 12% of the rail transport workforce, and those female employees were concentrated in clerical, sales and service jobs. Under 35s comprised 40% of the overall Australian workforce, compared to 26% for the rail industry. The average age of male rail workers was 42.3 years, more than three years higher than the average for the Australian male workforce as a whole. For drivers, who make up over one-fifth of the rail transport workforce, the ageing problem is even more acute, with an average age of 43.6 years in 2001. Analysis of age data derived from surveys with current rail operators indicates that over 75% of workers employed are 35 years or older and that almost half of the workers are aged 45 years or above. Almost all the rail operators interviewed had concerns about the ageing of workers with regard to at least one occupational group within their rail workforce. Retirement rates of around 20% over the next five years were nominated for train drivers and for controllers and signallers by several operators. The occupations which rail operators felt most uncomfortable about, with regard to the ageing of their workers also appears to be ones that they identify skill shortages in.

8

Another salient feature of the rail workforce is its relative concentration of employment within occupations with elementary to intermediate skill levels. Compared to the average for all Australian industries, a higher proportion of rail workers have a certificate qualification or possess no recognised qualification and, conversely, are less likely to have tertiary education qualifications

State by State profiles In 2001 New South Wales had the largest number of rail transport employees of the Australian states and territories, followed in descending order by Queensland, Victoria, Western Australia, South Australia and Tasmania. Few rail transport employees were recorded in either of the territories. This relative ordering among the states was unchanged from that revealed in the 1991, however, all states experienced very substantial reductions in rail employment. Overall Victoria and Tasmania experienced the greatest percentage reduction in their workforce with each recording a decrease of around 70%. Significant falls in the number of rail transport employees were also recorded for South Australia (63%) and Western Australia (58%). The relatively older age profile of rail workers applies across all states and territories. Each jurisdiction reveals a higher average age than the average for all Australian workers, and higher than for all Australian male workers. Workforce ageing is particularly acute in Western Australia, where the average age of rail workers was 44.2 years in 2001.

Skills Shortages Rail operators most readily identified skills shortages amongst higher skilled occupations and those that had significant lead time for training and capability development. Concerns about skill shortages appear to be greatest with respect to workers with qualifications gained through the higher education and the VET system, and for which the training rate is significantly impacted by public education and training policy and investment. Occupational groups for which skills shortages were recognised as being of most concern for rail operators included train drivers, tradespersons, managerial and engineering personnel. Operators reported higher turnover rates amongst tradespersons, clerical and customer service staff, train drivers and engineers. The majority of rail employers also believed that skills shortages were more prevalent and pronounced in rural regions such as Kalgoorlie, Merredin and remote regions of northern Western Australia, northern and central Queensland and New South Wales. Most of these areas were also expected to experience continued shortages into the future. Some capital cities including Brisbane, Sydney and Melbourne were also identified by several respondents as being locations where they currently experienced skills shortages, and this was largely attributed to shortages of suitable housing with reasonable commuting times in many of these city localities.

9

Modelling Projections Forecasts for employment demand by occupation to 2020 were derived from existing forecasts of the passenger and freight task, and based on assumptions relating to changes in labour productivity and occupational distribution. Projections of labour supply were based on a continuation of current intake levels of the 15 to 24 year olds, and older groups by applying age, gender and occupation specific net retention rates observed between the 1996 and 2001 Census to the existing rail workforce from the base year of 2001. The differences between the projections for labour demand and supply for each occupation were then taken to represent shortages or surpluses. Although the total rail task is expected to increase significantly, conservative assumptions relating to ongoing labour productivity growth results in rail employment being forecast to remain relatively constant to 2020. On the supply side, the rail workforce is projected to continue to age rapidly. By 2021, the average age of the rail worker is projected to be around 49 years old. In the case of managers the average age is projected to reach 55.9 years by 2021, and 52.2 years for intermediate production and transport workers (which includes drivers). These modelling projections appear to resonate with the expectations of rail operators who were interviewed, who expressed concern about the ageing of their drivers and managerial staff. Severe shortages are forecast to emerge for managers and intermediate production and transport workers, and modest shortages for tradespersons, associate professionals and advanced clerical and service workers. An initial shortage of professionals is projected to give way to a surplus by 2020. A surplus of workers is also predicted for elementary and intermediate clerical, sales and service workers. The projections appear to be consistent with many of the views expressed by the rail operators in the study who anticipated they would experience shortages amongst tradespeople, intermediate production and transport workers and managerial and professional staff in the future. Thus one potential means of addressing predicted shortages within some occupations would be to retrain and upskill workers from occupational groups likely to experience a labour surplus in the future.

Training Overview Rail operators believe there had been a substantial reduction in training investment across the industry, following the implementation of major microeconomic reforms over the last decade. Many interviewees asserted that this was because there was increased emphasis on cost minimisation and fear of poaching, which resulted in a prevailing reluctance amongst rail employers to invest significantly in the training of workers. This coincided with the substantial rationalisation of many of the large scale training programs and resources sustained by government owned rail organisations, which followed the push towards enhanced privatisation within the rail industry. All these factors have made it increasingly difficult for the training needs of the rail industry to be adequately met. The predominant reluctance of rail operators in the recent past, to invest in the training and development of their workers, also led to there being a distinct decline in the number of apprentices and trainees that were recruited during this period within the

10

industry. This trend was affirmed by many of the study participants who asserted that rail employers over the last 10 years have increasingly looked to recruit workers with pre-existing rail qualifications and experience. Many share the view that this has exacerbated increased competition and poaching of qualified and experienced rail workers and contributed to the ageing of the industry workforce. Other trends identified in training practices within the rail industry include: Increased outsourcing of training services to external providers and an associated

emergence of niche markets for the provision of rail training by specialised training providers and labour hire organisations;

A streamlining of rail training to reduce completion times. Many operators felt that training processes had become more efficient due to the implementation of improved training techniques and better development of training personnel and trainers. Others however feared that the training had become too short and general and thus was not comprehensive enough, for example in relation to rail safety issues.

A shift towards more competency based training and greater alignment with the Australian Qualifications Framework as determined by external regulatory boards, which has also lead to a more standardised training framework for the industry and greater utilisation of Registered Training Organisations (RTOs).

Some measures, which rail operators believed would improve future training outcomes for the rail industry included: Having a more standardised, national skills recognition and accreditation system Establishing more indepth partnerships and alliances between rail organisations, the

government, industry groups and training providers to foster the development of more rail training programs and facilities

Developing a more mature external industry training network to enable rail workers to acquire base qualifications in core competencies such as in safe working and occupational health and safety training (e.g. associated with Certificate 1 or Certificate 2 in Rail Operations)

More equitable provision of Government funding and assistance for training schemes such as apprenticeships and traineeships

More flexible arrangements with regard to how training is delivered to rail workers to minimise interruption to working hours and business operations thereby improving cost efficiency for rail employers (e.g. by using more computer based training, internet based and self paced training modules)

Measures to Address Workforce Issues Most operators exhibited tangible concern in relation to the issues of skills shortages, ageing and high turnover rates amongst their rail workers. As a result, many were developing and looking to implement several medium to long term strategies to address these workforce issues including: Providing older workers with financial incentives and flexible working conditions in

an attempt to get more of them to delay retiring

11

Developing and instigating more mentoring programs and initiatives to promote the transfer of knowledge from more experienced workers to their younger contemporaries

Increasing their intake of apprentices and trainees Developing more graduate recruitment and cadetship programs Increasing their investment in training and capability development of existing

workers and new recruits Nonetheless, one still senses there is a largely “business as usual” attitude amongst rail employers, albeit within a more difficult recruiting environment, rather than a sense of urgency for longer term planning to increase entry rates of younger workers into the industry. There are therefore real concerns that the rail industry will face critical workforce challenges in the imminent future. There are thus several compounding factors, which if left unchecked could potentially have an adverse multiplier effect on attraction and retention in the rail industry in the future. These factors include the older age profile of the rail workforce, relative inability to attract and retain younger workers and the industry wide under-investment in training and capability development. Unless effective measures are implemented to address these issues, the Australian rail industry will struggle to meet its future skills needs and will continue to lose its market share to other modes of transport.

12

Section 1: Introduction

1.1 Background to the report Adequate transport infrastructure and an efficient transport industry are critical if any economy is going to achieve production at or near its capacity. The timeliness and cost efficiency with which raw materials and intermediate goods are brought to the production process and of the delivery of final goods has a significant bearing on competitiveness in terms of both cost-structure and service quality. Equally, passenger transport is a major determinant of the livability and functionality of cities and of the commercial connectedness between cities and regional areas. The transport sector takes on an even greater significance for a country such as Australia. Australia’s large resource base requires extensive bulk haulage over long distances. Second, Australia has a vast land mass, but is also one of the most highly urbanised countries in the world, with around 64% of the population living in the capital cities (ABS 2006: p.2). The rail industry has played a pivotal role in Australia’s economic and social development and will continue to do so for the foreseeable future. Rail is a major provider of passenger transport, both in the form of inner city rail networks and regional/interstate networks, and of freight transport. Rail accounts for around one-fifth of the value of output from transport, and a higher share as an intermediate input into other industries. Expectations are for the importance of rail to continue. In the ten years to 2001, the rail freight task increased by an average of 4.4% per annum (BTRE 2006: p. 45) and passenger kilometres by 1.5% per annum (Apelbaum Consulting Group 2005). However, the rail industry is currently facing significant constraints in the form of the availability of appropriately skilled and trained labour to meet its growth potential and this situation is set to worsen dramatically in the next two decades. As policy-makers have begun to grapple in earnest with the potential implications of the ageing of the Australian population for labour supply and productivity, the extraordinary run of strong economic growth since the early 1990s has wound Australia’s unemployment rate down from just over 10% throughout 1992 and 1993 to be currently running at below 5%. As a consequence, concern about emerging shortages of skilled labour and the constraints this may be placing on further economic growth has become widespread, as evidenced in policy statements, current political debate and frequent media reporting on the ‘skills crisis’. The Australian rail industry is a prime example of an industry facing recruitment difficulties associated with a tight labour market. However, the synopsis of skills shortages in the rail industry is far more unique and complex than that of a generally tight labour market. On the one hand, the industry has undergone a lengthy period of restructuring that has seen total employment in rail transport fall by roughly half in the decade spanning from 1991 to 2001. From this perspective, the industry might be expected to be immune to some extent from the effects of rapidly growing aggregate labour demand. On the other hand, the long term reduction in the rail workforce has reduced the need to actively cultivate sources of new entrants and to minimise wastage among existing workers. This has exacerbated the ageing of the rail workforce.

13

Further, where employment and growth opportunities are popularly seen to be strongest in emerging technology based occupations and industries, such as the information technology and telecommunications sector, and in tertiary services, such as health, business administration and other technical services, the rail industry suffers from being viewed as an ‘old economy’ sector, reducing its attraction to school leavers and graduates from post-secondary education and training. To secure the future of the rail industry and its contribution to Australia’s ongoing economic development, both industry and policy makers need to respond to these challenges with a degree of expediency. As an initial part of that response the Cooperative Research Centre for Railway Engineering and Technologies (Rail CRC), with support from many of the nation’s major rail operators, commissioned the Centre for Labour Market Research (CLMR) in conjunction with the Planning and Transport Research Centre (PATREC) to undertake this study. This report sets out in detail the extent and nature of the skills shortage facing the rail industry and the likely time horizon over which it will develop, and provides recommendations for the alternative courses of action available to industry and government. The research undertaken for this report utilised a combination of secondary data and primary data collected through surveys and personal interviews. The authors would like to express their deep gratitude to the organisations and their representatives who kindly agreed to participate in the study. The information and insight provided has been invaluable in constructing a picture of the national rail workforce and in determining parameters used in the projections and modelling exercises described in the report. The research team would also like to acknowledge and thank the principal sponsors of the study, the Rail CRC, for providing the financial funding which enabled the study to be conducted.

1.2 The Objectives of the Study The objectives of the study are:

To develop a profile of the industry, including current employee numbers, by competency group, current age, probable retirement age/intentions, trends in non-retirement exits and geographic location (by State).

To develop estimates of future demand for the railway workforce, by competency groups, by State and through time. The research will examine the relationships between task and the workforce requirements by competency groups.

To estimate trend scenarios in future total demand, retirements and non-retirement exits for major competency groups in the next 10-15 years, to provide estimates of net demand by competency groups and related training needs.

To estimate the future required ‘pipeline’ including training and recruitment needs by time and location.

To estimate future requirements for training system capacity, by competency groups, time and State and to contrast projected industry training requirements with current capacity and forward plans of relevant training agencies.

14

1.3 Overview of the methodology To construct a profile of the rail workforce and to generate forecasts of future labour demand and supply, the research integrates data from existing published sources, customised tables requested from the Australian Bureau of Statistics’ (ABS) Census of Population and Housing and primary data collected through surveys and interviews with rail operators. A model is developed which forecasts employment demand by occupation to 2020 based upon existing projections for the total freight and passenger task. The demand estimates are contrasted with estimates of supply under a ‘business as usual’ scenario which takes into account the current age-profile of the rail workforce and current training rates, and the implications for future training requirements assessed. To obtain a picture of the composition of the rail workforce and how it has changed, tables of employment by occupation and qualification were requested from the 1991, 1996 and 2001 Census, with the data further broken down by State, age and gender. These were requested for all industries in total and separately for the Australian Rail Transport Industry.1 Unfortunately this data is a little dated, but the five-yearly Census provides the only accurate source of population estimates at such a highly disaggregated level, and customised data from the 2006 Census was not available at the time. The current profile of the rail workforce had to be generated through primary data collection. A list of the major Australian rail operators that provided freight and/or passenger transport services was made. As the Australian industry is highly concentrated, 27 major operators were identified and these are estimated to account for around 90% of output and employment in the industry. The purpose of the primary research was three-fold:

To collect factual data on the composition of the workforce by gender, age and skill level

To collect information to feed into the setting of parameters in the modelling (such as scale economies and rates of technological change)

To understand the industry’s perceptions of skills needs and the factors impacting upon the balance between labour availability and labour requirements.

To understand how operators monitor and respond to perceived skills shortages and how they are planning to meet future requirements

This data was collated through an initial mail-out questionnaire, followed up by in-depth face-to-face interviews conducted between and December 2006 and March 2007. Questionnaires were received from 22 of the operators targeted and 24 participated in the in-depth interviews. In the majority of cases the person interviewed was the Human Resource Manager or (the director/manager of Operations). Where possible, the data on each operator was supplemented with Annual Reports and other such published sources. Projections of future workforce demands out to 2020 were developed based on existing forecasts of the passenger and freight loads. Full details of the modelling and assumptions are set out in Section 4. Due to the rationalisation of the industry, it is difficult to use past trends for key parameters, such as the growth in labour productivity

1 Australian Standard Industry Classification 5200

15

and changes in the occupational/qualification composition of the workforce. The model therefore draws heavily on information provided in the interviews and indeed the questions were designed specifically to extract this information. These projections are contrasted with likely trends in labour supply to the industry. The results of the modelling are combined with information provided by operators to draw out implications for training and recruitment in the rail transport industry into the future.

16

Section 2: Overview of the Australian rail industry

2.1 Background

The rail industry has a long standing and distinguished record of contributing to economic and social development within Australia (Hensher et al. 1994). The inception of railways in Australia occurred in the 1850’s, prior to Federation (Affleck Consulting 2003). Primarily the rail network of each colony was centred on the capital city or other major ports and extended out into rural regions (Productivity Commission 2000a). As stipulated under the 1901 Australian Constitution, the primary legislative power over railways was granted to, and remains with, the States and the early development of railway infrastructure was undertaken by state and colonial governments (Everett 2006). The Commonwealth has however played a leading role in the development of the rail network, by establishing and augmenting key links in the national rail system (Affleck Consulting 2003).

Trains transformed transportation in Australia and enabled the linking of cities and ports to rural areas which allowed for export growth and facilitated greater movement of people into different regions of the country (Productivity Commission 2000a). Nearly all the “public” railways (available for hire and reward) were owned by government or were initially owned by private companies in their early years but were then taken over by government. Some privately owned railways (not available for hire and reward) were authorised to be constructed and operate for specific purposes (often ancillary services) under special legislation, such as the Pilbara iron ore railway which is currently owned by the Rio Tinto Group (Affleck Consulting 2003).

In modern times the railways continue to be an essential component of Australia’s transport system, playing major roles in transporting general freight, bulk commodities and passengers within states and across state boundaries. Rail operators have the majority of the market share for the transport of interstate linehaul freight across the east to west coast transport routes of Australia (Graham 2001). In total, the Australian rail industry, encompassing rail transport, rolling stock maintenance and manufacture, consultants and signals and communications and other services, contributes 1.6% of the national gross domestic product (GDP) with an annual output of goods and services estimated to be $8 billion. The rail transport industry (which comprises of rail operators involved in freight and/or passenger transport) is estimated to contribute 0.54% to the national GDP, representing 12.9% of output from the Australian transport industry. It is responsible for approximately 50% of the total freight tonne-kilometres moved by land transport and approximately 650 million passenger journeys annually, with the estimated passenger task being more than 11.3 billion passenger-kilometres (Productivity Commission 2006, Rail CRC 2006, Apelbaum Consulting Group 2005). As an input into other industries, the rail industry therefore has an important influence on efficiency and competitiveness, especially in those industries with an export focus such as mining and agriculture. For example, rail freight charges constitute 15-30% of

17

the free on board cost of coal exports in New South Wales (Productivity Commission 2000a). In total, rail contributes an estimated of $0.5 billion per year to the value of exports (Transport and Logistics Industry Skills Council [TDT] 2005). The industry is also a prominent contributor to rural and regional economies, generating substantial economic benefits through the output of goods and services worth $7 billion per annum (Rail, Tram & Bus Union [RTBU] 2004).

2.2 Economics of the Rail Industry It is clear that an efficient rail transport sector will deliver substantial and diverse benefits to the economy. However, unique aspects of the production and consumption of rail services mean that the market is far removed from that of the standard economic textbook. Some important characteristics of the rail industry are: High infrastructure (sunk) costs, meaning that variable costs are very low relative to

average costs. That is, once the infrastructure is in place and maintained, the marginal cost of carrying additional freight or additional passengers is very small.

As a result of its high fixed cost structure and relatively low variable costs, the economics of rail transportation are heavily dependent on economics of scale (Rail Productivity Information Paper, 2007)

These ‘natural monopoly’ conditions tend to result in one viable operator providing services within a given area or network, rather than a competitive marketplace

There are positive externalities associated with consumption of rail services. For rail passenger transport, for example, these are in the form of reduced pollution and congestion for road transport users. Further, one passenger’s use of rail services generally does not limit the use of the service by other passengers – in fact greater demand leads to enhanced services by allowing more frequent schedules.

The development of an efficient rail sector, therefore, cannot be left to private markets. Rather, governments must play a leading role in their structure and regulation while at the same time trying to harness benefits available from competition. How infrastructure is to be funded, the separation of activities (such as ‘above track’ and ‘below track’, regulation of access to infrastructure and the pricing of services are all highly contentious issues. This also has implications for the labour market. Once externalities are involved and prices are influenced by regulatory decisions, the textbook link between the marginal product of labour and wages also becomes tenuous. While this report is mainly concerned with labour market issues facing the rail industry, it is useful to first provide an overview of the evolving structure of the Australian rail industry. Indeed, such structural reforms over the past two decades have had lasting implications for the current rail workforce.

2.2.1 Rail Industry Reforms

Many rail sectors could be viewed as natural monopolies as the level and nature of the demand that exists for these often means that, in most cases, a single operator can provide the required level of service at a lower cost than multiple operators would be able to achieve. As capital costs are so large, most rail operators often face the prospect of extremely low marginal costs and high fixed costs (Productivity Commission 2006, Bradshaw 1997). The implication of this is that average costs continue to fall as an

18

incumbent provider expands in scale, making entry into the market of a second provider unviable. Consequently, the vast bulk of passenger and freight rail in each Australian state came to be operated through government owned monopolies.

In recent decades, however, Australia’s railway sectors have undergone significant changes. Initiatives by the Commonwealth and State/Territory Governments to promote more competition and efficiency within the rail industry have resulted in an increase in private rail activity and a decline in government ownership and management of railways (TDT 2005, Hensher et al., 1994). These deregulation policies were part of a wider microeconomic policy framework and were designed to open the rail industry to more private sector competitive forces and remove the existence of state based government monopolies (Everett 2006).

The reforms involved significant deregulation of the industry following the publication of the 1991 Industry Commission inquiry into rail transport, the 1993 Hilmer Report as well as the National Competition Policy (Everett 2006, Productivity Commission 2000a). Many of the policies that were implemented were based on a fairly broad microeconomic reform framework and involved enforcing a more commercial focus on rail operators to improve cost recovery. The structure of railways in most Australian jurisdictions consequently changed with many of the previously integrated State rail authorities being vertically and horizontally separated. Prior to the implementation of the reforms, most railways were controlled by State specific rail organisations which managed both below and above track operations within their jurisdiction (vertically integrated) and provided a combination of urban passenger, non urban passenger and freight services (horizontally integrated). Effectively, a single government agency controlled activities such as track provision, signalling, maintenance, train operations and timetabling. The implementation of rail reforms in the 1990’s however resulted in several rail networks in Australia being structurally separated (Productivity Commission 2000a).

Deregulation paved the way for the establishment of “open access” regimes which allowed competition within the rail industry by enabling competitors to have access to below track infrastructure (Productivity Commission 2000c, Everett 2006). This provision was designed to allow competition and removed the ability of state government authorities to earn monopoly rents. Following deregulation and introduction of “open access” regimes, the number of rail operators within the Australian rail industry increased from 12 in 1991 to 27 in 1999. There are presently over 30 major private rail operators in Australia compared to the 8 that existed 10 years ago (RTBU 2004). Deregulation also enabled rail enterprises to extend their operations more freely interstate and rail operators have increasingly moved towards the provision of integrated intermodal services (ie. integration of rail with road, air and water transport services). As a result many operators have evolved from being simple linehaul operators in bulk freight or container markets, to focusing their operations on the provision of third party services in a range of integrated functions (Everett 2006).

Many commentators have also purported that the reforms have facilitated structural separation within the Australian rail sector which has enabled increased product differentiation and market segmentation within the interstate rail markets. Evidence indicates that such segmentation enhances the ability of rail operators to more effectively compete with the sea and air modes of transport. Vertical separation of the interstate rail network has enabled greater integration of niche players into the transport logistics chain and has enhanced competition between rail operators for train schedules.

19

Vertical separation has also enabled some expansion in the geographic markets of above rail operators and allowed for improved coordination of freight flows across infrastructure networks (Productivity Commission 2000a, 2006).

Outcomes identified from the rail reforms introduced in the 1990’s have included reduced freight rates, improvements in service quality and increased productivity (Productivity Commission 2000a, 2000c). In turn, this has been credited with enabling productivity improvements estimated to be worth more than $2 billion (RTBU 2004). The development and implementation of new technologies has also strongly contributed to productivity growth within the Australian rail industry and it is likely that this trend will continue and accelerate in the future (Rail CRC 2006). The improvements in the levels of productivity and competition experienced within the Australian rail industry have contributed to an 18% decrease in freight rates over the period spanning from 1990 to 1997 and a 30% reduction in real national freight rates from 1989 to 1998 (Everett 2006, Productivity Commission 2000b).

