A RAPID increase in skilled migration is urgently needed to meet the demands of mining boom Mark II with the growth rate among the working population expected to plunge to half its level during the last boom. The call for increased migration comes amid warnings that a skills crunch will drive up interest rates. Deloitte Access Economics forecasts the growth in Australia's working-age population will fall to just 1 per cent next year, down from 2.2 per cent in 2008-9. Economists from big banks, think tanks and consultancies have told the Herald that not enough skilled labour is available to supply a wave of new mining and energy-related projects."Without more immigration forget it,'' Barry Hughes, an economist, said. "We haven't got Buckley's of getting anywhere near [the skilled labour needed]."

The departure of ''early'' baby boomers from the workforce has exacerbated the decline. The last time growth in the working age population was at 1 per cent Australia was climbing out of the deep recession of the early 1990s and unemployment was high. This time the economy is near what economists call full employment. After peaking at 320,000 in late 2008, annual migration fell to 185,800 in the year to September, 102,000 less than the year earlier. ''In the short term Australia looks like having too few workers to spread across too many jobs.

A shift in the politics of migration since the mining boom Mark I is partly responsible. At the last federal election the two main parties said they wanted lower migration numbers and a "sustainable" Australian population. But managing the demand for labour amid dwindling population growth now looms as a big policy test. Mr. Richardson said these measures taken to increase migration, while positive, would not be enough, and permanent immigration should be increased. Many prominent private sector economists, including Mr Bloxham, Saul Eslake of the Grattan Institute and Craig James of Commsec, also recommend lifting the permanent immigration intake. The chief economist of Westpac, Bill Evans, said the demands of the mining boom could "suck" skilled workers away from other sectors and create economy-wide wages pressures. The Business Council of Australia insists that migration numbers should not be allowed to fall further and has called for greater use of temporary migration visas.

CHRONIC skills shortages in Western Australia's resources hub of Karratha have created a two-tier town, locals say. Wedged between the Pilbara desert and the Indian Ocean, the town of 18,000 permanent residents supports an extra 13,000 itinerant workers who service the resources boom. Young men fly in by the hundreds each day from capital cities around the country. Stepping off the plane, they arrive in a rugged landscape where anything below 30 degrees is considered cool. These workers are vital for the massive mining and gas projects, but the fierce competition for labour has also created plenty of headaches for the local community. ''There's almost two economies here,'' says the chief executive of the Karratha and Districts Chamber of Commerce and Industry, Kim Henshaw. ''There's the mining sector and the rest.'' Most of the resource workers live on mining or gas developments for two to four weeks, spending little of their generous salaries in the town, he says. Andrew Ziems, the general manager of the Karratha International Hotel, competes with the miners for staff by supplying workers with accommodation and offering wages 20 per cent above those in eastern states. The hotel also employs several chefs on 457 temporary work visas.

But the business, which contracts for mining giants such as Rio Tinto, must provide ever more generous incentives to recruit staff from around the country. When he graduated as an engineer 20 years ago, he says, a salary of $27,000 was a good offer. Today a graduate salary is at least $80,000 in the west, he says, and can be up to 30 per cent more than in eastern states. The business also pays the cost of flying them in and out and supplying accommodation. This adds about $100,000 to the wage cost.
The content of this article was extracted from brisbanetimes.com.au by Matt Wade & Clancy Yeates