Some mining companies are having to offer pay increases in excess of five per cent and more attractive work hours to retain skilled workers, the Department of Treasury has found.
In its latest Economic Roundup, it says mining and related industries in Western Australia and Queensland are experiencing an increase in staff turnover, and some firms are finding it difficult to recruit and retain skilled labour.
“A number of firms in the mining sector have reviewed remuneration packages, or changed rosters, in an attempt to retain workers,” it says in the report released on Saturday.
“Firms are increasingly utilising fly-in-fly-out arrangements from other states as another measure to attract and retain skilled staff.”
Feedback from its business liaison program conducted in May found that while skills shortages are not as acute as during the last mining boom, shortages in the resources and related construction sectors are expected to drive wage pressures in the near term.
Wage agreements awarding pay increases in excess of five per cent were recorded for some specialised professions.
This compares with other firms that are providing pay increases of around three to five per cent.
In the quarterly liaison program, in which it contacts 34 businesses and organisations, it found mining investment remained strong and demand for resources was expected to drive investment growth.
“However, concerns are starting to emerge about the capacity of existing infrastructure and the availability of skilled labour to support the rapid expansion in volumes, particularly if there is slippage in planned infrastructure projects,” it says.
The report also says that economic activity has yet to recover fully from the Queensland summer floods and cyclone, with some resources companies still removing water from mines and some infrastructure having not yet fully returned to full capacity.
“Contacts suggested that it could take until the second half of 2011 to pump excess water out of all mines and return to full production,” it says.
The inflationary effect of the natural disasters on fresh food prices is still significant and are expected to stay elevated for the next few months.
The strong Australian dollar, while making imported materials cheaper, is putting the manufacturing sector under pressure from overseas competitors.
In a separate article by treasury staff, the department says the economy has benefited from a shift towards household saving and lower spending since the global financial crisis.
The current account deficit would otherwise be larger, banks would have a greater dependence of short-term wholesale funding, and there would be additional upward pressure on interest rates and the exchange rate.
“Increased household saving and debt stabilisation have also reduced households’ vulnerability to adverse economic shocks, which has helped to limit macroeconomic vulnerability,” it says.
The Reinvent Team would like to thank Fairfax Media, where this article first appeared.