Another consequence of the reform process and resulting labour productivity growth has been a large scale reduction in employment in the rail industry. Employment fell by around one half between 1991 and 2001. The Productivity Commission estimated that the number of full time employees in the rail industry decreased from 88500 in 1986 to 36500 in 1998 (2000c). Analysis of ABS Census data (see section 3) also shows a halving of employment in the rail transport industry between 1991 and 2001. Other factors believed to be responsible for the decline in demand for rail labour include increased competition from alternative transport modes; increased contracting/outsourcing of rail operations and the redefining of labour arrangements with greater emphasis on multitasking or multiskilling. As an example of the latter, many train drivers are now responsible for a wider range of duties including inspecting locomotives, planning shunting work and completing minor repairs (TDT 2005, Productivity Commission 2000a). The fall in rail employment in Australia may also be partly due to the large increases in real average labour costs which were recorded by many rail operators following the introduction of Enterprise Bargaining Agreements in 1992-93 and 1996-97. One study reported that over the period spanning from 1990 to 1998 real average labour costs, as a proxy for remuneration, increased by 27% within the Australian rail industry (Productivity Commission 2000b). Research reveals that the losses in employment among rail workers was less pronounced in Australian capital cities than in less densely populated regions such as rural and outer-city areas. A “Progress in Rail Reform” Report released in 2000 revealed that approximately two thirds of the 60% reduction in railway employment that occurred since 1986, was concentrated in regional areas, with devastating economic implications for some rural communities (Productivity Commission 2000a). The greatest reductions were recorded for occupational groups relating to clerical and service staff, labourers, tradepersons and managerial staff, all of which experienced a decrease of more than 50% in the number of their workers.

2.2.2 Ongoing reform issues

Despite the extensive reform process that has already taken place, there are a number of important outstanding issues relating to the Australian rail industry. As governments seek to address these issues, further reform of the industry is to be anticipated, with ongoing implications for rail employment. A brief overview of some of the more

20

important of these issues — investment in infrastructure, access regulation and market structure — is provided below.

Rail Infrastructure One major issue facing rail operators in Australia is the state of rail infrastructure. An insufficient level of infrastructure investment has commonly been blamed for the deterioration of rail infrastructure nationally and for many of the current service difficulties (Banks 2002). Many rail operators assert that the levels of infrastructure investment are inadequate to enable the output and employment potential of the rail industry to be maximised and that this has adversely impacted on service quality and contributed to higher operating costs. The major infrastructure concerns voiced by most rail operators seems to be associated with the capacity and condition of the interstate track. Poor quality track negatively affects productivity by contributing, for example, to there being lighter axle loads, slower train speeds, longer transit times and higher fuel and crew costs (Productivity Commission 2000a). Rail performance is also hindered by diminished track capacity. For example, short passing loops limit train length and an inadequate number of passing loops constrains traffic along a specific railway line (Productivity Commission 2000a). Additional pressures may also be placed on Australian rail operators due to the fact that the rail infrastructure which is utilised may be shared (Bradshaw 1997). Within some urban rail networks it has also been shown that congestion of track infrastructure used by multiple operators may be a problem especially during peak periods. For example rail operators in the Sydney metropolitan area face significant congestion problems, which has implications for rail operators throughout the interstate network. There is thus a need for the deficiencies in rail network in these areas to be alleviated with adequate infrastructure investment and consolidation (Productivity Commission 2000a). Apart from private railways such as those used for the transport of iron ore and coal by mining companies, the majority of investment for rail infrastructure has derived from government borrowing and grants (Productivity Commission 2000a). It has been widely acknowledged that the pricing of many rail services is inadequate to recover full economic cost and ensure the continuation of current services. This has eventuated due to the exclusion of substantial rail infrastructure assets from the regulated asset base and because the prices charged by rail operators have been less than the full economic costs as determined by various regulators. This has lead to a continued heavy reliance on public funding to maintain rail infrastructure nationally (Banks 2002). Unlike funding for road infrastructure, Australia’s rail infrastructure now functions under a more commercial structure. In this system regulators set maximum access charges (which effectively act as ceilings) based on the whole of life cycle costing of capital assets, although actual access charges continue to be much less (Banks 2002). In recent times, the Federal Government has also reduced its infrastructure outlays relative to GDP and revenue. This trend of fiscal consolidation as well as the tendency of governments to prioritise recurrent spending above capital expenditure when faced with budgetary limitations has lead to there being constrained levels of investment spending on rail infrastructure (Productivity Commission 2000a). Take for instance the fact that in the 2006-07 Federal Budget, only 10% of the total land transport funding allocation was assigned for rail (RTBU 2007). In addition, during the period between 1974 and 1990 the Federal government is believed to have distributed an estimated $2.2 billion

21

for rail capital works compared to approximately $58 billion for roads (RTBU 2007). In a practical sense, often investment of public funds into rail infrastructure only occurs when the deterioration of the infrastructure threatens service viability. The reduced levels of funding from the government sectors is therefore believed by many to be a leading in the deterioration of rail infrastructure and service levels (Banks 2002). Thus in the case of rail transport, budgetary pressures can delay or impede projects despite the fact that the projects are expected to generate high social and economic returns (Productivity Commission 2000a). The deficiencies in rail infrastructure are thus likely to undermine the ability of rail operators to contribute to modal substitution and effectively compete with road transport operators. Take, for instance, the fact that demand for bulk freight transport services is now based on more geographically dispersed origins and destinations. In light of such changing market conditions, it is unlikely that rail currently has adequate infrastructure in place to effectively compete for the provision of such transport services (Productivity Commission 2006).

Monopolistic Structure of Rail Markets The provision of rail infrastructure services and rail track service more specifically, are generally considered as natural monopolies, although these providers face significant competition in the freight market especially from road operators. Vertical separation has promoted new entrants into market segments of the interstate track, though its effect in opening up these markets has been limited in some respects. In niche railway markets characterised by economies of network density, it is still likely that there will only be one service provider. Rail infrastructure providers incur many “common costs” that are not specifically linked to any above rail operator or services provider. These “common costs” include sunk costs that are incurred regardless of the extent of use and non sector specific overhead and operating costs (e.g. administration expenses, buildings) (Productivity Commission 2006). In addition, rail infrastructure provision is subject to economies of density such that the average costs of providing access to the use of rail infrastructure decreases with increased use of the infrastructure. Thus even in cases where there may only be a single provider, the minimum capacity that can be supplied may be large compared to the level of demand that exists for the use of rail infrastructure (Productivity Commission 2006). The potential therefore exists for an incumbent owner-operator to limit access to rail infrastructure it controls by unfairly leveraging its infrastructure ownership as a barrier to entry. Thus competition in these rail markets could effectively be stifled by the setting of overly high access charges for competitors as well as by the implementation of restrictive access conditions (Productivity Commission 2000a). The OECD has pointed out that in markets where rail transport experiences intermodal competition it is likely that there will be limited opportunities for the entrance and profitable existence of new rail competitors. This is supported by the fact that the majority of new entrants into the rail freight market in Australia have been either established operators with the capacity to access interstate markets or niche railway operators (Productivity Commission 2000a). Many rail industry stakeholders therefore maintain that the system of competitive access has failed to prevent third party operators

22

from facing barriers to entry (Affleck Consulting 2003). In addition, the fact that the above rail sector is subadditive means that there is little scope for much competition.

Competition Railways have continued to experience competitive pressures basically since the 1920’s and this has been a consistent trend globally with railways now servicing a smaller share of the transport market than was previously the case (Productivity Commission 2006). The Australian railways face competition from other transport modes such as road, aviation/air and shipping service providers (Productivity Commission 2000a). Improvements and developments in sea, air and road transport have severely impacted on the level of demand for rail transport in Australia. One result has been that now there are limited markets in which rail charges, rates or fares can be increased without there being a higher proportionate revenue loss for operators (Bradshaw 1997). Although urban rail passenger networks exist in the vast majority of all mainland state capital cities (excluding Darwin), rail transport is only responsible for a small percentage of total non-urban passenger movements. In particular deregulation of the interstate road coach and airline industries induced price cutting which lead to the majority of non urban rail operators investing heavily to improve service quality to minimise revenue losses. Competition from other transport modes such as airlines and coaches has therefore played a more significant role in determining non-urban passenger rates than urban passenger rates. The potential for further competition between rail operators in Australia is however limited by the relatively small size of many of the urban passenger markets within the country (Productivity Commission 2000a). Increased competition from road transporters is thus another emerging challenge facing the Australian rail industry. The railways have increasingly specialised in the transportation of bulk commodities such as agricultural products (e.g. wheat), iron ore, coal and other minerals. These freight operations are often large in scale and in some cases feature the transport of long haul freight. Rail operators face significant competition from road transport in markets relating to the transport of non-bulk freight, and rail’s dominance in this market has consequently been diminished with rail continuing to lose market share to road in the non-bulk freight transport sector (Productivity Commission 2000a). However in more recent times, rail seems to have recovered some of its previous market share, particularly on the East-West link. Therefore rail operators face continued pressure to attain improvements in efficiency comparable to those achieved by road operators and other competitors. As an input to the production process, the demand for rail freight transport is a “derived demand” —a function of the demand for other goods. There is thus additional onus on railways to consistently increase their levels of efficiency and productivity due to the benefits which are passed on to the industries they serve, which in turn will generate further positive flow on effects for the rail industry by increasing demand for their services. Reductions in freight rates will lead to increases in output from the industries serviced by rail operators, and in turn generate greater demand from these industries for rail transport services (Productivity Commission 2000a). This is particularly relevant for industries in the mining sector, such as coal, for which freight transport costs represent a large proportion of total costs (almost 20% of intermediate input costs by some estimates). In

23

such export driven, mining related industries, increased demand for these exports resulting from price reductions will translate into elevated demand for rail freight services (Productivity Commission 2006). There are also various forms of competition within the Australian rail industry including competition between operators for franchises or contracts, and “rail on rail” competition which occurs when rail operators vie for the same passenger or freight markets. In addition, there is competition for network train schedules when train operators compete to acquire desired schedules. This competition has been found to exist between non-urban passenger, urban passenger and freight train operators across Australia. Following deregulation, increased competition within the Australian rail industry has been created by former public sector rail operations that have been either privatised or corporatised and non traditional rail operators such as trucking and freight forwarders who have diversified their operations into the provision of rail services (Productivity Commission 2000a). There is also continuous pressure on smaller firms to consistently adopt systems used by larger companies, in order to remain efficient and competitive (Department of Education, Science and Training 2006).

2.3 Current structure of the Rail Industry

The Australian rail industry is now very diverse in nature. The industry consists of suppliers, track access corporations, rail operators, (including those specialising in heritage, tourist, freight, passenger transport) and a diversity of other companies covering all sectors of the industry (TDT 2005). Although there are roughly 250 firms in total within the Australian rail industry, approximately 10 large rail enterprises dominate the majority of the operating and infrastructure sectors. These are (Rail CRC 2006):

- Queensland Rail (QR) - Pacific National - Australian Rail Track Corporation (ARTC) - Veolia Transport- Connex - Rail Corp - South Spur Rail Services - Freight Link - Public Transport Authority of Western Australia (PTA) - Transadelaide - V/Line - Transfield - Australian Railroad Group (ARG) - WestNet

Most of the companies in the Australian rail industry are generally profitable private enterprises that operate in monopolistic domestic markets (RTBU 2004).

Each sector of the rail industry has unique and different corporate and community objectives (TDT 2005). Urban and passenger rail service providers offer a range of

24

community transport services that are largely financed by taxes and fares. In contrast freight and track access providers are predominantly commercial organisations focussed on making profitable rates of return and being corporately accountable for their capital investments and capital stock.

The organisations that are principally focused on in this study include those that are associated with one or more of the following sectors within the Australian rail industry;

Providers of Rail Infrastructure Access These organisations either lease or own the track they control and thus administer track access to other parties. The category also includes organisations that are involved in the provision of signaling and communications. In some Australian states rail access providers own and control major rail yards and sidings used for the assembling, maintenance and repair of trains. In addition, many of these organisations may also be responsible for controlling train movements to ensure that trains that may be sharing the same track are separated, thereby effectively securing “train control”. Such organisations may solely specialise in the provision of rail infrastructure access which would mean that they are ‘vertically separated’. Alternatively, these organisations may be ‘vertically integrated’ meaning that they have ownership of train operating services in conjunction with being rail infrastructure access providers (Affleck Consulting 2003).

Rail Train Operators These organisations can be broadly classified as being involved in “Private Railways” or “Public Railways” within the Australian rail industry. The Private Railway group includes a small number of train operators whose rail services are not available for hire and reward (Affleck Consulting 2003). These rail operators often have operations integrated with the extraction, refining and transportation of natural resources and minerals. Public railway operators offer rail services for hire and reward. These rail operators may thus be owned by both private and public sector entities. Train operators may also be categorised according to whether they are involved in the transportation of freight or passengers or a combination of both. Rail operators are referred to as being “horizontally integrated” enterprises if they are involved in the operation of both passenger and freight rail services (Affleck Consulting 2003). Passenger train operators specialise in the provision of commuter, regional and/or tourist train services for the transportation of passengers within metropolitan areas, between capital cities and regional areas and also across states and territories. Commonly inter-urban service and urban commuter operators also manage and control ticketing, passenger stations and reservation systems (Affleck Consulting 2003). The majority of rail freight operators in Australia are engaged in the commercial transportation of cargo, most commonly primary agricultural products and mineral resources. Often rail freight operators own and manage major rail yards and sidings. These serve numerous functional purposes including allowing for the provisioning and fuelling of trains. The rail yards and sidings also provide a base for the storage, assembly and en route management of trains (Affleck Consulting 2003). In addition,

25

many freight operators also own and control intermodal freight terminals. There is a prevailing trend for freight operators to be increasingly integrated into multimodal and logistics entities (Rail CRC 2006).

Maintenance and Other Related Service Providers These organsiations are involved in the manufacture, maintenance and repair of rolling stock including the overhaul of wagons, passenger carriages and locomotives. Rail enterprises classified within this category may also be involved in the lease and hire of locomotives and wagons. It also includes organisations involved in the provision of services related to the development, maintenance and inspection of rail track as well as of communications and signaling systems. A small subsection of enterprises classified in this group are also responsible for providing services related to the recruitment and training of skilled rail personnel (Affleck Consulting 2003).

26

Section 3: The rail workforce This section provides a detailed analysis of the current profile of the rail transport industry workforce and of recent trends in employment. It draws on data from three consecutive ABS Population and Housing Censuses (1991, 1996 and 2001) and on primary data collected in the surveys and in-depth interviews conducted for this research. Data on rail employment is available from a number of existing published reports. Estimates of employment vary according to the methodology that is used and depending on how the ‘rail industry’ is defined.

Recent estimates of employment within the Australian rail transport industry put the number at around 40,000, representing just under 10% of total employment in the transport sector (Productivity Commission 2006a, TDT 2005). In 2005 the ARA reported that roughly 44 100 workers were employed in the rail industry (ARA 2005a). According to the ARA 15 777 (35.8%) of these employees worked in the freight sector, with the vast majority of rail workers (25 784 or 59%) being employed in the passenger transport sector (ARA 2005a). The remaining 2539 rail workers (5.2%) were identified as labour that was supplied from other sources such as labour hire firms (ARA 2005a). Approximately half of all Australian rail employees are believed to be employed in the private sector (Rail, Tram & Bus Union 2004). Australian railways also employ roughly 25 000 people in an indirect manner, through businesses which supply services to the rail industry (Rail CRC 2006).

For the purposes of future workforce planning and assessing training needs, the only existing source of data on rail industry employment that has the required level of detail is the full population Census. This data allows analysis of trends in employment by occupation, gender, age and level of qualification. However, at the time of writing this report, data from the 2001 Census was the most recently available, and it is likely that further significant changes have taken place over the past five years. Section 3.2, based on the data from the questionnaires and interviews, provides a more recent snapshot of the rail workforce. It must be noted, however, that, the sample consists only of major rail operators, and hence the coverage is quite different to that of the Census. Section 3.3 then contains a summary of recruitment and training arrangements, drawing largely on information from interviews with the major rail operators.

3.1 Analysis of ABS Census data

This section provides a detailed analysis of trends in the rail transport industry workforce using data from the 1991, 1996 and 2001 ABS Census of Population and Housing. The 1996 and 2001 Censuses classified employment according to the 1993 version of the Australian and New Zealand Standard Industrial Classification (ANZSIC), while the 1991 Census used the Australian Standard Industrial Classification (ASIC). Both classification systems included a category of ‘Rail Transport’ and this category is used to represent employment in the rail industry. This will exclude workers engaged in rail activities but for whom their employer’s main activity relates to another industry, as may be the case with some haulage activities within mining companies.

27

The analysis highlights some salient features of employment in the rail industry. These are: There has been a dramatic decline in employment in both absolute terms and as a

share of total employment in Australia. Employment fell by around one half between 1991 and 2001. This is consistent with previous estimates that the number of full time employees in the rail industry decreased from 88500 in 1986 to 36500 in 1998 (Productivity Commission, 2000c).

The rail workforce is significantly older than the wider Australian workforce and continues to age at an alarming rate.

The rail workforce is relatively less skilled than the wider Australian workforce, with a concentration of workers with elementary-intermediate level qualifications and with no recognised qualification, and a lower proportion of workers with diploma or tertiary qualifications.

Employment in the sector is very highly male dominated. The fact that most rail workers are older males with less than half having acquired secondary school qualification was forwarded as one of the explanations as to why the ABS Labour Force Survey findings indicated that rail employees were less “mobile” and less able to adjust to structural change than workers in other industries (Productivity Commission 2000a). Similar results were uncovered by the Bureau of Transport and Communications Economics (BTCE) in 1990 when it undertook a survey of redundant and redeployed rail workers and found that 44% remained unemployed after redundancy. It was also found that more than 56% of these unemployed rail workers were lowly skilled employees (Productivity Commission 2000a).

3.1.1 Aggregate employment According to the 2001 ABS Census data there were 28,875 workers employed in the Australian Rail Transport Industry. This represents a decrease from the equivalent 1996 Census figure of 33,295 and a considerable reduction from the 54,677 figure that was derived from the 1991 Census. In effect a significant downsizing in the Australian rail workforce of almost 50% occurred in the decade spanning from 1991 to 2001. With total employment in Australia growing by 17% between 1991 and 2001 the Rail Industry’s share of employment more than halved, declining from 0.77% of total employment in 1991 to just 0.35% in 2001. The bulk of the downsizing in the rail industry occurred between 1991 and 1996, with employment falling by an average of 9.4% per annum over that period. In the five years from 1996 to 2001, employment declined by 2.8% per annum. This downsizing of the rail workforce in all Australian States and Territories is likely to have been induced by the billion dollar annual deficits that were incurred across the national rail industry over the period. Furthermore, rail workforce downsizing and labour market reform were major outcomes that resulted from the implementation of deregulation policies across the Australian rail industry in recent decades (Everett 2006).

28

3.1.2 Employment by occupation and qualification The 2001 Census classifies employed persons using the Australian Standard Classification of Occupations (ASCO), which identifies nine major occupational groups as shown in Table 3.1. In terms of the major ASCO categories, the distinctive feature of the rail industry relative to all industries in total is the very high concentration of employment in the category ‘intermediate production and transport workers’, as would be expected. A second feature is the lower proportion of rail industry jobs that are within the professions. The industry thus has a relative concentration of employment within occupations with elementary to intermediate skill levels. Within the ‘intermediate production and transport workers’ major category, the largest occupation is that of drivers, representing around one-fifth of all rail industry jobs. ‘Intermediate plant operators’ also represent a significant share of employment within this major group. Among tradespersons, the most important occupations are the mechanical and fabrication engineering trades and the electrical/electronics trades. The ASCO categories are not consistent between 1991 and 1996, the inter-census period in which the rail industry experienced the greatest decline in employment. However, between 1996 and 2001, Table 3.1 shows that within the rail transport industry the share of employment in managerial, professional and associate professional occupations increased, while unskilled labouring positions and the trades suffered the greatest decline. In absolute terms, the largest falls in employment within the rail transport industry were among ‘other labourers and related workers’ (down by 1,630 workers), ‘road and rail transport drivers’ ( down by 745 workers), electrical and electronic tradespersons (down by 545 workers), ‘elementary service workers’ (down by 508 workers), ‘mechanical and fabrication tradespersons’ (down by 502 workers). Increases in employment occurred for ‘specialist managers’ (408 workers), ‘business and administration associate professionals’ (361 workers) and ‘business and information professionals’ (283). Table 3.1 Employment shares by occupation, rail and all industries, 2001

Rail Industry

1996 share

(1)

2001 share

(2)

Change in share (2)-(1) % pts

All Industries

2001 Share

1. Managers 2.9% 4.9% 2.0 9.4% 2. Professionals 4.9% 7.4% 2.5 18.6% 3. Associate Professionals 6.4% 8.7% 2.3 12.0% 4. Tradespersons 14.2% 11.0% -3.2 12.5% 5. Advanced Clerical & Serv. Wrkrs 1.5% 1.8% 0.3 3.8% 6. Interm. Clerical, Sales & Serv. Wrkrs 10.6% 11.4% 0.8 16.8% 7. Interm. Prod. & Transport Wrkrs 31.7% 31.5% -0.2 8.3% 8. Elem. Clerk, Sales & Serv. Wrkrs 12.9% 13.6% 0.7 9.7% 9. Labourers & Related Workers 15.0% 9.8% -5.3 8.8% Total 100.0% 100.0% 100.0%

29

Occupational trends within the rail industry thus suggest a degree of skill-biased structural change, most notably the falls in the number of unskilled, labouring and low- or semi-skilled service positions juxtaposed with increased employment of business administration and information professional and associate professional positions. Such skill-biased structural change is most commonly associated with changes in technology. The skill composition of the workforce can be more directly assessed through the Census data on workers’ highest level of qualification (see Table 3.2). It is clear from a comparison of the qualification profile of workers overall in 2001 (column 3) with the rail industry (column 2) that a higher proportion of rail industry workers have a certificate qualification when compared to the national average for all Australian industries, and are also more likely to possess no recognised qualification. Conversely, rail workers are less likely to have tertiary education qualifications, with the percentage of rail employees possessing a postgraduate degree, graduate diploma and/or certificate, bachelor degree and/or an advanced diploma or diploma, being recognisably lower than the Australian industry average. This broad profile of a concentration of skills in the ‘intermediate’ range, is also evident in data from the 1991 Census, and can be primarily attributed to the high proportion of employment within the occupations of transport drivers, intermediate transport operators and intermediate clerical workers. However, caution must be taken in investigating the trends between the Censuses as the classifications of qualifications changed from 1996 to 2001. Most importantly, in 2001 certificates were no longer distinguished as basic or skilled as they were in 1996. Despite these shortcomings, the general trend towards higher levels of qualification within the rail workforce is confirmed. Employed persons with ‘No recognised qualification’ is the only group to have declined, with their share of employment falling by seven percentage points. Rail workers with bachelor degrees displayed the largest increase in their share of employment, up by three percentage points between 1996 and 2001, although at 7.2% this is still half the proportion with bachelor degrees in the wider workforce. By and large, the increases in the proportion of qualified workers with qualifications, and the fall in those with no qualifications between 1996 and 2001, has been more pronounced than in the wider workforce. This suggests these recent changes are associated with reforms within the rail industry rather than just a more general trend of ‘credentialism’ within the labour force as a whole. It also reverses the trend between the 1991 and 1996 Censuses in which rail industry workers became, on average, less qualified than the workforce as a whole.

