Review and analysis of the demand for skills in the Solomon Islands labour market

Type Journal Article - Report commissioned by DFAT. Melbourne: Curtain Consulting
Title Review and analysis of the demand for skills in the Solomon Islands labour market
Publication (Day/Month/Year) 2013
Solomon Islands, despite its larger population than other Pacific island countries, a small formal economy with only 43,500 employed in 2009. The demand for skills that meet international standards of competency in Solomon Islands is shaped by the size and nature of its formal economy. According to the World Bank’s recent World Development Report on Jobs, small island nations, especially in the Pacific, are unable to reap the benefits from a concentration of businesses and skills available to large economies because of their size and other features. Remoteness from the main trade routes and the high cost of transport also means they cannot benefit from being close to high-income markets except through tourism. Employment opportunities in the formal economy are limited apart from working for government and in providing basic services. However, the World Bank emphasises that for these countries outmigration is a major way people can improve their living standards. Also return migration and overseas communities through remittances can boost business opportunities in the domestic economy.

Issues covered in report
This report looks at evidence about skill gaps in cognitive and social skills as well as technical skills. In terms of the latter, the report makes use of detailed 2009 census data on occupations, industry sector of employment and qualifications to identify skill shortages and skill gaps in the existing workforce. Particular use is made of data on the occupations of foreign workers to identify domestic skill shortages. The skills gap in specific occupations is measured by comparing the share of the domestic workforce with post-school qualifications with the share of foreign workers with post-school qualifications. Also presented is information from two employer surveys.

Information on overseas opportunities for employment for Solomon Islanders is another major focus of this report. This information covers the seasonal work opportunities in New Zealand and Australia. Opportunities for longer-term work in Australia are identified through a close look at the types of jobs Solomon Islands residents in Australia have, based on 2011 census data. Opportunities for skilled work in New Zealand are also highlighted by information on the occupations of migrants from Solomon Islands approved for skilled migrant entry. Other, more general information on opportunities for skilled work for Australia and New Zealand are also presented.

Key findings
The most direct and ‘hard’ measure of domestic skill shortages is a higher proportion of foreign workers in a specific occupation compared with other occupations. The presence of foreign workers is solid evidence that the domestic supply of skills training is inadequate because employers go to considerable expense to import and pay higher wages to these workers. For the occupations up to the technician & associate professional level, higher proportions of foreign workers are to be found, in rank order: machine operators & assemblers, drivers & mobile plant operators, retail & other services managers, physical & engineering science technicians, and metal machinery & related workers.

Skill shortage gaps for specific occupations have been identified by reference to the share of job holders with a post-school qualification in occupations where a post-school qualification is expected, for example, professional & technician occupations. A specific measure used of the skills gap in an occupation is the difference between the proportion of foreign workers in with a post-school qualification and the proportion of domestic jobholders in that occupation with a post-school qualification. The occupations with the largest skills gap, based on this measure, are: life science & health professionals, extraction & building trades workers, and teachers have the next largest skills gap. Other large skills gaps are evident for retail and other services managers, science and engineering professionals, and physical & engineering science technicians. The demand for skills to international standard is also shaped by the wage structure. Evidence from the 2006 household income and expenditure survey shows that workers with trade certificates are not paid more than workers without a certificate. Other evidence of shortages suggests that the demand for trade skills of international standard, especially in the construction sector, is low. Skills in demand, as shown in higher wages and the number of foreign workers with post-school qualifications, are more evident for jobs at the professional and technician skill levels. Nevertheless, the small numbers of jobholders in these occupations and the nature of the economy means the long-term demand for these skills is likely to be low. If the supply of skills training is to be tied to employment outcomes, as a demand-driven training system requires, the domestic job opportunities are relatively few. Job vacancies are likely to be limited to replacement demand, based on current jobholders reaching retirement age or the small number who migrate to work overseas. Any expansion of skills training to international standards in Solomon Islands needs to focus on achieving employment outcomes in neighbouring high-income labour markets.

Short-term seasonal work in Australia and New Zealand has the potential to provide income to low-income households and communities. However, the numbers of those taking part have been low compared with neighbouring countries such as Vanuatu. From the perspective of the demand for skills training, it is low-skilled work in the sense that the skills can be learned relatively quickly on the job. Nevertheless, a reputation as productive workers has a high reward in the form of employer requests for workers to return or for others from their community to come. Opportunities for skilled work in Australia and New Zealand are explored through the use of data from the 2011 Australian census on the occupations of Solomon Islands residents in Australia. Information on the occupations of skilled migrants from Solomon Islands to New Zealand is also presented More general information on the types of skill shortages in Australia and New Zealand is also provided.

The report concludes with recommendations on how to collect and build up a system of information to identify skills in demand. The recommended approach is a bottom-up, learn by doing approach based on local needs. This is to ensure that trainer providers and employers at are the centre of a system of data collection and feedback. The report closes with a framework showing the types of data and data sources needed to identify skills shortages and skills gaps.

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