Table 3.2 Employment shares by level of qualification, rail & all industries, 2001

Rail Industry

1996 share

(1)

2001 share

(2)

Change in share (2)-(1) % pts

All Industries

2001 Share

(3) Postgraduate Degree 0.8% 1.6% 0.7 2.9% Grad Dip & Grad Certificate 0.4% 0.9% 0.4 2.2% Bachelor Degree 4.2% 7.2% 3.0 14.9% Advanced Diploma & Diploma 3.4% 4.7% 1.3 8.2% Certificate (skilled vocational) 20.4% Certificate (basic vocational) 4.1%

26.2% 1.6 21.6%

No recognised qualification 66.6% 59.5% -7.1 50.3% Total 100.0% 100.0% 0.0 100.0%

30

3.1.3 The age profile of the rail workforce

The ageing of the rail workforce is demonstrated in Figures 3.1 and 3.2. Figure 3.1 compares the age profiles for the rail industry in 1991 and 2001. The feature which immediately stands out is the lower proportion of employees in 2001 in the age groups from 15 to 34. Whereas persons under 35 made up 40% of the rail transport workforce in 1991, ten years later the under 35s comprised just 26% of rail transport workers. This suggests an alarming decline in employees coming in at the entry level. The average age of rail workers as indicated by the Census data in 1991 was 39 years, compared to 37 years for the employed Australian population. By 2001, the average age of rail workers had increased by two and a half years to 41.5 years, while the employed workforce as a whole aged by just one and a half years. This bears a striking resemblance to the findings released in a 2006 ARA report which estimated the average age of workers in the rail industry to be 41.3 (which was representative of the average age of workers in the transport and storage industry) compared to an average age of 38.6 for workers in all Australian industries (ARA 2006c). Figure 3.2 shows the under-representation of rail transport workers in the younger age groups relative to workers in all industries, and the significant over-representation of workers in the 35 to 54 age groups. In 2001, under 35s comprised 40% of the overall Australian workforce, compared to the 26% figure for the rail industry. Further evidence of the aging phenomenon within the Australian rail workforce is presented in ABS Census figures indicating that between 1991 and 2001 the greatest reduction in rail employees was among those aged 15-19 years, with the number of workers in this age group declining by over 70% during the period. The Census data also indicates that there was a greater than 60% reduction in the number of rail workers aged 20-34 years over the ten year span. In addition, the only increase in rail workers recorded over the decade was amongst those aged 60-64 years, with the numbers of employees in this age group growing by more than half between 1991 and 2001. Table 3.3 shows the average age of rail workers by major occupational group and contrasts these averages with those for the wider workforce. Male rail workers are older, on average compared to other workers in every occupation with the exception of managers. This age difference is particularly pronounced for male clerical, sales and service workers. Such workers at the elementary skilled occupations are 7.2 years older than workers in theses occupations in all industries, and 5.4 years older for intermediate level occupations. Male labourers are also on average nearly six years older. In the largest occupational category of the rail industry, intermediate production and transport workers males are on average 3.6 years older. It has also been noted elsewhere that rail safety workers are predominantly males with an average age well above the average for Australian workers (ARA 2005). Looking specifically at drivers, who make up over one-fifth of the rail transport workforce, the ageing problem is even more acute, with an average age of 43.6 years in 2001. Only 11% of drivers in the rail industry were less than 35 and more than one in ten was aged 55 or over and thus would reach retirement age by 2011. Females who work in the rail industry are in fact slightly younger, on average, than the wider female workforce and this holds for all individual occupations except elementary clerical, sales and service workers and labourers and related workers. As they make up only 12% of the rail workforce (see below), however, this has little impact on the overall age profile of rail employment.

31

Figure 3.1: Age profile of the rail workforce; 1991 and 2001

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65+

Ag

e G

rou

p

Proportion of workers

2001

1991

Figure 3.2: Age profile of the workforce; rail industry and all industries, 2001

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65+

Ag

e G

rou

p

Proportion of workers

All Industries

Rail Industry

32

Table 3.3: Average age by occupation and gender, rail industry and all industries, 2001

Males Females

Rail All

Industries Rail All

Industries Managers 44.7 44.7 38.9 43.3 Professionals 41.7 40.8 33.8 39.2 Associate Professionals 42.9 40.5 37.1 38.9 Tradespersons & Related Workers 40.0 36.9 (a) 36.0 Advanced Clerical & Service Workers 42.2 40.6 36.6 40.2 Interm. Clerical, Sales & Service Workers 43.1 37.7 36.4 36.8 Interm. Production & Transport Workers 43.1 39.5 36.1 39.2 Elem. Clerical, Sales & Service Workers 40.6 33.3 35.2 32.0 Labourers & Related Workers 41.8 36.1 43.6 40.0 Total all Occupations 42.3 39.1 36.3 37.8

(a) Cell count too small to make inferences.

3.1.4 Employment By Gender Employment within the Australian Transport and Logistics Industry has been traditionally very male dominated. In 1984, the Australian Railway Research and Development Organisation (ARRDO) reported that female employees represented only 6% of all workers in the Australian rail industry (ARRDO 1985). A recent report by the TDT estimated that female employment in rail operations was approximately 8-9%, and that female representation in the industry could be expected to change only marginally in the near future (TDT 2005). This assertion appears to have been affirmed by figures released in 2006 indicating that a significant gender imbalance still exists despite the fact that the number of female employees as a proportion of the national rail workforce had increased to 16% (RTBU 2007). The 2001 Census figures show that women accounted for 12% of the Australian rail workforce. This compares to 7.3% in 1991 and 7.8% in 1996. This improvement in female represent does not reflect an increase in employment of women. Female employment in the industry in fact fell by 13% between 1991 and 2001. Rather, it reflects the fact that restructuring has had the biggest impact on the male dominated trade and labouring occupations. It can be seen from Table 3.4 that over half (65%) of all female workers in the rail industry were employed within clerical, sales and service positions, be that elementary (27% of female rail workers), intermediate (also 27%) or advanced (9%). By contrast, 21% of male rail workers are employed in such clerical, sales and service positions. Occupational categories which are very highly male dominated include the trades, intermediate production and transport workers and labourers and related workers. Looking at more specific occupations, 97.2% of secretaries and personal assistants employed within the rail industry are females; 2.2% of intermediate plant operators and 1.3% of transport drivers. The high degree of occupational segregation by gender remained relatively unchanged between 1991 and 2001.

33

Table 3.4: Employment by occupation and gender, 2001, Australian rail industry

Number Employed Share of Employm’t Male Female

% Female Male Female

Managers 1239 159 11.4% 4.9% 4.6% Professionals 1727 379 18.0% 6.8% 10.9% Associate Professionals 2107 377 15.2% 8.3% 10.8% Trades & Related Workers 3107 12 0.4% 12.2% 0.3% Adv. Clerical & Service Wkrs 185 327 63.9% 0.7% 9.4% Interm. Clerical, Sales & Service Wkrs 2290 943 29.2% 9.0% 27.0% Interm. Production & Transport Wkrs 8830 139 1.5% 34.8% 4.0% Elem. Clerical, Sales & Service Wkrs 2914 956 24.7% 11.5% 27.4% Labourers & Related Workers 2610 167 6.0% 10.3% 4.8% Total all Occupations 25384 3491 12.1% 100.0% 100.0% Data collected from the ABS Labour Force Survey in 2005 indicated that the percentage of full-time train drivers who were female was only 1.5%, which compared poorly to the average of 24.4% full-time female workers reported for all occupations (Australian Job Search 2006). The data also indicated that there were no female train drivers employed on a part time basis which was well below the 20.7% figure representing the proportion of females working part-time in all occupations (Australian Job Search 2006). The dominance of males in the train driving profession may well have increased since 2001. According to Australian Job Search (2006), from 2000-2005 a 2% increase in the proportion of male workers was recorded and that over the same 5 year period the proportion of female train drivers fell by -0.1%.

3.1.5 Employment by State and Territory In 2001 New South Wales had the largest number of rail transport employees of the Australian states and territories, followed in descending order by Queensland, Victoria, Western Australia, South Australia and Tasmania. Few rail transport employees were recorded in either of the territories. This relative ordering among the states was unchanged from that revealed in the 1991 and 1996 Censuses. However, all states have experienced very substantial reductions in rail employment. Overall Victoria and Tasmania experienced the greatest percentage reduction in their workforce with each recording a decrease of around 70%. Significant falls in the number of rail transport employees were also recorded for South Australia (63%) and Western Australia (58%). The Victorian and Queensland rail industries appear to have led the restructuring process, with the decline in employment occurring mainly between 1991 and 1996. Employment in Queensland in fact recovered slightly between 1996 and 2001, and this State recorded the smallest decline in employment overall (30%). For the other states the rationalisation of employment continued through both inter-censal periods. New South Wales recorded a relatively modest fall in employment in proportional terms (40%), but due to that State being the largest employer of rail workers, it suffered the largest absolute decline in employment of around 8,000 workers between 1991 and 2001. Employment in Victoria fell by a similar number.

34

Table 3.5: States and territories: Employment trends and average workforce age

Number Employed

State/Territory 1991 1996 2001

% change 1991-2001

Average Age 2001

New South Wales 20137 15131 11994 -40.4 41.7

Victoria 11502 3507 3285 -71.4 42.8

Queensland 14746 9754 10336 -29.9 40.6

South Australia 3552 2203 1296 -63.5 41.0

Western Australia 4016 2308 1704 -57.6 44.2

Tasmania 570 336 174 -69.5 43.0

Northern Territory 112 44 50 -55.4 42.6

A.C.T 42 12 36 -14.3 43.7

Australia 54677 33295 28875 -47.2 41.5

As the final column of Table 3.5 reveals, the relatively older age profile of rail workers applies across all states and territories. Each jurisdiction reveals a higher average age than the average for all Australian workers, and higher than for all Australian male workers (see Table 3.3). Workforce ageing is particularly acute in Western Australia, where the average age of rail workers was 44.2 years in 2001. Employment in the rail freight sector in New South Wales shrunk from 16300 in 1989 to 7000 in 1996, representing a decrease of approximately 60%. Further reductions occurred in 2002 when FreightCorp cut its workforce to less than 2500. Another prominent rail operator who instigated substantial reductions in the number of its employees was Queensland Rail which decreased its workforce from 24000 in 1990 to below 14000 by 2002 (Everett, 2006).

3.2 Overview of workforce from survey results

This section presents an in-depth profile of the Australian rail transport industry workforce using data that was forwarded by rail operators participating in the study. The findings presented in the following section are thus based on information acquired from the participants through the mail out questionnaires and face to face interviews. Specifically data was sourced from rail operators in the questionnaires as to the number of workers by gender and age group in a list of occupational categories, which were broadly based on similar occupational classifications used to report data on the Australian rail workforce with the ABS Census information.

3.2.1 Employment by occupation The results revealed that the 22 rail operators who provided employment data through the questionnaires in the study, employed a total of 46 048 workers. The study data revealed that over one third of the workers of the rail operators surveyed were currently employed as train drivers and/or assistants or in clerical and customer service roles. This would appear to resonate with the findings from the analysis of the ABS Census data in Section 3.1.2, which indicated that there was a concentration of employment in elementary to intermediary skilled occupations. According to the figures derived from rail operators participating in the study, workers employed as tradespersons represented approximately 14% of employees. Over half of these workers were classified as

35

‘mechanical and fabrication tradespersons’ with the remainder falling into the category of being either ‘electrical’ or ‘other tradespersons’. This reflects similar trends evident in the 2001 Census data which also appeared to indicate that mechanical and fabrication tradespersons dominated the occupational group. In total, workers employed in professional vocations comprised almost 14% of all rail employees, based on the data provided by the rail operators participating in the study. More than 50% of these professional workers were engineers. Most of the other professional workers were classed as ‘business, finance or IT professionals’, with ‘other professionals’ only representing a very small proportion of all professionals. Almost all associate professional workers identified in the study were ‘engineering associate professionals’. This group represented 98% of all employees classified as associate professionals, with only a smaller number of ‘other associate professionals’ being reported by the study participants. In total, associate professionals comprised roughly 3% of all rail workers reported by operators in the study.

3.2.2 The age profile of the rail workforce

Analysis of age data derived from the study indicates that over 75% of workers employed by the study participants are 35 years or older and that almost half of the workers are aged 45 years or above. There is also an evident under-representation of rail transport employees in the 15-34 age group, with these workers representing only 23% of all employees. Another interesting finding is that there is a high concentration of workers aged 35-54 years, with over 60% of employees falling into this age group. These trends are consistent with the ABS Census figures relating to the Australian Rail Transport Industry (ARTI) workforce, as outlined in Section 3.1.3 and are clearly depicted in Figure 3.3.

Figure 3.3: Age Profile of Rail Workers from 2006 Study Results

Rail Workforce- 2006 Study Results

0% 5% 10% 15% 20% 25% 30% 35% 40%

15-24

25-34

35-44

45-54

55-64

65+

Ag

e G

rou

p

Proportion of Workers

Rail Industry

According to the data from the rail operators collated through the study, their ageing concerns relating workers is more acute for some occupational groups than others.

36

Interestingly the data appears to support the assertions made by many of the study participants in the face to face interviews about their ageing concerns relating to their engineering personnel, managerial staff, train drivers and assistants and other plant and machine operators. The data from the operators indicated that 55% of workers in almost all these occupational groups were aged over 45 years, with most having almost 40% of their workers in the 45-54 age group. These occupational groups also had a comparatively low proportion of workers aged 15-34 years with most having less than 15% of their workers belonging to this age group.

Consequently many of the operators interviewed stated that the ageing of their rail workforce was a major issue for them, with 22 of the 24 respondents identifying ageing as a concern in at least one occupational group (92%). A large proportion of the respondents identified train drivers as being an occupational group in which ageing was of particular concern with 46% (11 out of the total of 24 operators interviewed) making this assertion. This appears to be a logical concern given that an average age of nearly 45 was calculated for train drivers from the workforce data that was supplied by the study participants (see Table 3.6). Engineers was another group of professionals that many interviewees were apprehensive about with regard to ageing, with one third of respondents stating they had ageing concerns associated with this occupational group. Roughly 29% of rail operators acknowledged ageing amongst their trades staff including electrical and mechanical tradespeople as a primary concern for their organisations. One quarter of the respondents also identified ageing concerns amongst their managerial staff and over one fifth (21%) had similar concerns with their labourers and related workers. Both of these were occupational groups which were found to have relatively high average age amongst their workers (as indicated in the Table 3.6) with the average age for managers being above 45 and the average age for labourers and related workers being roughly 44. Rail operators also had ageing concerns relating to their operational staff with approximately 17% reporting that this was the case. According to the study data, other plant and machine operators were also found to have a comparatively high average age of above 44 years. Retirement rates of around 20% over the next five years were nominated for train drivers and for controllers and signallers by several operators. High average ages were also evident amongst the engineering and other associate professionals who were employed by the rail operators surveyed, with their average age being around 45. The occupations which rail operators felt most uncomfortable about with regard to the ageing of their workers also appear to be ones that they identify skill shortages in.

37

Table 3.6: Average age by occupation, rail industry, 2006

Occupational Group Name Avg Age Business, Finance or IT Professionals 42.1 Clerical & Customer Service Staff 41.1 Electrical Tradespersons 42.1 Engineering Associate Professionals 44.7 Engineers 43.4 Labourers & Related Workers 43.6 Managerial Staff 45.2 Mechanical & Fabrication Tradespersons 42.7 Other 36.3 Other Associate Professionals 45.0 Other Plant & Machine Operators 44.2 Other Professionals 40.4 Other Tradespersons 43.2 Rail Controllers & Signallers 43.5 Rail Guards & Attendants 43.4 Technical Officers/Technicians 43.1 Train Drivers & Assistants 44.7 TOTAL 43.0

The sentiments expressed by operators relating to their ageing concerns for their rail employees appears to correspond with TDT predictions that many rail workers will take up voluntary retirement within the next 10 year period. In its 2005, Industry Skills Report, the TDT also identified that the increased standards of medical fitness required by changing regulations may further accelerate retirement among Rail Transport workers and contribute to a rise in the non-retirement labour turnover rate within the industry.

3.2.3 Employment by gender The fact that the Australian rail transport industry is dominated by male employees is further supported by the data provided by the rail operators in the study, with male workers accounting for almost 87% of the reported workforce. The representation of female employees at roughly 13% of the total is similar to the corresponding figure of 12% from the 2001 Census. Occupations which had a very low proportion of female employees included trade staff (i.e. electrical tradespersons, mechanical and fabrication tradespersons, other tradespersons), other plant and machine operators and train drivers and assistants. In each of these occupational groups more than 96% of the workers were male. Other occupational groups which had high percentages of male employees included technical officers/technicians, rail controllers and signallers and labourers and related workers, with all these having around 90% or more of their workers being male. The percentage of female workers was highest amongst business, finance and IT professionals along with clerical and customer service staff, with these two groups accounting for more than half the number of female employees reported by the rail operators surveyed in the study. These findings indicating there is a fairly high degree of occupational segregation by gender amongst workers in the Australian rail industry, is consistent with similar patterns that were reflected in the 2001 ABS Census data.

38

Table 3.7: Employment by occupation and gender, (From Study Data - 2006), Australian rail industry

Number employed

%

Share of Employment Occupational Group Name

Total Males Female Female Total Male Female

Business, Finance or IT Professionals 2566 1808 758 29.5% 5.6% 3.9% 1.7%

Clerical & Customer Service Staff 7722 5162 2560 33.2% 16.8% 11.2% 5.6%Electrical Tradespersons 1391 1376 15 1.1% 3.0% 3.0% 0.0%

Engineering Associate Professionals 1519 1495 24 1.6% 3.3% 3.3% 0.1%Engineers 3831 3293 538 14.0% 8.3% 7.2% 1.2%

Labourers & Related Workers 4747 4448 299 6.3% 10.3% 9.7% 0.6%Managerial Staff 2859 2387 472 16.5% 6.2% 5.2% 1.0%

Mechanical & Fabrication Tradespersons 3763 3730 33 0.9% 8.2% 8.1% 0.1%Other 998 900 98 9.8% 2.2% 1.9% 0.2%

Other Associate Professionals 31 26 5 16.1% 0.1% 0.1% 0.0%

Other Plant & Machine Operators 1363 1313 50 3.7% 3.0% 2.8% 0.1%Other Professionals 157 88 69 43.9% 0.3% 0.2% 0.1%Other Tradespersons 1402 1385 17 1.2% 3.0% 3.0% 0.0%Rail Controllers & Signallers 1990 1861 129 6.5% 4.3% 4.0% 0.3%Rail Guards & Attendants 3900 3221 679 17.4% 8.5% 7.0% 1.5%

Technical Officers/Technicians 424 377 47 11.1% 0.9% 0.8% 0.1%Train Drivers & Assistants 7385 7112 273 3.7% 16.0% 15.4% 0.6%TOTAL 46048 39982 6066 13.2% 100.0% 86.8% 13.2%

3.3 Overview of recruitment and training arrangements

3.3.1 Recruitment

In terms of the recruitment methods used, a broad generalisation is that rail firms could be categorised as having either very strong ‘internal labour markets’ or else quite open labour markets. The rail operators surveyed either used internal recruitment or training as the main method for filling vacancies across the vast bulk of occupations, or else they recruited from other firms and industries for many of the occupations. From the feedback received, it appears that few positions in any occupational category have been filled by recruiting overseas workers or through skilled migration. It seems therefore that rail employers in large, are confident of availing themselves of replacement workers, either through recruitment or internal training and promotion, for workers in lower-to-medium skilled jobs which have high turnover rates, even if they have a substantial number of current vacancies to be filled.

39

3.3.2 Overview of training in the rail industry Changes to Rail Training in the last 5-10 years A high proportion of the rail operators interviewed believed that there had been a substantial reduction in training investment across the industry, over the last decade. Most of the interviewees purported that this downsizing of training occurred around or slightly before the period in which some of the major microeconomic reforms were implemented in the 1990’s, during which the majority of the previously government owned rail organisations began to be privatised. There was thus a significant structural shift within the rail industry which resulted in changes in how workers were recruited, trained and developed. Many of the respondents identified that the large scale training programs and resources sustained by the government owned rail organisations were subsequently substantially rationalised or viewed as a non-core part of operations. This was fuelled by the increased focus placed by many rail employers on competitive tendering processes, especially in the more technical areas (such as track and rolling stock maintenance) where services were increasingly being outsourced. In addition, many rail employers preferred not to have to contend with the considerable financial costs and time required to effectively train workers and the risk of losing this training investment due to the loss of workers to other operators as a result of poaching. The prevailing view is that this effectively resulted in a void being created with regard to the vast training needs of the rail industry being largely unmet. Numerous respondents pointed out that there had been a significant shift from previous industry practices, since rail employers no longer provided staff with a career path in which they recruited workers and trained them throughout their whole career progression, as was the case in the past. The predominant reluctance of rail operators in the recent past, to invest in the training and development of their workers, also led to a distinct decline in the number of apprentices and trainees recruited during this period within the industry. This trend was affirmed by many of the study participants who asserted that rail employers over the last 10 years have consequently increasingly looked to recruit workers with pre-existing rail qualifications and experience. Many share the view that this has acted to exacerbate increased competition and poaching of qualified and experienced rail workers as well as contributing to the ageing of the industry workforce, since operators deliberately attempted to minimise their recruitment of younger, less experienced and qualified workers. Furthermore, it has been identified as one of the principal reasons why the rail industry now faces critical skills shortages in key occupational groups. In addition, several rail organisations who did continue to recruit trainees and apprentices stated that now they did so through third party providers who took care of the administrative and contractual responsibilities. Under these arrangements, the trainees and apprentices worked for the rail operator but were employed by a different organisation, most commonly a group training company. This thus represents a definite shift from the past when it was more likely that these rail operators would have directly employed the apprentices and trainees themselves. Some smaller operators interviewed, most commonly those involved in freight transport and “below rail” operations, asserted that they would prefer to continue recruiting already skilled and experienced rail workers and will attempt to proceed to do so, wherever possible in the future. However many of the larger rail organisations and the

40

majority of operators in the passenger transport sector, expressed that they were already committed to or were looking to increase their investment in training and their intake of apprentices and trainees going forward, in an attempt to mitigate many of the skill shortages and ageing workforce issues they currently face. Most of these rail employers believed that it was unproductive and unsustainable for the industry to continue tolerating the “training gap” which had prevailed in recent times and that more effective measures had to be taken to address many of the problems operators were confronted with in relation to skill shortages, poaching and the ageing of their workforces. Many of these larger sized rail employers were thus also more likely to offer apprenticeships, traineeships, internships, cadetships and professional graduate recruitment programs. The majority of these rail employers also offered generous study assistance programs to encourage their staff to take on additional study or further training. This often involved providing financial assistance and support to workers to help meet the costs associated with undertaking the additional training or education. In addition, many of these organsiations offered workers incentives in the form of monetary rewards and bonuses and allowed them time off and study leave provisions to enable them to better accommodate their training and study needs. Fourteen out of the 24 rail operators interviewed stated that they delivered most of their training internally, with eleven of these organisations asserting that they had their own internal Registered Training Organisation (RTO). Another two of the respondents indicated they were looking at the possibility of developing an internal RTO within their organisations in the future. Despite the fact that the majority of respondents used predominantly internal training resources to deliver training to their workers in-house, most rail operators interviewed commented that there had been a definite trend in recent years, favouring the increased outsourcing of more training services to external providers. Many believed that this has lead to the emergence of niche markets for the provision of rail training within the industry and the ascendance of many specialised training providers such as the Centre for Excellence in Rail Training (CERT), RTI (Rail Transport International) and Skilled Rail. Similarly several respondents commented that the current market conditions and skills shortages had led to the emergence in recent times of specialised labour hire organisations (e.g. CERT, Skilled Rail, Southern Cross, etc.) that trained rail workers in specific vocations and then hired them out to rail organisations that required these types of workers. Many of the interviewees believed that this was of benefit to rail employers as it enabled them to have greater flexibility from a human resources perspective and also improved labour mobility within the rail industry. Most operators also predicted that the growth in demand for the services and labour offered by these specialist organisations which had occurred over the last decade, would likely to continue in the future. This shift towards increasingly using external training providers was especially prevalent amongst the comparatively smaller sized rail operators and appears to have coincided with many of these operators downsizing their internal training resources. It was also reported that due to the involvement of more corporate institutions and other organisations in the provision of rail training, operators in the rail industry now had more choice and flexibility with regard to how they delivered training to their staff. Many of the larger sized operators, particularly most of those involved in the provision of passenger transport services, however seemed to have continued delivering the

41

majority of their training for workers internally, with many using their accredited RTO status and internal rail schools or training colleges to do so. Most of these operators believed that it was more optimal for them to deliver the training in-house due to their expertise in the relevant areas, their intimate knowledge of what specific training their workers required and their ability to adapt the training so that it was better suited to their specific systems and business operations. Some of these respondents also pointed out that in addition to improving flexibility, maintaining the delivery of training internally enabled them to better facilitate the retention of business knowledge within their respective company and also ensured that they weren’t overly reliant on external providers to service their training needs. Therefore many of these rail operators either did not outsource any of their training or only minimally utilised external training providers to deliver specific training outside of their areas of expertise such as in the use of computer/IT resources, first aid and manual handling training. Another prominent trend that was noted by several of the interviewees was that there had been a streamlining of rail training such that duration of many of the training regimes undertaken by workers had been reduced, so that they now took less time to complete than had been the case in the past. Many of these operators felt that such training processes had become more efficient due to the implementation of improved training techniques and better development of training personnel and trainers. An example which was commonly mentioned was in relation to locomotive driver training. Numerous study participants cited that the time required to train a worker to become a fully qualified driver had reduced from being 2-2.5 years minimum (and in some cases even longer) in the past, to now only requiring 14-18 months. However some rail operators believe that the streamlining of such rail training has led to training being too short and general and thus not comprehensive enough in terms of the content and subject matter that is covered. In particular, several of the interviewees expressed concern that this decline in comprehensive rail training has lead to reduced coverage of rail safety issues and diminished training in this area, resulting in workers now being less proficient in their knowledge of safety standards and procedures. The strength of criticism of some of these operators in relation to this is so potent that they feel that this decline in comprehensive rail training has resulted in safety within the industry being increasingly compromised and is one of the main factors which has contributed to the increased incidence of rail accidents in recent times. One prominent change with regard to training in the Australian rail industry that was identified by the study participants as having occurred in the last decade, was the shift towards more competency based training. As a result, training within the industry is now nationally accredited with standards being externally driven by a governing authority that establishes the criteria for training and assessment. This has resulted in rail training being more aligned with national standards so that training is increasingly based on achieving specific outcomes to qualify for a certificate of competency that is nationally recognised. Thus in recent years, the skill and qualification requirements across the rail industry have become more standardised and often linked to national guidelines (e.g. the Australian Qualifications Framework - AQF) as determined by external regulatory boards, which has also lead to the emergence of more skill based programs. Prior to the emergence of competency based training, the actual training standards and requirements were largely determined for each rail organisation by the individual operators themselves. Therefore, although there were likely similarities between most of

42

the different training modules and regimes delivered by specific rail organisations to workers, the majority of the training was not nationally accredited and in most cases, was not recognised by any other rail employer other than the particular one that was responsible for developing and/or delivering the training. However after implementation of a more standardised training model framework for the industry, the rail regulators increasingly insisted on the delivery of rail training by RTOs who were independently audited to ensure safety and accreditation requirements were met by the respective training providers. Therefore RTOs became subsequently increasingly utilised by operators to deliver rail training as they had the authority to determine and certify the competencies and qualification levels of rail workers. This trend towards a more nationalised and standardised training framework has also resulted in the increased use by rail operators of training resources and packages developed and administered by the TDT. This fact was confirmed by many of the rail employers interviewed, who acknowledged that they now increasingly used the TDT’s training resources to deliver training to their staff. Many respondents also believed that there was now a renewed focus on matching training to the skills that rail workers in specific occupations required (more “training for the job”), as opposed to training academically just for a qualification, which had tended to occur more commonly in the past. These operators further asserted that there had thus been a distinct decline in the rail industry of what some might call “unnecessary training” i.e. training not directly related to improving the organisation’s profit margins. From the perspective of most of these interviewees, there was now instead a greater awareness for the need for targeted training which involved providing workers with more precise and detailed training to meet the needs of their specific vocation within the organisation. Current Rail Training Practices Most rail operators stated that the majority of training for operational staff involved a combination of different components including some in class training, supplemented with some on the job training experience. However the exact composition of how training took place varied depending on the specific operator and respective occupational group involved. Many of the interviewees stated that training delivered in a class room type setting was generally reserved for theoretical material and that the majority of the training particularly for frontline staff (i.e. drivers, shunters, etc.) was completed on the job. Numerous operators also asserted that they were constantly looking at how they could better deliver training to their staff to best accommodate their diverse capabilities especially in relation to their familiarity and aptitude in using IT and other technological resources. Some rail organisations also used computer and web based resources to deliver their training to workers. A few rail operators did assert that they believed there had been an increased trend towards the use computer based training, with some saying that there was a definite rise in the use of online resources and simulators (especially in relation to locomotive driver training) by their organisations in recent years. Several interviewees also felt that there were now more numerous training courses for the use of different types of technology (e.g. ultrasonic training) offered by external training organisations. Others also predicted that the increased use of computer based training and online delivery of training would continue to occur within the rail industry in the future, with several respondents (especially the larger sized operators) stating that it was definitely an option that they were looking to implement and expand on going forward.

43

However some of the smaller operators felt that they preferred to continue using largely on the job training, as opposed to using simulators and more computer based training resources. This was because the majority of them believed that on the job training was more effective and practical, especially when it came to their operational and “on the ground” staff, since on the job training allowed these workers to develop a more relevant and useful skill set. Another impediment to the enhanced use of simulators and other sophisticated training technologies for some operators was the considerable associated expense and disruption to their normal operations that would occur if such training resources were utilised. Other respondents felt that such modern training aids were ineffective because they were too unrealistic when compared to the real life scenarios they were supposed to model. Some were also perturbed by the difficulty these training tools presented to older workers, who were generally less accustomed to the use of such modern technological resources than their younger colleagues. Another sentiment commonly shared by the study participants was their belief that there was a lack of rail specific training programs and courses offered by the more generic, training providers and educational institutions such as TAFEs and universities. This was thus listed as one of the principal reasons why many of the rail operators abstained from sourcing training for their staff from such institutions (and in particular largely explained the low demand for TAFE training services from rail organisations). Several operators were of the view that TAFEs and similar educational institutions did not currently offer any relevant rail specific training courses or programs. Many also commented that this was in contrast to the considerable amount of training offered for other transport, distribution and logistics disciplines that is currently available from some TAFEs and universities. Some felt that a fair degree of the responsibility for the lack of rail specific training at TAFEs, universities, etc. lay with the rail operators and the industry overall for not being more proactive with such institutions and taking the initiative to encourage them to develop and establish more rail specific training programs. Many interviewees however felt that it would take such institutions a considerable amount of time and resources to be able to efficiently offer training of the same standard and quality as existing rail specific training providers. Many also posed the question of whether it would be worthwhile and profitable for such institutions to attempt to deliver rail specific training courses due to the substantial amount of time and resources that would be required to develop such quality rail specific training programs, especially given that efficient and effective rail training providers already exist. Some operators did note that some TAFEs did offer some pre trade and shunter training which was utilised by some rail organisations. A few of these organisations also asserted that they were more likely to use TAFEs for training in regional areas due to the reduced number of training providers often available in those areas compared to metropolitan areas and the fact that TAFEs often had the vast resources required to cater for their training needs. A few rail operators stated that often TAFE was the only training provider in certain regional locations that had the facilities and resources they required to effectively train their workers. Several operators were also aware of rail specific training programs and courses offered by several universities, some of which they incorporated as part of their training regimes for their workers. Examples of universities with rail specific training courses that were utilised by some of the study participants included the Central Queensland

44

University, Queensland University of Technology, Royal Melbourne Institute of Technology, University of Western Sydney and University of Queensland. External training providers including universities and organisations such as the Australian Institute of Management and SHL were commonly used by many rail operators to deliver specialised training to professional staff in the areas of business, leadership and management development and also to develop their skills and expertise in the areas of finance, industrial relations and corporate affairs. Some respondents also believed there had been growth in the market for capability enhancement and development programs with increased demand for courses that were designed to improve the proficiency of staff in specialised areas such as in relation to financial literacy and contract management. The outsourcing of training related to specialised equipment was also common within the industry with most rail organisations utilising the training services of the providers or manufacturers of the equipment to deliver the relevant training to their workers relating to the specific equipment. This included using the equipment related training services of organisations such as Westinghouse, Motorola, Siemens, who were often responsible for manufacturing or supplying the rail operators with the equipment in the first place. Many rail operators also reported that even when they utilised training services from RTOs from within the industry and other external training providers, most still had to work closely with them to design and customise their training programs so that they were specialised enough to service their specific business and operational needs. Therefore although these operators outsourced the training of their staff to external training agencies, they still provided a lot of internal input. Such training regimes often involved open training systems, where RTOs are very much utilised to deliver the training. Hence, despite the fact that these rail organisations delivered their training through external training providers, many stated that they still contributed internal resources from a subject matter perspective and spent time working with the training provider(s) to tailor and adapt the training to best suit their needs. In this way, localised content training is often provided to enable workers to adapt to an operator’s specific rail equipment and operations and thus acts to supplement the broad based theoretical understanding that is provided as part of the general training. This is reflective of the trend across the industry towards more operator aligned training as opposed to broad-brush theoretical training.

45

Section 4: Current and future workforce needs The previous section provided a detailed profile of the rail workforce and the industry’s recruitment and training practices, and highlighted the major trends that have occurred in the nature of employment in the rail industry. We now turn to the question of how well the industry is placed to meet its current and future human resource needs. Section 4.2 collates information provided through the surveys and in-depth interviews on rail operator’s perceptions on the skill shortages and recruitment difficulties currently faced and their future expectations. This qualitative evidence is supplemented in Section 4.3 by projections of future skills and labour imbalances derived from quantitative models of labour supply and demand by occupation. Section 4.4 draws together the information provided in the interviews and from the modelling results to discuss the major training and recruitment implications for the rail industry. While the term ‘skills shortage’ is commonly used, it should be acknowledged that there is no widely accepted definition of the term. Identification and interpretation of skills shortages may vary significantly depending upon one’s viewpoint, and when the different incentives facing employees, employers and the government are taken into consideration. It is important to bear this in mind in interpreting the research findings, and particularly in assessing the qualitative evidence on employers’ perceptions. This chapter therefore commences with a brief discussion of the concept of a skills shortage.

4.1 The concept of a skills shortage In the neo-classical economics’ perfect market model of the labour market there can be neither labour shortages nor labour surpluses (unemployment). If there are more workers wanting to work at the prevailing wage rate than are demanded by firms, competition for jobs among the homogenous workers bids the wage down, thereby increasing demand and reducing supply until a single equilibrium wage rate is reached that precisely equates labour supply to labour demand. Similarly, an excess of demand for labour over the number of people willing to work will lead to an increase in the wage rate, eliminating the possibility of a persistent shortage. Relaxing the assumptions of perfect information, perfect mobility and zero transaction costs suggests that short-term ‘frictional’ imbalances may occur due to the search processes that match job vacancies to available workers. In aggregate, a certain level of ‘frictional unemployment’ is always present due to these processes. Similarly, short lags will occur before vacancies are filled. Of course, workers and jobs are not homogenous. The contemporaneous existence of an unemployed worker and an unfilled vacancy may not allow a match to be made even with perfect information and mobility. In particular, workers live in different geographical regions and possess different skills and knowledge, just as jobs occur in different regions and have different skill requirements. Accepting the more realistic view of the labour market as one that is highly segmented along a number of dimensions and that adjustments between these segments can require significant time and resources — that is, mismatches can be structural rather than just frictional — then shortages or surpluses of labour within different segments (industries, occupations or

46

regions) may well exist and be highly persistent. Wage setting in this environment entails a high degree of uncertainty. If employers in one sector are having trouble filling vacancies (or workers having trouble finding work) it may be because the wages they are offering (asking) are below (above) the market clearing wage for that sector. However, it may also just be because of frictional and structural impediments to the market clearing. Since neither party can know what the ‘true’ equilibrium wage is, there is a tendency to rely on past wages and those paid in similar jobs in other sectors as a frame of reference in wage setting. For this and other institutional reasons, the role of the wage in clearing markets is much muted, particularly in the short term, relative to its prominence as the means of adjustment in the theoretical model. Shah and Burke define a skill as “an ability to perform a productive task at a certain level of competence.” (2005: 45). Formal education and training as well as on-the-job experience contribute to the level of skill possessed by a worker, and the achievement of formal qualifications, such as under the Australian Qualifications Framework, is an important mechanism by which individual workers accumulate skills and signal their skill levels to potential employers. As Shah and Burke explain, the concept of a ‘skills shortage’ is by no means clear cut, and interpretations vary from a public policy perspective to those of employers and unions. In the parlance of the popular media, skills shortages are seen to reflect some form of allocative inefficiency or policy failure. Skill shortages are most commonly measured by the incidence of hard-to-fill vacancies in given occupations as reported from the employers’ perspective (see Shah and Burke 2005). However, the profit maximisation objective of firms readily leads us to appreciate that employers will always prefer more skilled labour to be available at a given wage rate rather than less. As discussed above, it can be difficult to distinguish between a ‘shortage’ and an employer simply offering wages below the going rate. In a period of high unemployment, it might readily be accepted that employers struggling to fill vacancies was evidence of some failure within the labour market. In the current macroeconomic environment of high output growth and low unemployment, however, the text-book outcome is that competition among employers bids up wage rates such that labour is allocated to sectors in which labour productivity is highest; that is, to the sectors which can afford to pay the highest wages. That other sectors struggle to attract skilled workers at wage rates in line with their (lower) level of marginal productivity of labour may indeed be the desired outcome. In this sense, skills shortages need to be viewed through a lens of ‘Pareto efficiency’. Vacancies being hard to fill, or employers expressing a desire for more trained workers at the wage rates they have on offer, should not be considered a failure or ‘skills shortage’ unless reallocation of labour to those employers could be achieved without leaving other employers or sectors worse off. At a public policy level, dealing with apparent ‘skills shortages’ is thus very complicated. The first question that should be asked is whether policy makers really have the ability to identify skills shortages that represent ‘true’ instances of allocative inefficiency. Even if the answer to this is in the affirmative, there is the second question of whether resources invested in addressing skills shortages are of a net social benefit once their potential alternative uses (including a reduced tax burden) are considered. Integral to this assessment is the question of why it is that, if such investments are ‘profitable’, the incentives facing firms and workers have not already resulted in private investments to generate such skills or to reallocate labour within the economy. Drawing upon Becker’s (1962) distinction between general and specific training, some potential explanations for under-investment in training from

47

a social perspective include high rates of staff turnover which suppress the incentive for firms to invest in specific training; or minimum wage legislation or capital market imperfections which prevent workers paying for general training through receiving a training wage below the value of marginal product or through borrowings. Despite the obvious difficulties in identifying true ‘skills shortages’ and deciding whether policy measures are appropriate, a public role in skills training is unavoidable. The government’s role in funding higher education and Vocational Education and Training necessitates the government adopting something of a ‘planners’ role. That the government is now under considerable pressure to address skills shortages implies a general acceptance of allocative inefficiency and that these shortages are constraining Australia’s economic growth. One way this is seen to occur is through the emergence of ‘bottlenecks’ in the economy, where constraints to output in one sector reduce the rate of capacity utilisation in downstream sectors that rely on those inputs. Thus in its planning role, it can be argued that the government needs to place greater emphasis upon addressing skills shortages in industries like rail that primarily provide inputs rather than final consumption goods.

4.2 Skills shortages and future expectations – qualitative evidence The following results are based on data provided by rail operators participating in the study. The information was acquired through questionnaires and face to face interviews that were completed with the rail organisations. Almost all respondents stated that they were experiencing difficulties in recruiting and/or retaining workers in at least one occupation, consistent with the proposition that the Australian rail industry is currently facing significant labour shortages. Moreover, it was predominately in the higher skilled occupations in which recruitment difficulties were nominated. The operators’ perceptions of skill shortages are summarised below, with the discussion organised by occupational group. Evidence is then presented on vacancies and turn-over rates within the industry and regional dimensions to the skills shortages and recruitment difficulties being experienced.

4.2.1 Skills shortages by occupation Tradespersons The occupational group for which shortages were most commonly reported was tradespersons, with 45% of rail operators experiencing shortfalls in trade staff. This included shortages in electrical tradespeople such as electrical fitters and electricians, with approximately 27% of rail operators experiencing shortages of workers in this occupational group. Entry into trade professions within the rail industry generally requires an AQF Certificate III or higher qualification, typically involving a standard three to four year apprenticeship, although in some instances additional experience may also be necessary. Some operators indicated that they were unable to attract applicants with the appropriate experience, while others indicated that they had not been able to attract any applicants at all. Operators facing shortages of electrical tradespersons generally attributed the shortage to the current tight labour market conditions, although

48

one participant blamed competition from foreign firms for the shortfall. Operators also identified recruitment difficulties in other trades, including boilermakers and mechanical tradespersons. This current shortage in tradespersons as recognised by the operators interviewed is consistent with similar findings which were reported by the ARA in 2006 (ARA 2006c). Signalling Staff In addition, 32% of the study participants identified having difficulties in attracting or retaining signalling staff, including signal electricians, signal maintainers and signal technicians. The mandatory requirements for workers in this occupational group is usually an AQF Certificate III or higher qualification, with additional relevant experience sometimes also being considered essential. The shortages amongst signalling staff were generally attributed to a lack of applicants with the appropriate qualifications and or experience. However, in the case of signal technicians, the rail operators in the study stated that they had no applicants at all. Factors that the respondents believed contributed to the shortages in signalling staff included increased competition for these workers due to the current booms in the resources and construction industries and an inability to compete with the rates of pay offered by firms in these competing industries and other organisations including foreign companies. Professionals- Engineers Around 32% of respondents indicated difficulties in attracting or retaining engineers. In particular, a lack of appropriately tertiary qualified applicants with the necessary specialisations in civil, electrical, mechanical engineering and signal maintenance engineering was identified. Rail operators participating in the study attributed the shortages in engineering personnel to competition from other rail operators as well as increased demand for engineering professionals due to the booms currently occurring in the mining and resources sector as well as the building and construction industries. The evident shortage of engineers within the Australian rail industry identified through the study therefore supports similar findings that were published in a 2006 ARA report (ARA 2006c). Train Drivers A number of rail operators (around 27%) reported shortages among train drivers. The majority stated that this was because there were insufficient numbers of applicants who were appropriately qualified and experienced to assume train-driving positions within their organisations. Two study participants indicated they had no applicants at all for these positions. Consideration for this occupation generally required an AQF Certificate II or higher qualification or at least one year of relevant experience (although in some cases relevant experience in addition to the formal qualification is required). The time required to fully train a worker to become a qualified driver as reported by the respondents varied from 14 to 30 months depending on the specific training regime utilised and the previous training and experience of the recruits. A shortage in train driver assistants was reported by two of the rail operators who had stated that they were also experiencing difficulties in recruiting train drivers. Both of these operators indicated that applicants for these positions did not possess the necessary qualifications and one also stated that applicants lacked adequate experience.

49

4.2.2 Vacancies and wastage rates The respondents’ assessments of recruitment difficulties were backed up by data provided on current vacancies. A significant number of vacancies were noted for engineers, tradespersons and drivers. Interestingly, many vacancies were also reported in occupations that were not acknowledged as ones for which the operator was facing recruitment difficulties. These included rail controllers and signallers, rail guards and attendants and customer service staff. The existence of vacancies in these professions is consistent with shortages being associated predominantly with higher skilled occupations. In the mail-out survey, most rail operators were not able to provide reliable estimates of either the typical wastage rates within given occupations or the proportion of employees likely to retire in the coming 5 years. Among those who could, the estimated annual wastage rates were often very high, notably among tradespersons and rail guards and attendants. The responses suggest that rail employers do not focus particularly strongly on calculating specific wastage rates or retirement rates in their analysis of workforce data. In the face to face interviews, however, a high proportion of rail operators (15 out of the total of 24 respondents) asserted that they were concerned about turnover rates amongst specific occupational groups within their organisations. Respondents were most commonly concerned with turnover among their trade staff, including electrical and mechanical tradespeople, with approximately 29% of those interviewed reporting this. More than one fifth of the study participants identified high turnover rates associated with their clerical and customer service staff as well as with their train drivers. The other occupational group for which comparatively high wastage rates were reported by some operators was engineers including electrical and signalling engineers, with around 12% of operators identifying shortages amongst this group of professionals. Most occupations reported by the respondents as having relatively high turnover rates were also occupations in which these operators believed they faced skill shortages. Higher turnover rates were also reported by some rail operators amongst younger staff (namely those aged under 25 years) and employees who had been with their organisation for a relatively short period of time – i.e. less than 3 years. This appears to reflect general trends associated with younger “generation Y” workers who are commonly more career mobile and often prefer to have shorter employment tenures in each of their occupational roles, than their older contemporaries.

4.2.3 Skill shortages by region Skill shortages were reported by the rail operators interviewed in the study to be more common in rural regions throughout Australia. This was generally attributed to the remoteness of these areas acting as a deterrent for many workers but in some of these regions housing difficulties was also considered to be a contributing factor. In particular, Kalgoorlie was identified as a locality where many rail organisations experienced labour shortages. Kalgoorlie and Merredin (also in Western Australia) were recognised as places where some rail operators recorded comparatively higher turnover rates among their rail personnel especially with regard to tradespeople, drivers and managerial staff. Other areas where skill shortages were reported included several locations in rural New South Wales (mainly agricultural hubs) and remote regions of

50

Northern Western Australia (predominantly mining towns). Interestingly, some capital cities were also nominated by some operators as being places where they experienced difficulty in attracting and retaining rail workers. This included the cities of Melbourne, Brisbane and Sydney where issues and problems relating to housing and commuting were believed to have contributed to the shortages experienced in these localities. The relevant rail operators anticipated skill shortages to continue in the future in Kalgoorlie and Merredin. Other areas of concern identified by rail operators where they were expecting shortages going forward included regions in rural NSW and several predominant mining towns in northern Queensland and northern Western Australia. Turnover rates amongst tradespeople, drivers and managerial staff were also considered by many respondents to be comparatively higher in these regions.

4.3 Modelling future workforce needs Aggregating the expectations of individual operators to generate a picture of the future outlook for the rail industry as a whole could potentially be highly misleading. In many respects these operators are in competition with one another – such as for passengers, freight, infrastructure access and for new recruits. One operator’s expectations may only be achievable at the expense of another’s. Secondly, as discussed in Section 4.1, the assessment of skills shortages can be highly subjective. This section takes the opposite ‘tops down’ approach of starting with forecasts of aggregate output of the sector, and working backwards to derive the labour requirements by occupation to meet that demand. To highlight potential skill shortages, these demand projections are contrasted with the likely supply of workers by occupation under a ‘business as usual’ scenario which takes into account the profile of the existing rail workforce, assumes a continuation of recent entry rates by occupation for the industry and applies age, gender and occupation specific net-retention rates derived from Census data.

4.3.1 A model of labour demand in the rail industry To illustrate the approach taken to forecasting labour demand, assume initially that there is just one homogenous output from the rail industry, which we denote Y, produced by homogenous units of labour, X. In any one period, t, then output per worker (or labour productivity) is defined by;

(1) t

tt X

Yl

Given data on both output and employment in a base year it is possible to determine labour productivity. Forecasts for future output, combined with assumptions regarding changes in labour productivity, are then used to generate a forecast of total employment in each period. The distribution of employment by occupation is also known for the base year. Forecasts for employment by occupation are then derived from the forecasts of aggregate employment based on assumptions relating to the change in occupational distribution.

51

The basic forecasting approach is therefore straightforward - it is deriving the most plausible assumptions regarding labour productivity and the occupational distribution of employment that is more involved. It is also necessary to take account of the fact that the rail industry produces more than one type of output. The model differentiates between passenger and freight task. The data sources and the basis for each assumption are detailed below, with the resulting projections presented in Section 4.3.2. Output forecasts The model differentiates between freight and passenger outputs for the rail industry. Recent data and forecasts for each are taken from existing published sources. Projections for the freight task are taken from BTRE (2006), and passenger task from Apelbaum Consulting Group (2007). However, data on employment is not disaggregated between the provision of freight and passenger services in each year. For relating trends in output to employment, it is therefore necessary to translate the projected changes in the freight and passenger tasks into changes in a ‘composite’ index of output. In their 2006 report Freight measurement and modelling in Australia, the BTRE provides forecasts of the total Australian rail freight task by single year to 2020. The task is predicted to grow by around 2.2% per annum between 2003 and 2020; increasing from 161 billion tonne-kilometres in 2003 to 234 billion tonne-kilometres in 2020 (2002, Table 1.4). Data and projections on the passenger task are provided by Apelbaum Consulting Group’s publication “Australian Rail Transport Facts 2007”. This contains estimates of total actual passenger kilometres (including light rail, urban and non-urban passenger) up to 2005, and forecasts to 2015 (2007: Table D1-2). To take the projected series out to 2020, we assume that the forecast trend growth rate between 2010 and 2015 continues to 2020. Under this assumption, passenger task is forecast to increase from 11.3 billion passenger-kilometres in 2005 to 13.8 billion passenger-kilometres in 2020, an average rate of growth over those 15 years of 1.4% per annum. Total freight task is therefore projected to grow significantly faster than passenger task. In fact, the projected growth rate for freight is 50% higher than for passenger. Estimates for employment by freight and passenger available for 2003 and 2005 (ARA 2003a, ARA 2005a) show that 157 persons were employed per 1 billion tonne-kilometres of freight carried, compared to 1,422 persons per 1 billion passenger-kilometres. To generate a composite measure of output consistent with employment requirement, freight and passenger kilometres are weighted accordingly. We standardised this composite measure to equal 1 million in 1991. The projections in freight and passenger output imply a rate of growth of 1.8% per annum in weighted output from 2006 to 2020. Labour productivity and aggregate employment Although composite output increased by one-third between 1991 and 2001, as noted previously total employment in the rail industry decreased by 47% as a result of extensive restructuring. Using the composite index of output and ABS Census employment figures, labour productivity is found to have increased by 13% per annum between 1991 and 1996, and by a further 6.5% per annum between 1996 and 2001. In all, output per worker increased by a factor of just over 21/2 in those 10 years. The assumption regarding future developments in labour productivity are critical to the projected estimates for labour demand. Clearly, the restructuring process cannot continue indefinitely at such a pace and, given that the rate of growth in labour

52

productivity halved from 1991-96 to 1996-2001, we believe that the reform process had largely run its course by 2001. We assume a further halving of the rate of growth in labour productivity to 3.25% per annum between 2001 and 2006, followed by a trend rate of growth in labour productivity of 2% per annum from 2007 onwards. Considering that this ‘trend’ will embody further industry restructuring, reforms to work practices and job redesign, technological change and economies of scale as the level of output increases, the assumption of a 2% per annum growth in labour productivity seems reasonably conservative. Even though, the resulting projection is for total employment to fall from 28,875 in 2001 to 27,915 in 2020. This slight decline in aggregate employment contrasts to an increase in output over the same period of 50%.

Employment by Occupation Having generated estimates for aggregate employment, estimates of employment by occupation then requires an assumption regarding the occupational composition of employment. Past data is available on a consistent basis by ASCO categories from the 1996 and 2001 Censuses. As noted in section 3.1.2 above, there was significant change in occupational composition between those years, including growth in the share of managers, professionals, and associate professionals, a decline in the share of employment for tradespersons and a significant decline in the share of labourers and related workers. To arrive at a distribution for 2006, consistent with the approach for labour productivity, we first assume that the reform process continued but at half the rate of change that occurred between 1996 and 2001. This resulting profile is then compared to the aggregate occupational employment profile of the firms who responded to the questionnaires sent out in the second half of 2006. Although the coverage of the survey and the ABS defined ‘rail industry’ will not directly correspond, the survey data suggests two adjustments to our projected distribution for 2006 are warranted: first there appears to have been more rapid continued growth in the employment of professionals, and second the decline in tradespersons may have been reversed. In each case the difference between our projections based on the Census data and the survey data is 5-6 percentage points. Given the likely inconsistencies between definitions used and coverage of the industry, we conservatively adjust the shares of both these groups up two percentage points, and then re-scale all shares so they sum to 100. The projected trends in occupational distribution between 2006 and 2011 are based on information collected in the in-depth interviews on what changes the operators expected in their workforce in the coming five years. Based on a general consensus of the views expressed across operators, occupational groups are assigned changes in their share of either +1, +0.5, 0, -0.5 or -1 percentage points by 2011, with the compositional change occurring linearly for the years in between. From 2011 onwards, changes in occupational shares are based on estimates of the effect of scale on employment demand. In the in-depth interviews, respondents were asked to indicate how employment within each occupational category would change if there was a 50% increase in output. The average responses are used to provide an estimate of the elasticity of employment with respect to output (remember that this impacts upon shares only – aggregate employment is already determined through projected output and labour productivity). We believe these economies of scale effects will be important and can be justified because, as discussed in Section 2, increases in output in the rail industry are likely to lead to a higher scale of operation for existing operators rather than new operators entering the market, due to low marginal costs and falling average costs with output levels. These estimated elasticities range from a low of between a 6 to 8%

53

increase in employment for professionals, clerical and sales workers and managers resulting from a 50% increase in output, to a high of a 36% increase in employment for intermediate transport and production workers (which includes drivers, controllers and signallers, other plant and machine operators).

4.3.2 A model of labour supply and population ageing Projections of labour supply by occupation are calculated separately by occupation, age and gender starting from the base year of 2001, the most recent year that such detailed data is available. The projections require assumptions to be made regarding the number of persons recruited to the rail industry at entry-level, and net retention rates. Unfortunately historical trends in employment in the rail industry cannot be used as a realistic guide for these assumptions because of the significant restructuring and labour shedding that occurred between 1991 and 2001. In contrast to a continuation of these trends, our output and employment projections show rail employment having stabilised and starting to expand slightly from 2006. Therefore recent trends for the economy as a whole will provide a better yardstick for future retention rates in the rail industry, rather than rail specific ones. The approach can be illustrated as follows. Note that the Census data on employment by occupation has been collated by 5-year age groups — 15-19 year olds, 20-24 year olds, and so on to 60-64 year olds. Persons 65 and over make up the final category. Note also that the Census is taken every five years. Thus all persons who were in the 25-29 year age group, for example, in the 1996 Census, must have been in the 30-34 year age group for the 2001 Census. It is possible to calculate the net retention rate from one Census to the next. This is a ‘net’ rate in that it that it represents the balance between wastage rates (leaving the labour force through retirement, disability, temporary non-participation in the labour force or workers changing to a different occupation, out-migration) and entry rates (new entrants, people returning from outside the labour force, people entering the occupation from a different occupation, inward migration). These net retention rates from 1996 to 2001 are calculated separately by occupation (at the major group level), age and gender for all Australian workers. As would be expected, the net retention rates vary significantly by gender and age. For men, they range from +11.3% for 20-24 year olds to -31.8% for 55-59 year olds. For women, the rates are much lower around age 20-29, but increase markedly from age 50 onwards. The proportion of people employed in lower skilled and manual occupations also falls with age. Using the profile of employment by occupation, age and gender for the rail industry in the 2001 base year, it is then a simple mechanical matter to generate the projected workforce profile every fifth year from 2006 onwards, with the intervening years estimated through linear interpolation. The strength of this approach is that it explicitly takes into account the older average age of the rail workforce, as well as its specific gender and occupational distributions. The remaining assumption needed to complete the forecasting exercise relates to the number of new recruits at entry level. Given that employment levels in the rail industry are estimated to be very similar for 2006 as for 2001, it seems reasonable to assume that the training and recruitment levels will also have remained roughly constant. In each occupational group in the rail industry, the number of 20-24 year olds in 2001 is much higher than the number of 15-19 year olds. Therefore it is assumed that the number of

54

employees in the age group 15-24 is constant at the 2001 level as an estimate of the training rate in each year. This is in contrast to the alternative of holding the 15-19 year old intake constant and applying the net retention rate estimates to generate the figure for 20-24 years olds in subsequent years. This latter approach is unlikely to reflect actual training and recruitment practices, particularly for more skilled occupations in which people will not complete their qualifications until after they have turned 20.

4.3.3 Modelling results The final results are shown in table 4.1. Total employment (demand) in the rail transport industry is forecast to rise initially to 2010 due to robust forecasts for output growth, but then to contract steadily to be around 27,015 (1,000 persons lower) by 2020 as a slower rate of output growth is more than offset by the trend increase in labour productivity. In contrast, applying the retention rates observed for all industries by occupation, gender and age to the rail workforce’s current profile and recruitment levels suggests the supply of workers will fall to 24,353 persons by 2020. The projected shortfall in supply relative to demand is predicted to grow steadily starting from 2006 to reach 3,562 persons in 2020. Given total employment demand is forecast to moderate slightly we believe the output and employment demand projections are quite conservative. This suggests that the factors most likely to lead to labour shortages in the rail industry lie on the supply side. The declining supply projections result from both the assumptions used and the current profile of the rail workforce. With respect to the assumptions, addressing the shortfall will require the industry to significantly increase their entry level recruitment over 2001 levels, or else achieve much higher retention rates of older workers relative to other industries. The model indicates that entry rates to the rail industry in the 15-24 year old age groups would have to approximately double over 2001 levels to balance the demand and supply projections. Admittedly recruitment levels in 2001 may have been suppressed due to the prior periods of labour shedding, however in the current climate of very tight labour markets and the resources boom, it seems unlikely that the rail industry could expand recruitment levels by the required degree necessary to avoid shortages. The option of doing so by substantially increasing the wages and conditions on offer at entry level seems unrealistic given that the degree of price competition the industry faces from other transport modes. Increases in wages at entry level will also inevitably eventually flow on to some degree to incumbent workers. The more important supply-side factor lies in the simple reality of the ageing, male-dominated rail workforce and hence the high expected wastage rates of exiting workers over the coming 15 years. As noted in Section 3.1.3, the average age of all workers in the rail transport industry in 2001 was 41.5 years. Under the supply projections, this increases to 49.1 by 2021 (see Table 4.2). Even with the hypothetical doubling of the intake of 15-24 year olds it still increases to 46.0 years. Projections by occupation The projected shortages are given in the final panels of Table 4.1 expressed in both the number of persons and as a percentage of projected demand (a positive figure indicates a shortage and a negative figure a surplus). The most significant shortage arises with

55

respect to intermediate production and transport workers, which include drivers and other transport operators. This arises because the occupation share is forecast to increase and because of low retention rates expected for these occupations, as they are dominated by older males. Significant shortages are also projected for managers and tradespersons. Table 4.2 illustrates the importance of the age profile of the workforce in determining these projected shortages. In the case of managers the average age is projected to reach 55.9 years by 2021, and 52.2 years for intermediate production and transport workers.

56

Table 4.1: Rail workforce projections

1996a 2001 a 2006p 2011 p 2016 p 2020 p

Rail output forecasts

Freight (billion tonne-kms) 110.25 136.91 174.95 195.96 217.03 234.06

Passenger (billion passenger-kms) 10.12 11.40 11.58 12.77 13.32 13.84

Index of weighted output (millions) 1.12 1.34 1.56 1.73 1.88 2.00

Output per worker 33.7 46.3 54.3 59.9 66.2 71.6

Total employment (persons) 33295 28875 28679 28922 28387 27915

Occupational share

Managerial 2.9% 4.9% 5.7% 6.9% 6.8% 6.7%

Professionals 4.9% 7.4% 10.3% 9.3% 9.1% 9.0%

Associate Professionals 6.4% 8.7% 9.5% 9.8% 9.7% 9.6%

Tradespersons 14.2% 11.0% 10.9% 10.1% 10.0% 9.9%

Adv. Clerical & Service 1.5% 1.8% 1.9% 2.0% 2.0% 2.0%

Int. Clerical, Sales & Service 10.6% 11.4% 11.3% 11.9% 11.7% 11.5%

Int. Production + Transport 31.7% 31.5% 30.2% 31.3% 32.3% 33.1%

Elem. Clerical, Sales & Service 12.9% 13.6% 13.4% 14.2% 14.0% 13.8%

Labourers & Related Workers 15.0% 9.8% 6.9% 4.5% 4.5% 4.5%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Demand by occupation (persons)

Managerial 971 1418 1629 1987 1922 1868

Professionals 1618 2136 2942 2676 2579 2500

Associate Professionals 2123 2520 2730 2848 2759 2685

Tradespersons 4721 3164 3128 2920 2834 2763

Adv. Clerical & Service 498 519 538 583 562 545

Int. Clerical, Sales & Service 3516 3279 3242 3439 3319 3219

Int. Production + Transport 10558 9097 8660 9063 9171 9234

Elem. Clerical, Sales & Service 4293 3925 3846 4112 3969 3850

Labourers & Related Workers 4998 2817 1965 1294 1272 1252

Total 33295 28875 28679 28922 28387 27915

Supply by occupation (persons)

Managerial 971 1418 1423 1360 1230 1084

Professionals 1618 2136 2311 2502 2694 2839

Associate Professionals 2123 2520 2531 2523 2500 2417

Tradespersons 4721 3164 2989 2786 2542 2339

Adv. Clerical & Service 498 519 507 516 532 500

Int. Clerical, Sales & Service 3516 3279 3334 3488 3635 3662

Int. Production + Transport 10558 9097 8516 7702 6542 5419

Elem. Clerical, Sales & Service 4293 3925 4181 4495 4714 4780

Labourers & Related Workers 4998 2817 2563 2029 1591 1313

Total 33295 28875 28357 27402 25982 24353

57

Table 4.1: Rail workforce projections (cont’d)

1996a 2001 a 2006p 2011 p 2016 p 2020 p

Projected shortage – persons (Demand minus Supply)

Managerial 0 206 626 692 784

Professionals 0 630 174 -115 -339

Associate Professionals 0 199 325 259 267

Tradespersons 0 139 134 292 423

Adv. Clerical & Service 0 31 66 31 45

Int. Clerical, Sales & Service 0 -93 -49 -316 -443

Int. Production + Transport 0 144 1361 2629 3814

Elem. Clerical, Sales & Service 0 -336 -382 -746 -930

Labourers & Related Workers 0 -598 -735 -319 -61

Total 0 322 1520 2405 3562

Projected shortage - % of projected demand

Managerial 12.6% 31.5% 36.0% 42.0%

Professionals 21.4% 6.5% -4.5% -13.6%

Associate Professionals 7.3% 11.4% 9.4% 10.0%

Tradespersons 4.4% 4.6% 10.3% 15.3%

Adv. Clerical & Service 5.7% 11.4% 5.5% 8.3%

Int. Clerical, Sales & Service -2.9% -1.4% -9.5% -13.8%

Int. Production + Transport 1.7% 15.0% 28.7% 41.3%

Elem. Clerical, Sales & Service -8.7% -9.3% -18.8% -24.1%

Labourers & Related Workers -30.4% -56.8% -25.1% -4.8%

Total 1.1% 5.3% 8.5% 12.8% Notes: a. actual, p. projected. Table 4.2: Average age by occupation, rail workforce projections 2001a 2006p 2011p 2016p 2021p Managers 44.0 47.5 50.8 53.7 55.9 Professionals 40.3 42.2 44.1 45.8 47.2 Associate Professionals 42.0 44.7 46.9 48.6 49.3 Tradespersons 40.0 41.9 43.0 43.3 42.9 Adv. Clerical & Service 38.6 42.3 45.5 48.4 49.0 Int. Clerical, Sales & Service 41.2 44.4 47.6 50.2 51.8 Int. Production + Transport 43.0 46.3 49.1 51.2 52.2 Elem. Clerical, Sales & Service 39.3 42.2 44.7 46.7 47.8 Labourers & Related Workers 42.1 44.3 45.3 45.2 43.5 Total 41.6 44.4 46.6 48.4 49.1

Notes: a. actual, p. projected. The projections appear to be consistent with many of the views expressed by the rail operators in the study who anticipated they would experience shortages amongst tradespersons, intermediate production and transport workers and managerial and professional staff in the future. Most of the respondents, including 17 of the total of 24 rail operators who were interviewed believed that they were likely to experience skill shortages in at least one occupational group in the future. Half of these operators were expecting to experience shortages amongst engineering staff including electrical, civil,

58

mechanical and bridge engineers. Many operators were also of the opinion that they would face shortages in tradespeople (e.g. electrical) with approximately 38% of interviewees expressing this sentiment. One quarter of respondents identified train drivers as being an occupational group in which future shortages were likely. Managerial staff was another group of professionals singled out by several operators as an area where they also predicted experiencing future shortages with roughly 17% of respondents stating this would be the case. Shunters were also identified by 2 operators (8%) of those interviewed as being a profession in which future shortages were likely. Relatively large surpluses of labourers and related workers and elementary clerical, sales and service workers are projected to emerge by 2011. For labourers and related workers, this largely results from the assumption of a continued decline in the occupational share of this group in line with recent trends, with the surplus looking like moderating by 2020. For elementary clerical, sales and service workers, however, the surplus arises due to the occupations being dominated by younger (relatively) females with much higher expected net retention rates. In this case, the projected surplus increased out to 930 persons in 2020, or around one quarter of projected demand. In the immediate term, one possible remedy to labour shortages (amongst drivers and operators) is the upskilling of labourers and related workers to drivers and operators, though the potential for this decreases over time. The same potential does not exist for the surplus of elementary clerk, sales and service workers because of the mismatch in gender profiles of the two occupations.

4.4 Recruitment and training implications Addressing a skills shortage requires both the recruitment of personnel and the embodiment of the requisite skills in those workers. Given the specificity of skills required in the rail industry it is not feasible, by and large, that experienced workers who already possess the required skills can be recruited in adequate numbers. Such a strategy may work for individual operators, but it cannot work for the industry as a whole. Rather, the rail industry needs to simultaneously attract workers and address their training needs, or secure a sufficient flow of workers at the entry level from the relevant training courses.

4.4.1 Recruitment implications

Given the current and projected shortages amongst intermediate production and transport workers, managerial, associate professional and trade staff within the rail industry over the next 15 years, there is a need to increase the number of personnel that are recruited within these occupational groups. The largely unfavourable image of the rail industry and its lack of career appeal to many potential recruits mean that it is likely to be quite a challenge to ensure sustainable and adequate levels of staff recruitment will be achieved. In the case of managers and intermediate production and transport workers it also seems imperative that rail operators should place greater emphasis on recruiting younger workers due to the consistently higher average age of workers in these occupational groups as predicted by the modelling results.

59

One potential strategy to address the ageing workforce problem and labour shortages within the rail industry would be an aggressive campaign to attract women re-entering the labour force into those rail occupations currently dominated by men. However, gender biases in employment patterns are typically strongly rooted in social norms that are not easily overturned. A second strategy would be to achieve net retention rates of existing employees that are well above the average for all industries, given the workers’ ages. Net retention rates can be increased either by reducing the rate at which existing workers leave the industry or by increasing the rate at which new workers enter. In either case, the success of any such strategy would depend upon increasing the attractiveness of the rail sector as an industry of employment relative to other industries. An alternative approach is to try to encourage older rail workers to delay retirement. This has been promoted as one of the required responses in addressing the challenges of population ageing in the Australian economy more generally. If this could be achieved in the rail industry, it would smooth the anticipated spike in wastage rates associated with the concentration of workers in the older age groups and at least delay emerging skills shortages, thus allowing greater time for human resource adjustments to be made. However, note from Figure 3.2 that the concentration of workers in the older age categories for the rail industry, relative to all industries, is actually reversed for 60-64 year olds and for workers 65 and older. The proportion of rail workers in these age groups is lower than for the workforce as a whole, and very much lower for the 65s and over. This seems to suggest that rail industry jobs are typically not well suited to workers in their 60s and beyond, thus limiting the potential for delayed retirement as a mechanism to address skills shortages. It also suggests that the modelling approach may well have underestimated the extent of skill shortages in the rail industry, given that the net retention rates used were not specific to the rail industry. On the other hand, the rationalisation of employment that occurred in the rail industry throughout the 1990s may have contributed to an abnormally high incidence of early retirement within the rail workforce prior to 2001. According to the projections, there will be a need for rail employers to recruit increasing numbers of professional staff in the short to medium term due to current shortages in these personnel being predicted to continue until 2011. However according to the modelling results, this recruitment drive to attract professionals into the rail industry will not have to be sustained over the long term since surpluses are predicted to eventuate by 2016. One potential strategy that could be implemented to help operators better adjust to their workforce needs over the next decade would be to train some additional professional staff into becoming managerial staff to minimise the extent of shortages predicted amongst the latter occupational group. The modelling results also suggest the need for an increase in recruitment of associate professionals and, to a lesser degree, advanced clerical and service staff. Shortages in both these occupational groups are projected to peak in 2011. Some potential would seem to exist for retraining and upskilling intermediate and/or elementary clerical and service staff to work as advanced clerical and service personnel, and from the advanced level to the associate professional level. In these cases there seems to be a better match between the skills sets and gender concentration of the workers involved.

60

4.4.2 Training implications The following section outlines what the operators interviewed stated they would like to see eventuate with regard to changes in rail training going forward, given the current situation and their future expectations. In particular this section outlines some policies and measures which rail operators believe, if implemented, would assist in improving training outcomes within the industry. All operators interviewed believed they would at the very least consolidate their organisation’s current levels of training investment, with many asserting that there would likely be significant increases in the extent of resources devoted to training in the future, particularly as the size of their workforce and operations grew. The overwhelming majority of respondents expressed the intention to maintain and expand the existing relationships they had established with training providers, rather than develop new training relationships with training agencies they had not previously utilised. Several of the interviewees also anticipated that they were likely to invest more in capability development training with an enhanced focus on personal, management and leadership development programs. Consequently many of these operators believed that demand for training organisations that offered such courses and programs would be likely to grow in the future. This would appear to be an appropriate response given the shortages forecast to occur among managerial and professional staff. The results of the modelling indicate that a significant increase in training must be committed to by rail operators to develop and ensure there is an adequate supply of workers in the occupational groups predicted to experience significant shortages in the future including among intermediate production and transport workers, managerial, associate professional and trade staff. Therefore considerable resources are likely to be needed to be invested in developing training programs and courses designed for driving, trade, associate professional and managerial staff operating within the rail industry. Many rail operators expressed the desire to develop more in-depth partnerships with other rail organisations, the government, industry groups, educational institutions and training providers to foster the development of more rail training programs and facilities. The need to promote greater training alliances between rail operators was especially identified as an important outcome to work towards, due to the fact that many of the organisations within the industry had similar training needs. The predominant view was that it would be beneficial for the operators to share training resources and services wherever possible. This would be especially pertinent in cases where specialised training only needed to be provided for a small number of workers. Many rail operators expressed a desire for a more nationalised and standardised training framework and accreditation system across the industry. This would principally involve the establishment of a more standardised skills recognition model which accommodates greater consistency in the rail training programs and competencies between all the states. Most of the rail organisations believed however, that in order to achieve this there must be a cohesive framework developed in terms of the types of technology and rail systems that were utilised, such as nationally standardised communication and signalling systems. More specifically many of the operators felt that a lot of the training relating to rail specific risks and technology such as with track safety awareness, should be adapted to a national model.

61

Several of the operators stated that they would also like to see the development of a more mature external training network for the industry which would facilitate the training of rail workers to acquire base qualifications addressing core competencies in safe working or occupational health and safety training (e.g. associated with a Certificate 1 or Certificate 2 in Rail Operations). Some of these respondents believed that this should be an industry wide initiative in which all operators contributed towards the establishment of a centralised training provider (whether that be through a largely government funded institution such as TAFE or some other privately operating training agency) which administered basic rail training and then placed the trained workers with rail operators. This would prevent duplication in relation to the provision of training services by rail operators and also minimise their individual training and development costs. In addition it would also ensure that there was a pool of base qualified rail workers and trainers for all rail operators, which would also assist in improving labour mobility within the industry. Other rail operators would prefer to see more general training initiatives developed at an industry level and then delivered through relevant training providers (i.e. TAFEs, RTOs, etc.) depending on the specific region in question. A specific model cited by one interviewee was the example of a TAFE institution that provided a particular rail organisation with direct rail training for their workers. However all the training delivered by this TAFE had been developed previously by the rail organisation but was handed over to the TAFE to do the training delivery and assessment as the RTO.

Most operators did mention that they received financial funding from the government to help support and assist them with the apprentices that they took on. However one issue that was raised with regard to government funding assistance for the provision of rail training was in relation to the fact that rail operators who also had an internal RTO received less funding, with most receiving roughly half the amount that other training providers were entitled to. This was viewed as inequitable by the majority of the interviewees, with many believing it acted as a disincentive for rail operators to develop and facilitate internal training and an inconsistency that needed to be resolved in the future in order to promote more employer sponsored training within the industry. An increased focus on safety was also listed by some study participants as what they would like to see incorporated more in rail training in the future. Although the coverage of safety content in rail training currently is generally seen as satisfactory, many wanted an even greater onus placed on this component of training over the next decade. These operators felt the decline in comprehensive rail training and the resulting reduced focus on rail safety training to be of particular concern. They believed this was especially pertinent since the emphasis on equivalent training in similar industries such as the airline and shipping transport sectors had been enhanced in recent years and was thus definitely an issue that clearly needed to be addressed by the rail industry going forward. Another preference expressed by rail operators was to have more flexible arrangements with regard to how the training is delivered to their workers such that it could be completed with minimal interruption to the normal working hours of staff and business operations. This would make training more cost efficient for rail employers. Some of the measures that the respondents were looking at in this regard included developing more computer based training and incorporating more internet based, self paced training modules.

62

Government or industry sponsored programs designed to increase employer funded rail training are also likely to be more effective if they include: Schemes that assist in improving the awareness of rail operators as to the many advantages that derive from investing in training, particularly in terms of enhancing profits and contributing to the intellectual capital of their organisation

Subsidies, tax relief or other financial incentives coupled to the employer’s level of training expenditure

Initiatives that enable firms to recoup a greater proportion of the benefits that result from increased training investment

Assistance in developing effective training regimes and the provision of infrastructure support such as promoting information for “best practice” and other benchmarks.

63

Section 5: Conclusions The microeconomic reform policies that were introduced into the Australian rail industry in the 1990’s contributed to increased privatisation and fragmentation of the rail sector, and were principally designed to achieve several short term operational goals such as improved industry productivity and cost minimisation. This has however largely been at the expense of long term investment in the workforce, the adverse effects of which are presently being realised. The rail reforms have resulted in a significant decline and underinvestment in training and capability development by employers across the rail industry. Consequently there has been a reluctance for operators to invest substantially in the training of rail workers due to the considerable costs involved and the increased prevalence of poaching within the industry. This has proved unsustainable for rail employers and has contributed to and exacerbated many of the workforce issues the industry now faces, including the problems relating to ageing, skills shortages and the attraction and retention of workers. The rail industry acknowledges that the attraction and training of new recruits has become a critical issue. The transformation of the Australian rail industry from largely consisting of government organisations to now predominantly comprising of private operators has placed additional demands on employees. These changes combined with the dynamic nature of the industry in Australia has meant that personnel, especially those who are new, need a more comprehensive understanding of railway systems and technology and will increasingly be required to work effectively in a multi-disciplinary manner. The Industry Skills Report released by the TDT in 2005 also reported that rail workers needed a wider skills base to allow them to be more flexible and responsive to industry needs. Therefore, a major challenge facing the Australian rail industry is to build the skills and capacity of its existing workers as well as those of new entrants to the rail workforce. Employers both within Australia and internationally are demanding a more skilled workforce possessing technical, generic and employability skills (ANTA 2003). Consequently the focus of meeting the skill needs of the rail industry should be on developing an efficient, flexible and innovative response, which coincidently also delivers a quality skills and knowledge outcome. Training programs must thus incorporate such skills to assist rail operators to effectively and profitably compete in a modern economy. Improvements resulting from increased investment in training can act to raise the quality of service delivery and improve efficiency and productivity. In addition, maintaining such a focus would help to ensure that individual workers are best positioned to respond to the dynamic needs of the rail workforce and still be employable. Hence the Australian rail industry’s ability to effectively respond to the emerging skills crisis will largely depend on its ability to reduce barriers to higher levels of participation for both new recruits and existing rail workers. In the next ten year period, the Australian rail industry faces several different challenges. One is the likely high rate of labour turnover, which is predicted to occur due to the ageing profile of the rail workforce. This will largely be due to the high prevalence of “baby boomer” rail workers who were predominantly recruited in the period lasting from the 1960s -1980s. The problem is likely to be further exacerbated by the fact that the downsizing of firms in all rail sectors since the mid 1980’s has resulted in low recruitment levels. Consequently a large proportion of the rail industry’s existing workforce is likely to retire during the next decade (Rail CRC 2006). Recently collected

64

input from Australian rail operators also reveals that current recruitment practices and turnover trends have compounded the ageing workforce effects and thus further intensified problems relating to rail labour supply. Analysis of the Census data confirms that workers in the rail industry, and particularly in the major occupations of drivers and plant operators, are older and that the rail workforce is ageing more rapidly than the overall average for all Australian industries. This was also supported by the results of the modelling of future labour supply and ageing within the rail industry. These trends were further confirmed by sentiments expressed by the majority of the rail operators interviewed who indicated concerns about ageing among their rail workers, particularly with regard to their train drivers, engineering, trade and managerial staff. The ageing of the industry’s workforce is also likely to mean more workers in the sector will face a range of health issues. This includes such things as diminished hearing, sight, reactivity, impaired movement and the increased prevalence of age related diseases such as Type 2 Diabetes. All these may adversely impede the ability of employees to work efficiently, thereby contributing to reduced productivity and other labour problems. The relevance of this is particularly pertinent to the rail transport industry due to the physical nature of the work undertaken by the majority of employees, the stringent health and safety standards that have to be met and the often high risk work environment that much of the workforce is exposed to. Due to the high proportion of older rail workers occupying positions of seniority, their eminent departure from the workforce due to retirement or other reasons is likely to result in a substantial loss of industry experience and expertise. This is of particular concern in a number of key rail occupations and is especially pertinent considering that there is likely to be an insufficient pool of adequately experienced and skilled workers available to replace them. The Census data shows an ongoing decline in the number of workers in the younger cohorts, at least up until 2001. Information acquired from the study participants support the proposition that this trend was likely to continue going forward. The result of this is likely to be increased turnover rates due to accelerated retirement rates in coming years. These factors combined are likely to result in a significant loss of experience and skills as a large group of older workers retire, which will overlap with there being an insufficient number of adequately qualified or suitably experienced workers to fill their positions. The retirement of experienced workers will also mean there will be a lack of mentors to effectively train and develop the younger workers. A lack of effective workforce planning and training of younger rail workers by Australian rail operators can thus be identified as having contributed to the skilled labour shortage currently being experienced by the industry nationally. That the number of younger workers entering the rail transport industry is not sufficient to replace ongoing wastage and retirement rates has yet to greatly impact upon the sector because of the long run reduction in employment brought about by industry restructuring and technological change. However, given general expectations that output in the rail industry will grow, it seems unlikely that the rationalisation of employment can continue at the rate it has in recent decades. Furthermore, the rail operators interviewed in the study provided no clear indication that they were expecting further declines in employment either in aggregate or within specific occupations. The ageing of the workforce is therefore likely to become a major issue in the near future

65

and further dilemmas are likely to derive from the increasing dissatisfaction among workers regarding their work-life balance (Workplace Research Centre, 2006). In addition, the industry is now facing very tight labour market conditions brought about by the booming Australian economy. The demand for both skilled and unskilled labour within the Australian market is currently quite intense and competitive, and looks like remaining like this for some time to come. Many competing industries have already made significant progress towards ensuring their skill needs are met and so in this regard the rail industry could be viewed as being behind in developing effective strategies to tackle the issue. As other competing industries seek to improve their practices and strategies for attracting and retaining workers in the future, the challenge facing the rail sector to ensure it has an adequately qualified workforce is likely to become even more difficult. The rail industry faces a predicament in which it is competing for an ever declining portion of the available labour market. The skills crisis facing the rail sector is likely to be further exacerbated by the fact that the industry has been largely unsuccessful in attracting new recruits. The problem is also complicated by the fact that, in the past, the rail industry has enjoyed the benefits of having a very loyal, passionate and dedicated workforce who have had a largely “cradle to grave” perspective on a career in the rail industry. This combined with the prevalence of traditional rail families helped to ensure sufficient numbers of recruits could be attracted and retained to continue working within the industry on a long term basis. However in recent times with the decline in traditional rail families and the changing employment attitudes of younger workers, much of the appeal for recruits, that was once associated with a career in the rail industry has been diminished. This trend appears to be reflected by the higher rates of turnover reported by operators among younger workers (namely those under the age of 25) and workers who have only been employed for a short period of time (i.e. generally less than 3 years) with their specific organisations. The industry’s ability to meet its labour and skill needs in many areas will therefore certainly be challenged in the coming five to ten years, and this was confirmed by much of the information provided by participants through the questionnaires and in-depth interviews which were completed as part of this project. The significant amount of recruitment that is required of younger workers (especially in the under 25’s age group) to accommodate the demand projections for the future would seem particularly hard to achieve given the current labour market conditions. Thus, the industry may need to look to other solutions, including expecting to have to pay increasingly high wage premiums to secure skilled workers in engineering and the trades, at least for the duration of the booms currently occurring in the resource, building and construction industries. However, there are already indications from what respondents have said that rail operators are often not able to effectively compete with the financial incentives offered to recruits by larger firms in competing sectors such as the mining, building, construction and infrastructure development industries. As has been identified elsewhere, (see, for example, Department of Education, Science and Training 2006) the image of careers within the rail industry needs to be improved in order to attract young workers. Factors identified as negatively impacting on the attraction and recruitment of workers into the rail transport sector included such things as the lack of clear career pathways, the industry image (i.e. as old, dirty and unsophisticated) and specific issues relating to the employment of younger workers (such as the attitudes of most “Generation Y” employees concerning the traditionally

66

hierarchical nature of most rail workplaces). It would also be productive to address the entrenched gender segregation that exists within the major semi-skilled occupations in the industry. Currently, half of the potential supply of young workers is effectively excluded from major rail occupations, such as driver and intermediate plant operator positions, due to the almost complete domination of males within these occupations. Policies to address this imbalance would likely include greater flexibility in working hours and other family-friendly working arrangements and a visible antidiscrimination regime. Rail operators exhibit tangible concern in relation to the issues of skills shortages, ageing and high turnover rates amongst their rail workers. As a result, many are developing and looking to implement medium to long term strategies to address these workforce issues including: Providing older workers with financial incentives and flexible working conditions in

an attempt to get more of them to delay retiring Developing and instigating mentoring programs and initiatives to promote the

transfer of knowledge from more experienced workers to their younger contemporaries

Increasing their intake of apprentices and trainees Developing more graduate recruitment and cadetship programs Increasing their investment in training and capability development of existing

workers and new recruits Nonetheless, one still senses there is a largely “business as usual” attitude, albeit within a more difficult recruiting environment, rather than a sense of urgency for longer term planning to increase entry rates of younger workers into the industry. Therefore there are reasons to be concerned that the rail transport industry is not well placed to meet its future skills needs. This is especially alarming since, even if major policy reforms were implemented within the rail sector, these are unlikely to have a substantial effect on overall domestic labour supply for a number of years. A useful strategy for addressing the rail industry’s many workforce issues would be to differentiate the workforce by specific occupational groups to identify and implement tailored policies based on the type of skills being sought. In this sense, it would be desirable for the industry to implement measures to promote the development of rail careers as well as develop policies designed to enhance the sustainability of industry workforce skills and experience to ensure the continued effective operation of the sector in the future. The future workforce model for the rail industry may even have to be based on increased outsourcing using external contractors, instigating employment tenures of shorter duration and substantially increasing pre-industry training for workers. Without the development and implementation of effective strategies to address many of the workforce issues currently facing the rail industry, the sector’s human resource outlook is likely to deteriorate and this will have implications for all sectors of the industry. In the event that no effective action is taken, many have predicted that the Australian rail industry is likely to experience a labour attraction and retention crisis. The main objective of the Australian rail industry should therefore be to develop and maintain a motivated, flexible and adequately skilled workforce through innovative and coordinated employee recruitment, retention, training and development strategies. There is thus an onus for rail companies and industry organisations within Australia to work

67

cooperatively and take effective action to curtail the skills shortages and other workforce issues that currently exist in the Australian rail industry.

68

Appendix A: Further analysis of Census data by State

A.I: Employment Shares by Occupation

Table A1: NSW - Employment shares by occupation, Rail and All industries, 2001

Rail Industry

All Industries

1996 2001

Change in

share 2001

share share (2)-(1) Share (1) (2) % pts

1. Managers 3.3% 5.6% 2.3 9.7% 2. Professionals 5.8% 7.4% 1.6 19.5% 3. Associate Professionals 7.1% 9.1% 2.1 11.9% 4. Tradespersons 12.4% 8.5% -3.9 12.2% 5. Advanced Clerical & Serv. Wrkrs 1.8% 2.5% 0.7 4.2% 6. Interm. Clerical, Sales & Serv. Wrkrs 12.4% 12.5% 0.1 16.9% 7. Interm. Prod. & Transport Wrkrs 27.3% 27.3% 0.00 8.0% 8. Elem. Clerk, Sales & Serv. Wrkrs 15.3% 18.4% 3.1 9.5% 9. Labourers & Related Workers 14.6% 8.7% -5.9 8.1%

Total 100.0% 100.0% 100.0%

The Table above indicates that New South Wales (NSW) had a higher employment share of elementary clerical, sales and service rail workers in both 1996 and 2001 compared to the industry averages recorded for these years. The state also experienced an above average rate of growth in the employment share of this group of rail employees between 1996 and 2001. The employment share of intermediate clerical, sales and service workers in NSW was also higher than the national average for the industry in 1996 and 2001, despite the rate of growth in employment share for these employees between these two time periods being less than what was recorded nationally across the rail sector. Advanced clerical and service workers also occupied a larger employment share in NSW in 2001 compared to the national average for the industry, with the rate of growth in employment share for the occupational group from 1996 to 2001 also being higher than the national average. The employment share of tradepersons and intermediate production and transport workers in 1996 and 2001 was below the average reported for the rest of the rail sector. In the case of tradepersons, a greater than average decline in employment share was recorded in NSW between 1996 and 2001. However with intermediate production and transport workers no change in employment share in NSW was reported between the two time periods, whereas nationally a slight decline was recorded for the occupational group over the five year period.

69

Table A2: VIC. - Employment shares by occupation, Rail and All industries, 2001

Rail Industry All Industries

1996 2001

Change in share 2001

share share (2)-(1) Share

(1) (2) % pts

1. Managers 2.4% 5.1% 2.7 9.7% 2. Professionals 2.3% 4.1% 1.8 19.6% 3. Associate Professionals 6.6% 6.7% 0.0 11.6% 4. Tradespersons 13.7% 6.7% -7.1 12.5% 5. Advanced Clerical & Serv. Wrkrs 0.8% 1.4% 0.6 3.7% 6. Interm. Clerical, Sales & Serv. Wrkrs 8.0% 10.2% 2.2 16.4% 7. Interm. Prod. & Transport Wrkrs 37.0% 42.4% 5.4 8.3% 8. Elem. Clerk, Sales & Serv. Wrkrs 17.7% 19.1% 1.4 9.8%

9. Labourers & Related Workers 11.5% 4.4% -7.2 8.4%

Total 100.0% 100.0% 100.0%

Within Victoria, growth in employment share from 1996 to 2001 amongst advanced, intermediate and elementary clerical, sales and service workers was greater than the average recorded for the rail industry nationally. In all these (above mentioned) occupational groups the increase in the employment share within the Victorian rail workforce was double that recorded nationally. In addition the percentage share of workers belonging to the elementary clerical, sales and service workers occupational group was higher in Victoria than the national industry average in both 1996 and 2001. The number of professionals as a proportion of the total Victorian rail workforce was also less than the average for the industry nationally (roughly half) according to both the 1996 and 2001 ABS Census figures. The proportion of the state rail workforce represented by tradespersons and labourers & related workers respectively in both 1996 and 2001 was also lower than the industry average recorded for both these occupational groups. The reduction in the employment share of these occupational groups between 1996 and 2001 was also larger than the average recorded nationally, with a fall of roughly 7 percentage points in each over the five year period. The employment share of associate professionals was also lower in Victoria than the industry average, with the employment share amongst this group of workers from 1996 to 2001 noticeably less than that recorded nationally. The Census figures also indicate that intermediate production and transport workers held a greater employment share in Victoria during 1996 and 2001, than was the case across the remainder of the rail sector. Interestingly between 1996 and 2001, this occupational group actually increased its employment share in the Victorian rail workforce while nationally the employment share of this group of workers declined, on average.

70

Table A3: QLD. - Employment shares by occupation, Rail and All industries, 2001

Rail Industry All Industries

1996 2001

Change in share 2001

share share (2)-(1) Share

(1) (2) % pts

1. Managers 1.7% 3.4% 1.7 8.7% 2. Professionals 3.9% 8.6% 4.7 16.3% 3. Associate Professionals 5.7% 9.2% 3.5 12.2% 4. Tradespersons 17.0% 16.0% -1.0 13.0% 5. Advanced Clerical & Serv. Wrkrs 0.8% 1.1% 0.4 3.6% 6. Interm. Clerical, Sales & Serv. Wrkrs 8.5% 10.5% 2.0 17.3% 7. Interm. Prod. & Transport Wrkrs 32.6% 28.9% -3.7 8.7% 8. Elem. Clerk, Sales & Serv. Wrkrs 11.3% 8.8% -2.5 10.3%

9. Labourers & Related Workers 18.5% 13.5% -5.0 9.9%

Total 100.0% 100.0% 100.0%

The 2001 figures listed in the Table above indicate that Queensland had a higher share of professional and associate professional rail workers when compared to the equivalent averages for the Australian rail industry. Larger increases in the employment share of these occupational groups was also recorded in the state between 1996 and 2001 than was the case nationally. A similar trend was experienced amongst intermediate clerical, sales and service workers, with this occupational group experiencing more growth in Queensland than the average that was recorded across the remainder of the rail sector. Tradespersons and labourers & related workers represented a larger employment share in both 1996 and 2001 in Queensland’s rail workforce compared to the Australian industry average. The state also recorded a less substantial decline in the employment share of tradespeople over the five year time period in between (which was only one third of the decline experienced across the industry nationally). In 2001, Queensland had a lower employment share amongst intermediate production and transport workers and elementary clerical, sales and service workers than was the case in the rail workforces of the other states, on average. With respect to intermediate production and transport workers, there was a larger decline in the employment share in Queensland between 1996 and 2001 than what was reported nationally. In the case of elementary clerical, sales and service workers there was a decrease in employment share in Queensland, which was in contrast to the growth that was recorded for the occupational group over the period (on average), nationally.

71

Table A4: SA- Employment shares by occupation, Rail and All industries, 2001

Rail Industry All Industries

1996 2001

Change in share 2001

share share (2)-(1) share

(1) (2) % pts

1. Managers 5.4% 8.7% 3.3 9.6% 2. Professionals 5.8% 6.2% 0.4 17.2% 3. Associate Professionals 5.5% 8.1% 2.7 11.7% 4. Tradespersons 17.8% 7.0% -10.9 12.5% 5. Advanced Clerical & Serv. Wrkrs 3.1% 2.6% -0.5 3.4% 6. Interm. Clerical, Sales & Serv. Wrkrs 10.9% 13.7% 2.7 16.8% 7. Interm. Prod. & Transport Wrkrs 36.5% 41.1% 4.6 8.5% 8. Elem. Clerk, Sales & Serv. Wrkrs 5.0% 6.6% 1.6 9.4%

9. Labourers & Related Workers 10.1% 6.1% -4.0 10.8%

Total 100.0% 100.0% 100.0%

The rail workforce in South Australia (SA) had a higher share of employment attributed to managerial, advanced clerical and service workers and intermediate production and transport workers in both 1996 and 2001 when compared to the national figures for the rail sector. The employment share of intermediate clerical, sales and service workers was also larger in 2001 in SA than the industry average. Between 1996 and 2001 the employment share of advanced clerical and service workers declined by a small margin in SA, while there was slight growth for the occupational group recorded on average nationally. With respect to managerial and intermediate clerical, sales and service workers the percentage increase in employment share between 1996 and 2001 was higher in SA than the industry average. Interestingly in the case of the intermediate production and transport workers, SA recorded an increase in the employment share of this occupational group which contrasted with the national trend where a decline in employment share was reported. Amongst elementary clerical, sales and service workers as well as labourers and related workers the share of employment in both 1996 and 2001 was less than the industry average. This was despite the fact that the employment share of elementary clerical, sales and service workers grew by more and the employment share of labourers and related workers declined less in SA than was the case nationally, over the time period. Although the employment share of professionals in SA was higher than the national average in 1996, by 2001 the employment share of this occupational group in the state was less than the industry average. This can be largely attributed to the lower than average growth recorded for professionals between 1996 and 2001 in SA compared to the average for the other states. Tradespersons is an occupational group that had a higher employment share in SA in 1996. However by 2001, due to a higher than average decline in employment share over the time period in between, the employment share of this group of workers was lower than the industry average.

72

Table A5: WA - Employment shares by occupation, Rail and All industries, 2001

Rail Industry All

Industries

1996 2001

Change in

share 2001

share share (2)-(1) share

(1) (2) % pts

1. Managers 3.6% 6.1% 2.5 8.8% 2. Professionals 6.1% 8.2% 2.1 17.4% 3. Associate Professionals 5.7% 7.5% 1.7 12.5% 4. Tradespersons 8.8% 8.1% -0.7 13.6% 5. Advanced Clerical & Serv. Wrkrs 1.9% 1.3% -0.6 3.8% 6. Interm. Clerical, Sales & Serv. Wrkrs 11.1% 9.7% -1.3 16.4% 7. Interm. Prod. & Transport Wrkrs 42.9% 46.9% 4.1 8.7% 8. Elem. Clerk, Sales & Serv. Wrkrs 6.6% 5.4% -1.2 9.7% 9. Labourers & Related Workers 13.4% 6.8% -6.6 9.0%

Total 100.0% 100.0% 100.0%

The employment share of managerial and professional staff in Western Australia (WA) was higher in both 1996 and 2001. WA also had a higher employment share of intermediate production and transport workers in 1996 and 2001, with this occupational group also experiencing a higher than average rate of growth over the time period. The employment share of tradespersons, labourers & related workers and elementary clerical, sales & service workers was lower in WA than nationally in both 1996 and 2001. This was despite the decline in employment share over the time period for Tradespersons being less than the national average. The decline in the employment share between 1996 and 2001 for labourers and related workers was also higher in WA compared to the average for the rest of the sector. In the case of the employment share of elementary clerical, sales & service workers over the same time period, in WA a small decline was recorded whilst nationally slight growth was reported. Similarly the employment share of advanced clerical and service workers in WA decreased slightly between 1996 and 2001, which contrasted with the growth that was experienced within the occupational group nationally. With respect to intermediate clerical, sales and service workers, this group had a higher employment share in WA in 1996 compared to the industry average. However by 2001 this group of workers represented a lower proportion of the WA rail workforce than the national average, with the employment share of the occupational group declining while nationally it increased.

73

A.II: Employment Shares by Level of Qualification Table A6: NSW - Employment shares by level of qualification, Rail and All industries, 2001

Rail Industry All Industries

1996 2001

Change in share 2001

share share (2)-(1) share (1) (2) % pts (3)

Postgraduate Degree 1.4% 2.5% 1.1 3.6% Grad Dip & Grad Certificate 0.6% 1.0% 0.4 2.0% Bachelor Degree 5.4% 8.2% 2.8 15.9% Advanced Diploma & Diploma 4.0% 5.0% 1.0 8.9% Certificate (skilled vocational) 19.5% Certificate (basic vocational) 4.1% 25.1% 1.6 22.8% No recognised qualification 65.0% 58.2% -6.8 47.0% Total 100.0% 100.0% 100.0%

In New South Wales, the employment share of rail workers with postgraduate degree and advanced diploma and diploma qualifications was higher than the industry average in both 1996 and 2001. A higher than average rate of growth in employment share was also recorded amongst these types of rail employees over the time period between 1996 and 2001. The employment share for the state of rail workers with no recognised qualification was lower than the industry average, with the rate of decline in the employment share for these employees between 1996 and 2001 also being less than the national average for the rail sector. Table A7: VIC. - Employment shares by level of qualification, Rail and All industries, 2001

Rail Industry All Industries

1996 2001

Change in share 2001

share share (2)-(1) share (1) (2) % pts (3)

Postgraduate Degree 0.5% 0.9% 0.4 2.8% Grad Dip & Grad Certificate 0.3% 0.7% 0.5 2.8% Bachelor Degree 4.5% 5.8% 1.3 16.2% Advanced Diploma & Diploma 2.8% 5.3% 2.5 8.3% Certificate (skilled vocational) 20.7%Certificate (basic vocational) 5.2% 25.0% -0.8 20.0%

No recognised qualification 66.1% 62.2% -3.9 50.0%

Total 100.0% 100.0% 100.0% The employment share of rail workers with bachelor degrees was lower for Victoria in 2001 compared to the average for the rest of the rail sector. The increase in employment

74

share of rail workers possessing bachelor degrees between 1996 and 2001 was also lower in Victoria than that recorded nationally. In addition Victoria’s employment share of workers with advanced diplomas and diplomas was slightly less than the industry average in 1996. However by 2001 this situation was reversed due to the state experiencing a larger increase in the employment share of workers with this qualification than was reported nationally between 1996 and 2001. In 2001, Victoria also had a higher employment share of rail workers with no recognised qualification compared to the industry average, with the reduction in this group of workers being less (roughly half) for the state than what was recorded nationally. Another point of interest is the fact that in 1996, Victoria had a higher proportion of rail workers with a basic or skilled vocational certificate than the national average. However due to Victoria experiencing a decline in the share of these type of qualified workers between 1996 and 2001, while nationally an increase in employment share was recorded, by 2001 the state had a lower share than the industry average. Table A8: QLD. - Employment shares by level of qualification, Rail and All industries, 2001

Rail Industry All Industries

1996 2001

Change in share 2001

share share (2)-(1) share (1) (2) % pts (3)

Postgraduate Degree 0.2% 1.0% 0.7 2.1% Grad Dip & Grad Certificate 0.2% 0.7% 0.5 1.8% Bachelor Degree 2.6% 7.0% 4.4 12.5% Advanced Diploma & Diploma 2.1% 4.1% 2.0 7.4% Certificate (skilled vocational) 20.7%Certificate (basic vocational) 2.7% 26.8% 3.4 21.5%

No recognised qualification 72.0% 60.5% -11.0 54.7%

Total 100.00% 100.0% 100.0% In 1996, Queensland had a lower employment share of rail workers with bachelor degrees when compared to the national average. However by 2001 the state was more or less on par with the industry average, largely due to a higher rate of growth in the employment share of workers who had acquired this qualification during the period in between. A similar scenario was also evident amongst rail workers in Queensland with basic vocational certificate qualifications between 1996 and 2001. In the case of rail employees with no recognised qualification, the state had a higher than average employment share of workers in 1996. Queensland however experienced a higher than average rate of decline in this group of employees between 1996 and 2001, such that by 2001 Queensland’s employment share of these workers had levelled out to be relatively similar to the industry average.

75

Table A9: SA - Employment shares by level of qualification, Rail and All industries, 2001

Rail Industry All Industries

1996 2001

Change in share 2001

share share (2)-(1) share (1) (2) % pts (3)

Postgraduate Degree 0.2% 0.5% 0.3 2.0% Grad Dip & Grad Certificate 0.6% 0.5% -0.1 2.0% Bachelor Degree 3.6% 5.9% 2.3 12.6% Advanced Diploma & Diploma 4.9% 5.3% 0.4 7.6% Certificate (skilled vocational) 24.9% Certificate (basic vocational) 4.6% 28.6% -0.8 21.7% No recognised qualification 61.3% 59.2% -2.1 54.1% Total 100.0% 100.0% 100.0%

South Australia had a larger percentage of rail employees with advanced diploma & diploma qualifications than the national average 1996 and 2001, despite recording a lower than average rate of growth amongst the employment share of this group of workers. The state also had a higher proportion in both 1996 and 2001, of rail workers with basic certificate qualifications when compared to the industry average. However between these two years a small decrease in the employment share of this group of workers was reported in the state while nationally growth was recorded. Similarly a slight decline in the employment share of workers with graduate diploma and graduate certificate qualifications was reported in SA between 1996 and 2001, while on average the industry experienced minor growth in the employment share of this group of workers. As a result, although the employment share of workers with these qualifications was slightly higher in SA in 1996, by 2001 this was reversed so that the employment share of workers in the state with these qualifications was slightly lower than the national average. In 1996, SA had a lower employment share of rail workers with no recognised qualification than the industry average. However due to the state experiencing a decline between 1996 and 2001 in the employment share of this group of workers that was less than what was reported nationally, by 2001 SA’s figures almost matched the industry average. The state also had a lower percentage of rail employees with postgraduate graduate degree qualifications in 1996 which was maintained in 2001, as SA recorded a lower increase in the employment share of this group of workers in the period in between.

76

Table A10: WA - Employment shares by level of qualification, Rail and All industries, 2001

Rail Industry All Industries

1996 2001

Change in share 2001

share share (2)-(1) share (1) (2) % pts (3)

Postgraduate Degree 0.8% 0.9% 0.1 2.2% Grad Dip & Grad Certificate 0.3% 1.4% 1.1 1.9% Bachelor Degree 3.7% 6.3% 2.6 13.8% Advanced Diploma & Diploma 4.6% 5.0% 0.4 8.3% Certificate (skilled vocational) 19.0% Certificate (basic vocational) 8.4% 29.6% 2.2 22.4% No recognised qualification 63.3% 56.9% -6.4 51.5% Total 100.00% 100.00% 100.0%

The employment share of rail workers with postgraduate degree qualifications in WA was pretty much on par with the average for the industry in 1996. However the rate of growth in this group of workers between 1996 and 2001 was lower than the national average so that by 2001, WA actually had a lower employment share of rail employees with postgraduate degree qualifications than was the case nationally. WA had a higher employment share of rail employees with basic certificate qualifications in both 1996 and 2001 when compared to the equivalent averages reported nationally. The state also recorded an above average rate of growth in the employment share for this group of workers between the two time periods. WA had a lower employment share of rail employees with no recognised qualification than the industry average in 1996 and 2001 but also recorded a smaller than average decline in the employment share of this group of workers. In 1996, WA had a lower proportion of rail workers with graduate diplomas & graduate certificates when compared to the industry average but by 2001 this trend had reversed, with the state experiencing a higher than average rate of growth in the employment share of these workers between the two time periods. With respect to rail workers with advanced diplomas and diplomas, WA had a higher employment share in both 1996 and 2001 but experienced lower than average percentage growth amongst this group of employees over the five year period.

77

A.II: Employment Shares by Occupation & Gender

Table A11: NSW - Employment by occupation and gender, 2001, Australian rail industry

Number Employed % Share of Employment Male Female Female Male Female

Managers 591 74 11.1% 5.9% 4.2% Professionals 719 155 17.7% 7.2% 8.7% Associate Professionals 946 133 12.3% 9.4% 7.5% Trades & Related Workers 991 12 1.2% 9.9% 0.7% Adv. Clerical & Service Wkrs 121 172 58.7% 1.2% 9.7% Interm.Clerical, Sales & Service Wkrs 1024 456 30.8% 10.2% 25.7% Interm. Production & Transport Wkrs 3152 73 2.3% 31.4% 4.1% Elem. Clerical, Sales & Service Wkrs 1573 597 27.5% 15.7% 33.6%

Labourers & Related Workers 926 105 10.2% 9.2% 5.9%

Total all Occupations 10043 1777 15.0% 100.0% 100.0% The figures listed in the Table above indicate that NSW had a lower percentage of female advanced clerical and service rail workers in 2001 compared to the national industry average. The state overall however had a higher proportion of female employees in its rail workforce than the average for the rest of the rail sector. Specifically NSW had higher percentages of females amongst labourers and related workers as well as elementary clerical, sales and service workers. Elementary clerical, sales and service workers as an occupational group also represented a higher proportion of total employment for both male and female rail workers in NSW compared to the average for the other states. Interestingly, intermediate transport & production and trades & related workers represented a lower proportion of total employment for male rail employees in NSW in 2001, compared to the average for the rest of the industry. Table A12: VIC. - Employment by occupation and gender, 2001, Australian rail industry

Number Employed % Share of Employment Male Female Female Male Female

Managers 144 20 12.2% 4.9% 6.0%Professionals 111 22 16.5% 3.8% 6.7%Associate Professionals 198 19 8.8% 6.8% 5.7%Trades & Related Workers 216 0 0.0% 7.4% 0.0%Adv. Clerical & Service Wkrs 18 28 60.9% 0.6% 8.5%Interm.Clerical, Sales & Service Wkrs 258 74 22.3% 8.9% 22.4%Interm. Production & Transport Wkrs 1361 15 1.1% 46.7% 4.5%Elem. Clerical, Sales & Service Wkrs 477 144 23.2% 16.4% 43.5%

Labourers & Related Workers 133 9 6.3% 4.6% 2.7%

Total all Occupations 2916 331 10.2% 100.0% 100.0%

78

In 2001, Victoria had a lower proportion of female employees as a percentage of the total state rail workforce than was the case nationally. There was an evident shortfall in the percentage of female rail workers in Victoria assuming roles as associate professionals and advanced & intermediate clerical, sales and service personnel compared to the equivalent figures for the industry nationally. Interestingly associate professionals represented a higher percentage of total employment for males in the Victorian rail workforce than was the case for female rail workers in the state. This was in contrast to the national trend where on average, associate professionals accounted for a greater proportion of total female employment in the rail industry when compared to their representation as a percentage of total male employment in the sector. Employment of women as elementary clerical, sales and service workers and men as intermediate production workers as a proportion of total rail employment for each of the respective genders was also higher in the state than the national average. However in Victoria the percentage of total male employment accounted for by labourers and related workers and the percentage of female workers occupying intermediate clerical, sales and service positions (as a proportion of the total rail employment) was less than was the case for the rail sector Australia wide. Table A13: QLD. - Employment by occupation and gender, 2001, Australian rail industry

Number Employed % Share of

Employment Male Female Female Male Female

Managers 307 37 10.8% 3.3% 3.8%Professionals 714 164 18.7% 7.7% 16.6%Associate Professionals 765 178 18.9% 8.3% 18.1%Trades & Related Workers 1635 0 0.0% 17.7% 0.0%Adv. Clerical & Service Wkrs 37 78 67.8% 0.4% 7.9%Interm.Clerical, Sales & Service Wkrs 768 303 28.3% 8.3% 30.7%Interm. Production & Transport Wkrs 2921 35 1.2% 31.6% 3.6%Elem. Clerical, Sales & Service Wkrs 745 150 16.8% 8.1% 15.2%

Labourers & Related Workers 1341 41 3.0% 14.5% 4.2%

Total all Occupations 9233 986 9.7% 100.0% 100.0% Within the Queensland rail workforce in 2001 there was a lower percentage of female employees compared to the national average, with the proportion of women employed as elementary clerical, sales and service workers in the state also less than the industry average for that year. The state however had a higher percentage of females employed as advanced clerical and service workers and associate professionals compared to the national average. Employment for female rail workers as professionals and associate professionals in Queensland was higher as a proportion of total employment for females in the rail sector when compared to the industry average. The percentage of males employed as trades and related workers in 2001, as a proportion of all male rail employees was also higher in Queensland than nationally.

79

Table A14: SA - Employment by occupation and gender, 2001, Australian rail industry

Number Employed % Share of

Employm’t Male Female Female Male Female

Managers 97 13 11.8% 9.1% 6.5%Professionals 64 14 17.9% 6.0% 7.0%Associate Professionals 75 28 27.2% 7.0% 14.0%Trades & Related Workers 88 0 0.0% 8.3% 0.0%Adv. Clerical & Service Wkrs 6 27 81.8% 0.6% 13.5%Interm.Clerical, Sales & Service Wkrs 106 67 38.7% 9.9% 33.5%Interm. Production & Transport Wkrs 510 10 1.9% 47.9% 5.0%Elem. Clerical, Sales & Service Wkrs 54 29 34.9% 5.1% 14.5%

Labourers & Related Workers 65 12 15.6% 6.1% 6.0%

Total all Occupations 1065 200 15.8% 100.0% 100.0% Overall females represented a higher proportion of the rail workforce in SA than was the case on average, nationally in 2001. Within the state there was a higher percentage of females employed as associate professionals, advanced, intermediate & elementary clerical, sales & service workers as well as labourers and related workers. With respect to associate professionals along with advanced & intermediate clerical, sales & service workers, the percentage of women workers as a proportion of total female employment in the rail industry was higher in SA compared to the average figures for the other states. Likewise the state also had a higher percentage of men working as intermediate production and transport personnel, as a proportion of total male employment in the rail industry when compared to the national average. However, when it came to male rail employees assuming roles as trades & related workers, elementary clerical, sales & service workers and labourers & related workers, SA had a lower percentage as a proportion of total employment for these groups than the national industry average. Similarly there was also a lower percentage as a proportion of total employment of females employed as professionals and elementary clerical, sales & service workers than the equivalent 2001 average for the rail sector.

80

Table A15: WA - Employment by occupation and gender, 2001, Australian rail industry

Number Employed % Share of

Employm’t Male Female Female Male Female

Managers 93 9 8.8% 6.1% 6.4%Professionals 113 24 17.5% 7.4% 17.0%Associate Professionals 108 16 12.9% 7.1% 11.4%Trades & Related Workers 135 0 0.0% 8.7% 0.0%Adv. Clerical & Service Wkrs 3 19 86.4% 0.2% 13.5%Interm.Clerical, Sales & Service Wkrs 128 34 21.0% 8.4% 24.1%Interm. Production & Transport Wkrs 775 6 0.8% 50.9% 4.3%Elem. Clerical, Sales & Service Wkrs 56 33 37.1% 3.7% 23.4%

Labourers & Related Workers 113 0 0.0% 7.4% 0.0%

Total all Occupations 1524 141 8.5% 100.0% 100.0% Female rail employees in WA comprised a smaller percentage of the workforce compared to the national average for the industry in 2001. The state also had a lower percentage of women assuming roles as labourers and related workers with no female rail employees reported for this occupational group in WA. However amongst advanced, intermediate and elementary clerical, sales & service workers the percentage of female employees in WA was higher than the industry average. In WA the proportion of female workers employed as professionals and advanced clerical & service workers was also higher as a proportion of total female employment than was the case nationally. Employment of women as elementary & intermediate clerical, sales & service workers as a proportion of total female employment in the rail industry was lower in the state compared to the national average. The percentage of male intermediate production and transport workers as a proportion of total male employment in WA’s rail workforce was also unusually high. The percentage of men employed as trades and related workers, elementary clerical, sales & service workers and labourers & related workers was less as a proportion of total male employment in the state’s rail industry compared to the 2001 industry average.

81

Appendix B: Details on methodology for primary data collection

Initially a mail-out questionnaire was compiled and forwarded to relevant contacts in each of the 27 rail organisations who were identified as potentially suitable participants for the study. The questionnaire was designed to collect mainly factual human resource data from rail operators to assist in contributing to developing a more thorough profile of the national workforce in the rail transport sector. It was later determined that 2 of the companies were inappropriate candidates to participate in the study because they considered themselves to be freight forwarders rather than rail operators. Another rail organisation who was invited to participate declined to do so due to their belief that they had insufficient time and resources to do so. This thus reduced the total number of rail employers who agreed to participate in the study to 24. Due to a concerted effort in promoting the importance of the research project to the industry contacts and an intensive follow-up effort, a very high response rate was achieved from the study participants. In total, 22 rail operators completed and returned the mail-out questionnaire, equating to a response rate of approximately 92%. Following this, in-depth face-to-face interviews were then conducted between November 2006 and March 2007. In the majority of cases the individuals interviewed were human resource managers and/or other senior human resource personnel from each of the rail organisations who had agreed to participate in the study. However in the case of many of the smaller sized operators who didn’t have specialised human resources staff, the general manager of the organisation was generally interviewed. Additional data was thus accessed from interviews conducted with 24 rail respondents across Australia. This included all 22 operators who returned completed questionnaires as well as another operator who participated in the interview process but failed to return the questionnaire data. For one of the larger rail operators (who also completed the questionnaire), two separate interviews were completed with human resource staff from the same organisation who were based at two main sites of operation in different states (in two different capital cities). Full face-to-to face interviews were conducted with 21 operators. In the case of the face to face interviews, a copy of the interview questions was often forwarded to the participants prior to the interview taking place to provide the interviewees with an idea of the nature and scope of the questions that were going to be asked during the course of the interview. A further three operators opted to complete the interview questions independently, without a face to face interview needing to take place. The relevant human resource personnel within these organisations were thus provided copies of the interview questions and subsequently forwarded their responses to the research team.

82

Appendix C: Survey Instruments C.1 Mail Out Questionnaire 1. Please complete the following table with regard to your rail workforce; Table 1: Number of Employees Occupational Group Total Males Females Managerial Staff Engineers Business, Finance or IT Professionals Other Professionals Technical Officers/Technicians Engineering Associate Professionals Other Associate Professionals Mechanical & Fabrication Tradespersons* Electrical Tradespersons* Other Tradespersons Train Drivers & Assistants Rail Controllers & Signallers Other Plant & Machine Operators* Rail Guards & Attendants Clerical & Customer Service Staff* Labourers & Related Workers* Other

Note: *See attachment for examples of professions classified in this occupational group 2a. What proportion of your rail employees are employed on a part-time (i.e. less than 35 hours per week) basis?_________________________________________________________________ b. Roughly what would this figure have been for this organisation 5 years ago?___________________________________________________________________

83

3a. What proportion of your rail employees are employed on a casual (i.e. non-permanent) basis? _______________________________________________________ b. Roughly what would this figure have been for this organisation 5 years ago?_______ 4a. What are the unions that your rail workers are able to join?__________________________________________________________________ 4b. What proportion of your rail workforce is unionised?______________________________________________________________ 4c. Roughly what proportion of your rail workforce was unionised 5 years ago?___________________________________________________________________ 5a. Please complete the following table with regard to your rail workforce:

84

Table 2:

Total Number of Employees In Each Age Group Occupational Group 15-24 25-34 35-44 45-54 55-64 65+ Managerial Staff Engineers Business, Finance or IT Professionals Other Professionals Technical Officers/Technicians Engineering Associate Professionals Other Associate Professionals Mechanical & Fabrication Tradespersons* Electrical Tradespersons* Other Tradespersons Train Drivers & Assistants Rail Controllers & Signallers Other Plant & Machine Operators* Rail Guards & Attendants Clerical & Customer Service Staff* Labourers & Related Workers* Other

Note: *See attachment for examples of professions classified in this occupational

group 6. In the following table, for each occupational group please indicate the number of rail vacancies that you are currently trying to fill; the typical annual wastage rate (the proportion of rail employees leaving the firm for other jobs or for personal reasons other than retirement); the approximate proportion of rail employees you would expect to retire in the next five years and whether employment growth is expected in the next 1-5 years.

85

Table 3:

Occupational Group

Number of current vacancies

Typical annual wastage rate

Proportion likely to retire in next 5 years

Is Employment Growth Expected for the Occupational Group in the Next 1-5 Years (Y or N)

Managerial Staff % %

Engineers % % Business, Finance or IT Professionals

% %

Other Professionals % %

Technical Officers/Technicians % % Engineering Associate Professionals

%

%

Other Associate Professionals

%

% Mechanical & Fabrication Tradespersons*

%

%

Electrical Tradespersons*

%

%

Other Tradespersons

%

%

Train Drivers & Assistants

%

% Rail Controllers & Signallers % % Other Plant & Machine Operators*

% %

Rail Guards & Attendants % % Clerical & Customer Service Staff*

% %

Labourers & Related Workers* % % Other % %

Note: *See attachment for examples of professions classified in this occupational

group 7. Are there any particular jobs or positions (such as train drivers, electricians, rail signallers, etc.) for which your organisation experiences particular difficulty in recruiting and/or retaining rail workers? If so, please list these jobs and indicate what you see as the main reason(s) for the shortage.

86

Table 4: Position/Job title Main reason(s) for shortage (Tick one or indicate other reason) No

applicants at all

No applicants with adequate experience

No applicants with adequate qualifications

Other (please specify)

8a. Please tick the states and/or territories in which your organisation has rail operations and the percentage of your total rail workforce that is employed in each state or territory where your rail operations occur. State/Territory % of Total Rail Workforce NSW _______________________ VIC. _______________________ QLD _______________________ WA _______________________ SA _______________________ TAS _______________________ NT _______________________ ACT _______________________ 8b. Does your organisation subdivide any of its rail operations within specific states or territories on a regional or some other intrastate basis? Yes go to 8c No go to 8d

87

8c. Please list these regional divisions and the specific states or territories to which they apply e.g. rail operations in WA - may be divided into Northern (Pilbara region) and South West (Metropolitan area)

8d. Are there any specific regional areas where you find it particularly difficult to attract and retain rail workers? If so, please list these regions. 9. For each of the occupational categories, the following table presents four sources of recruitment: internal; graduates or students from training and/or educational institutes; other firms and foreign workers. Thinking of your current recruitment practices for rail employees; rank the importance of each source using the following scale:

1. Most positions in this occupation are filled this way 2. A significant number of positions are filled this way, but it is not the most

important means of recruitment.

88

3. Very few employees are recruited this way 4. Not used at all.

If other methods are used, please list these in the final column along with their ranking.

Table 5:

Occupational Group

Internal recruitment or training within the organisation

Training and/or

educational institutions, programs or courses

Other firms or industry sectors

Foreign workers

(e.g. through skilled

migration) Other- please specify Managerial Staff Engineers Business, Finance or IT Professionals Other Professionals Technical Officers/Technicians Engineering Associate Professionals Other Associate Professionals Mechanical & Fabrication Tradespersons* Electrical Tradespersons* Other Tradespersons Train Drivers & Assistants Rail Controllers & Signallers Other Plant & Machine Operators* Rail Guards & Attendants Clerical & Customer Service Staff* Labourers & Related Workers* Other

Note: *See attachment for examples of professions classified in this occupational group

89

ATTACHMENT Occupational Group Examples Mechanical and Fabrication Tradespersons

Maintenance Tradespersons, Mechanics

Structural Steel and Welding Tradespersons

Metal Tradespersons Electrical and Electronics Tradespersons

Electricians

Communications Tradespersons Other Plant and Machine Operators Engine and Boiler Operators Crane, Hoist and Lift Operators Clerical & Customer Service Staff Terminal Operators & Cashiers,

Receptionists Data Entry Clerks, Payroll/Account Clerks Labourers & Related Workers Railway Labourers, Cleaners,

Kitchenhands

C.2 Interview Questions With respect to the major changes that have occurred in the rail industry over the past 5-10 years? 1A) Which sectors of the industry have experienced growth or decline? - by how much?

1C) Have there been any changes in the training and education resources available to rail operators and rail staff?- if so please explain - preemployment training and education e.g. TAFE courses, training colleges - on the job training e.g. apprenticeships

1B) Have there been any major technology/operational developments? – if so please explain -what have been the implications to efficiency + productivity -need to retrain staff to use technology

1D) Have there been any changes in the way that rail workers acquire their skills/education? i.e. do a higher a higher proportion of rail workers gain skills/education prior to being employed or after

90

With respect to the major changes that have occurred in your rail workforce over the past 5-10 years? 2A) How have the skills requirements for rail workers changed? -what skills/knowledge/experience are now more in demand? -what training, skills/knowledge/experience or other specific qualifications do you look for and value in your employees and new recruits?

2C) What changes have you noticed in the occupational structure of your rail workforce? - which occupational groups have experienced a growth in employment in recent years? - which occupational groups have experienced a decline in employment in recent years?

2B) What training and education opportunities do you offer or encourage your employees to pursue? -what training and education resources/facilities do you currently use to train your rail staff? e.g. training colleges, trade schools, TAFE courses

2D) Is there a lot of competition to recruit and retain workers among firms in the rail industry? -if so, in which professions/occupations? - how do you attract new rail employees or recruits? - what incentives do you offer?

With respect to the major changes you are anticipating will occur in the rail industry over the next 5-10 years? 3A) Do you expect output for the rail industry to grow? - by how much, what sectors will be impacted? -which sectors of the industry are likely to experience growth or decline?- by how much?

3C) Are you aware of any major rail infrastructure developments that your organisation is planning or maybe involved with in the future? -what sectors/occupational groups are likely to be impacted?

3B) Are you anticipating any technological/operational developments?- if so, explain -changes to efficiency and productivity -implications for your rail labour force

3D) What changes to the training and education resources that are available to rail operators and rail staff do you anticipate will occur in the future? -would you like to see occur?

With respect to the changes you are anticipating will occur in your rail workforce over the next 5-10 years? 4A) Do you expect to employ more rail workers or invest more in training? -what are you looking to implement in your workforce planning for the future?

4E) How concerned is your organisation about the aging of your rail workforce? i.e. the imminent retirement of rail workers -which occupations do you feel will be most affected? -do you have any measures in place to monitor the aging of your rail workforce?- if so, explain

4B) How concerned is your organisation about 4F) What programs or incentives do you offer to get

91

turnover rates among your rail workers? -which occupations are most affected? -do you have any measures in place to monitor the turnover rate of your rail workforce?- if so, explain

older employees to delay retirement and continue working?

4C) What programs or incentives do you offer to retain existing employees?

4G) What are some of the reasons why you may experience labour shortages/recruitment difficulties in specific regions/occupations?

4D) Are you anticipating labour shortages and/or recruitment difficulties in any regions or occupations in the next 5-10 years?

4H) In which rail occupations is employment sensitive to changes i.e. increase in rail output? - how much would employment in the occupational group be affected by changes in rail output?- Please complete Table 1 (see below- next page)

Table 1: Please complete

Careers in the Rail Industry/Rail Careers in Your Organisation

5A) What do you believe are the main factors impeding the attraction of employees into the rail industry?

-do you think the public’s perceptions about being employed in the rail industry i.e. the public

5C) Do you think potential recruits know much about the benefits/advantages of a career in the rail industry? - what type of public image do you think the rail industry has? (i.e. among young people, students, etc.)

Occupational Group % Effect on Employment if Rail Output Increased by 50%

Managerial Staff

Engineers

Business, Finance or IT Professionals

Other Professionals

Technical Officers/Technicians

Engineering Associate Professionals

Other Associate Professionals

Mechanical & Fabrication Tradespersons*

Electrical Tradespersons*

Other Tradespersons

Train Drivers & Assistants

Rail Controllers & Signallers

Other Plant & Machine Operators*

Rail Guards & Attendants

Clerical & Customer Service Staff*

Labourers & Related Workers*

Other

92

image of the rail industry, has some effect? -what do you believe are the main causes for the labour shortages/recruitment difficulties in the rail industry?

5B) Do you think enough resources are being invested to educate the public/potential employees about the rail industry? i.e. in advertising marketing, promotions etc

-what changes would you like to see in the way this is done? e.g. would you prefer to see increased focus/funding from governments or rail industry groups?

5D) What information and guidance do you provide potential or existing employees with, in regard to their career options and opportunities within your organisation and the rail industry?

e.g. do you promote rail career options within your organisation at highschools, universities or career fairs -do you offer any work experience, apprenticeship or graduate entry programs

93

Appendix D: Modelling Results by Year Appendix Table D1: Rail workforce projections by year

2006p 2007p 2008p 2009p 2010p 2011 p 2012 p 2013 p 2014 p 2015 p 2016 p 2017 p 2018 p 2019 p 2020 p

Rail output forecasts

Freight (billion tonne-kms) 174.95 179.33 183.42 187.56 191.75 195.96 200.15 204.38 208.59 212.81 217.03 221.26 225.49 229.75 234.06

Passenger (billion pssnger-kms) 11.58 11.86 12.04 12.29 12.57 12.77 12.92 13.02 13.12 13.19 13.32 13.45 13.58 13.71 13.84 Index of weighted output (millions) 1.56 1.60 1.63 1.66 1.70 1.73 1.76 1.79 1.82 1.85 1.88 1.91 1.94 1.97 2.00

Output per worker 54.3 55.4 56.5 57.6 58.8 59.9 61.1 62.4 63.6 64.9 66.2 67.5 68.8 70.2 71.6

Total employment (persons) 28679 28807 28810 28863 28935 28922 28858 28756 28635 28494 28387 28275 28158 28037 27915

Occupational share

Managerial 5.7% 6.1% 6.3% 6.5% 6.7% 6.9% 6.8% 6.8% 6.8% 6.8% 6.8% 6.8% 6.7% 6.7% 6.7%

Professionals 10.3% 8.8% 8.9% 9.0% 9.1% 9.3% 9.2% 9.2% 9.2% 9.1% 9.1% 9.1% 9.0% 9.0% 9.0%

Associate Professionals 9.5% 9.9% 9.9% 9.9% 9.9% 9.8% 9.8% 9.8% 9.8% 9.7% 9.7% 9.7% 9.7% 9.6% 9.6%

Tradespersons 10.9% 9.5% 9.6% 9.8% 9.9% 10.1% 10.1% 10.0% 10.0% 10.0% 10.0% 10.0% 9.9% 9.9% 9.9%

Adv Clerical & Service 1.9% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%

Int Clerical & Service 11.3% 11.8% 11.8% 11.8% 11.9% 11.9% 11.8% 11.8% 11.8% 11.7% 11.7% 11.7% 11.6% 11.6% 11.5%

Int Production+Transport 30.2% 31.4% 31.4% 31.4% 31.3% 31.3% 31.5% 31.7% 31.9% 32.1% 32.3% 32.5% 32.7% 32.9% 33.1%

Elem Clerk,Sales & Service 13.4% 14.0% 14.1% 14.1% 14.2% 14.2% 14.2% 14.1% 14.1% 14.0% 14.0% 13.9% 13.9% 13.8% 13.8%

Labourers & Related Workers 6.9% 6.6% 6.1% 5.5% 5.0% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%

Total 100.0

% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Demand by occupation (persons)

Managerial 1629 1758 1813 1872 1932 1987 1976 1963 1950 1935 1922 1909 1895 1882 1868

Professionals 2942 2531 2565 2603 2643 2676 2660 2641 2620 2599 2579 2560 2540 2520 2500

Associate Professionals 2730 2849 2846 2848 2852 2848 2834 2816 2797 2777 2759 2741 2722 2704 2685

Tradespersons 3128 2735 2779 2827 2878 2920 2906 2890 2871 2851 2834 2817 2799 2781 2763

Adv Clerical & Service 538 565 569 574 579 583 579 575 571 566 562 558 554 550 545

Int Clerical & Service 3242 3394 3402 3416 3433 3439 3419 3395 3370 3343 3319 3294 3269 3244 3219

Int Production+Transport 8660 9042 9040 9052 9071 9063 9104 9128 9143 9150 9171 9190 9206 9220 9234

Elem Clerk,Sales & Service 3846 4033 4049 4073 4098 4112 4088 4060 4030 3997 3969 3940 3910 3880 3850

Labourers & Related Workers 1965 1900 1747 1597 1448 1294 1292 1287 1282 1276 1272 1267 1262 1257 1252

Total 28679 28807 28810 28863 28935 28922 28858 28756 28635 28494 28387 28275 28158 28037 27915

94

2006p 2007p 2008p 2009p 2010p 2011 p 2012 p 2013 p 2014 p 2015 p 2016 p 2017 p 2018 p 2019 p 2020 p Supply by occupation (persons)

Managerial 1423 1411 1398 1386 1373 1360 1334 1308 1282 1256 1230 1194 1157 1121 1084

Professionals 2311 2350 2388 2426 2464 2502 2541 2579 2618 2656 2694 2730 2767 2803 2839

Associate Professionals 2531 2530 2528 2527 2525 2523 2519 2514 2510 2505 2500 2480 2459 2438 2417

Tradespersons 2989 2949 2908 2867 2826 2786 2737 2688 2640 2591 2542 2492 2441 2390 2339

Adv Clerical & Service 507 509 511 513 515 516 519 522 525 529 532 524 516 508 500

Int Clerical & Service 3334 3365 3396 3426 3457 3488 3517 3547 3576 3606 3635 3642 3648 3655 3662

Int Production+Transport 8516 8353 8191 8028 7865 7702 7470 7238 7006 6774 6542 6262 5981 5700 5419

Elem Clerk,Sales & Service 4181 4244 4307 4369 4432 4495 4539 4583 4626 4670 4714 4731 4747 4763 4780

Labourers & Related Workers 2563 2456 2350 2243 2136 2029 1941 1854 1766 1679 1591 1521 1452 1382 1313

Total 28357 28166 27975 27784 27593 27402 27118 26834 26550 26266 25982 25575 25167 24760 24353

Projected shortage – persons (Demand minus Supply)

Managerial 206 347 415 487 559 626 642 655 667 679 692 715 738 761 784

Professionals 630 181 177 177 179 174 119 61 3 -57 -115 -171 -227 -283 -339

Associate Professionals 199 319 318 322 327 325 315 302 288 272 259 261 263 265 267

Tradespersons 139 -213 -129 -40 51 134 169 201 232 260 292 325 358 391 423

Adv Clerical & Service 31 57 59 61 65 66 60 53 45 38 31 35 38 42 45

Int Clerical & Service -93 29 7 -10 -24 -49 -98 -152 -206 -263 -316 -347 -379 -411 -443

Int Production+Transport 144 689 849 1025 1206 1361 1634 1890 2137 2375 2629 2928 3225 3520 3814

Elem Clerk,Sales & Service -336 -211 -257 -297 -333 -382 -450 -522 -597 -673 -746 -791 -837 -883 -930

Labourers & Related Workers -598 -557 -603 -646 -688 -735 -650 -566 -484 -402 -319 -254 -190 -125 -61

Total 322 640 835 1079 1342 1520 1740 1922 2085 2228 2405 2701 2990 3277 3562

Projected shortage - % of projected demand

Managerial 12.6% 19.7% 22.9% 26.0% 29.0% 31.5% 32.5% 33.4% 34.2% 35.1% 36.0% 37.5% 38.9% 40.4% 42.0%

Professionals 21.4% 7.2% 6.9% 6.8% 6.8% 6.5% 4.5% 2.3% 0.1% -2.2% -4.5% -6.7% -8.9% -11.2% -13.6%

Associate Professionals 7.3% 11.2% 11.2% 11.3% 11.5% 11.4% 11.1% 10.7% 10.3% 9.8% 9.4% 9.5% 9.7% 9.8% 10.0%

Tradespersons 4.4% -7.8% -4.6% -1.4% 1.8% 4.6% 5.8% 7.0% 8.1% 9.1% 10.3% 11.5% 12.8% 14.1% 15.3%

Adv Clerical & Service 5.7% 10.0% 10.3% 10.7% 11.2% 11.4% 10.3% 9.2% 8.0% 6.7% 5.5% 6.2% 6.9% 7.6% 8.3%

Int Clerical & Service -2.9% 0.9% 0.2% -0.3% -0.7% -1.4% -2.9% -4.5% -6.1% -7.9% -9.5% -10.5% -11.6% -12.7% -13.8%

Int Production+Transport 1.7% 7.6% 9.4% 11.3% 13.3% 15.0% 17.9% 20.7% 23.4% 26.0% 28.7% 31.9% 35.0% 38.2% 41.3%

Elem Clerk,Sales & Service -8.7% -5.2% -6.4% -7.3% -8.1% -9.3% -11.0% -12.9% -14.8% -16.8% -18.8% -20.1% -21.4% -22.8% -24.1%

Labourers & Related Workers -30.4% -29.3% -34.5% -40.5% -47.6% -56.8% -50.3% -44.0% -37.7% -31.5% -25.1% -20.1% -15.0% -9.9% -4.8%

Total 1.1% 2.2% 2.9% 3.7% 4.6% 5.3% 6.0% 6.7% 7.3% 7.8% 8.5% 9.6% 10.6% 11.7% 12.8%

95

References Affleck Consulting 2003, The Australian Rail Industry: Overview and Issues- Report prepared for the National Road Transport Commission. Available from: http://www.ntc.gov.au/ViewPage.aspx?page=A02205505300960020 Apelbaum Consulting Group 2005, Australian Rail- The 2004 Productivity Report, Australasian Railways Association [ARA] Inc., Australia. Available from: http://www.ara.net.au/dbdoc/ARA%20Productivity%20Report%202004.pdf Apelbaum Consulting Group 2007, Australian Rail Transport Facts 2007, Apelbaum Consulting Group Pty Ltd, Australia. Australian Bureau of Statistics. 2006. Australian Social Trends 2006, Cat. no. 4102.0, ABS, Canberra. Australian Job Search. 2006. “Train Drivers”, Australian Government, Canberra. Available from: http://www.jobsearch.gov.au/joboutlook/default.aspx?PageId=AscoDesc&ASCOCode=7315 Australian National Training Authority [ANTA]. 2003. Submission by the Australian National Training Authority; Senate Inquiry into Current and Future Skills Needs, p 33, Australia.

Australasian Railways Association [ARA] 2003a, Australian Rail - Industry Report 2003, ARA Inc., Australia. Available from: http://www.ara.net.au/dbdoc/Industry%20Report%202003.pdf

Australasian Railways Association [ARA] 2003b, Yearbook and Industry Directory 2003, ARA Inc., Australia. Australasian Railways Association [ARA] 2005a, Australian Rail – Industry Report 2005, ARA Inc., Australia. Available from: http://www.ara.net.au/dbdoc/Industry%20Report%202005.pdf Australasian Railways Association [ARA] 2005b, Yearbook and Industry Directory 2005, ARA Inc., Australia. Australasian Railways Association [ARA] 2006a, Yearbook and Industry Directory 2006, ARA Inc., Australia. Australasian Railways Association [ARA] 2006b, Submission to the House of Representatives Standing Committee on Transport and Regional Services- Inquiry into the integration of regional rail and road networks and their interface with ports, ARA Inc., Australia. Available from: http://www.aph.gov.au/house/committee/trs/networks/subs/sub070.pdf Australasian Railway Association [ARA] 2006c, The Changing Face of Rail - A Journey to the employer of Choice, ARA Inc., Canberra, Australia. Australian Railway Research and Development Organisation [ARRDO], 1985, Characteristics of the Rail Transport Workforce: Information Paper 2, Melbourne, Table 3.1, p 12.

96

Australian Transport Safety Bureau [ATSB]. 2004. “Rail Transport Activity in Australia”, Australian Government, Canberra. Available from: http://www.atsb.gov.au/publications/2004/Rail_Act_1.aspx

Banks, G. 2002, ‘Regulating Australia’s infrastructure: looking forward’, Presentation by the Chairman of the Productivity Commission to the National Infrastructure Summit, hosted by The Australian Financial Review and AusCID, Melbourne, 14 August. Becker, G. S. 1962. Investment in human capital: a theoretical analysis. Journal of Political Economy, 70: Supplement, p 9-49. Bradshaw, W. 1997. Competition in the rail industry. Oxford Review of Economic Policy, 13 (1): p 93-103 Bureau of Transport and Regional Economics [BTRE]. 2006. Freight measurement and modeling in Australia, BTRE, Report 112, Department of Transport and Regional Services, Commonwealth of Australia, Canberra. Department of Education, Science and Training [DEST]. 2006. National Industry Skills Report – May 2006, Commonwealth of Australia, Canberra. Available from: http://www.dest.gov.au/NR/rdonlyres/9364A212-6183-4A66-8145-9165CB98C9F7/10627/NationalIndustrySkillsReportMay2006.pdf Everett, S. 2006. Deregulation and reform in Australia: Some emerging constraints, Transport Policy, 13 (1): p 74-84, January. Graham, V. 2001, Fuel Taxation Inquiry Submission, National Rail Corporation, Australia. Available from: http://fueltaxinquiry.treasury.gov.au/content/Submissions/Industry/NRail_253.asp Hensher, D.A, Daniels R., DeMellow I. 1994, Revisions and Update: Productivity of Australian Railways 1971/71 to 1991/92, Institute of Transport Studies, Graduate School of Business- The University of Sydney. Pacific National 2006, Rail Reform, Pacific National, Australia. Available from: http://www.pacificnational.com.au/corporate/rail_reform.asp Productivity Commission. 2000a. Progress in Rail Reform, Productivity Commission (Australian Government), Canberra. Available from: http://www.pc.gov.au/inquiry/rail/finalreport/index.html\ Productivity Commission. 2000b. An Assessment of the Performance of Australian Railways 1990-1998, Productivity Commission (Australian Government). Canberra Available from: http://www.pc.gov.au/inquiry/rail/finalreport/supplement/supplement.pdf Productivity Commission. 2000c. Draft Report- Progress in Rail Reform (Media Release), Productivity Commission (Australian Government). Canberra Available from: http://www.pc.gov.au/inquiry/rail/draftreport/mediarelease.html Productivity Commission. 2006. Road and Rail Infrastructure Pricing, Productivity Commission (Australian Government). Canberra Available from: http://www.pc.gov.au/inquiry/freight/draftreport/index.html

97

Rail Collaborative Research Centre [Rail CRC] 2006, Research: Theme 6 Industry Skills Development (Education and Training), Rail CRC. Australia Available from: http://www.railcrc.cqu.edu.au/uploads/theme%206.pdf Rail, Tram & Bus Union [RTBU] 2004, Skills Crisis in Australia’s Railways. Rail, Tram & Bus Worker, 12 (3): p 1 Available from: http://www.rtbu-nat.asn.au/journal/303/1098065251_21378.html Rail, Tram & Bus Union [RTBU] 2007, Inquiry into Workforce Challenges in the Transport Industry- Submission to Inquiry by Senate Employment, Workplace Relations & Education Committee. January. Available from: http://www.aph.gov.au/Senate/committee/eet_ctte/transport_employment/submissions/sub27.pdf Shah, C. and Burke, G. 2005. Skills shortages: concepts measurement and policy responses, Australian Bulletin of Labour, 31(1): p 44-71. Transport and Logistics Industry Skills Council [TDT] 2005, Industry Skills Report, Australian National Training Authority, February, p 9-28. Available from: http://www.tdtaustralia.com/files/documents/1111027027transportlogistics%20final.pdf Workplace Research Centre 2006, Human Resources in Practice (HiP) Report- Succession Management, Newsletter Issue 33, July, University of Sydney. Yates, A. 1999, Engineering for rail sector growth: a report on engineering rail skills shortages in Australia, Institution of Engineers, Australia. Available from: http://66.102.7.104/search?q=cache:pgrhY4ur6mcJ:www.ieaust.org.au/library/publications/railreport.doc+rail+sector+growth+athol+yates&hl=en&gl=au&ct=clnk&cd=2