Arup, Worley, Monadelphous: Engineering wage inflation flows from the bottom to the top

Mr Ashton, who started in February 2020 on a lower pay package than his predecessor Andrew Wood, was paid a total of $4.16 million in fiscal 2022 including a $1.6 million cash bonus, up from $3 million a year earlier.

Worley’s stock has performed well under Mr Ashton’s tenure, rising about 18 per cent, but the company has also benefited from rising demand for engineering services.

‘Higher than usual’ pay increases

Worley declined to comment on the exact size of pay increases being given to the engineers it employed in Australia. It said salary rises were “slightly higher than usual” and mostly in line with industry escalation rates.

“However, there are some larger increases in pockets, and particularly in areas of tighter demand,” a company spokesman said.

Monadelphous, a smaller Perth-based engineering group that is also performing well, paid its chief executive Rob Velletri a fixed salary of $1 million in fiscal 2022, up from $915,243 a year earlier when executives took temporary salary cuts due to the COVID-19 pandemic.

Mr Velletri’s total pay, including bonuses and stock options, rose to $1.54 million over the past 12 months from $1.16 million a year earlier.

To entice workers to stay with the company, Monadelphous – which has been forced to be more selective about bidding for new projects due to worker shortages – has started an employee retention plan, issuing share rights that vest over three years.

Arup’s Ms West, who is attending the national jobs summit in Canberra, said the group was dealing with “shortages on all fronts”, adding the fact that only 12 per cent of Australia’s engineers were women contributed to the paucity.

Critical skills shortages

It was particularly difficult to find decarbonisation experts, materials scientists and environmental engineers – the kind of people critical to helping Australia build projects that will help the nation meet its net zero emissions target, Ms West said.

“The global demand for engineering (and other skills) required to enable the transition to net zero will intensify significantly over the coming years as the world faces the reality of the need for faster action to decarbonise economies.”

Data from the Australian Bureau of Statistics shows that people working in the construction industry received a 3.4 per cent pay increase on average in the 12 months to June. The Association of Professional Engineers Australia’s most recent employment and remuneration report, released last year, forecast engineers would receive a 1.6 per cent pay rise in 2021-22.

Romilly Madew, the former CEO of Infrastructure Australia who is now heading up Engineers Australia, said company bosses had been giving increases above those levels to hire or retain engineers. “There is such a war on talent for engineers, it’s very competitive,” she said.

The “acute” shortages are due to both low numbers of engineers graduating from universities (only half of the students who start studying engineering finish their degrees) and the difficulty that many migrants with engineering qualifications have in actually getting jobs, Ms Madew said.

The shortages of engineers that existed before pandemic have been compounded by Australia’s border closures at the same time that demand is rising due to a big pipeline of complex infrastructure projects, including clean energy projects.

Engineering Australia’s analysis of job vacancies compiled by the National Skills Commission showed there has been a 176 per cent jump in engineering vacancies nationally in the two years to June 2022, to 6681 vacancies. It also showed that vacancies are the highest since late 2012.

The industry group’s most recent report on skills shortages, released in August, has outlined dozens of recommendations, including promoting science, technology, engineering, and mathematics courses at schools, and encouraging students to consider jobs as engineering technologists and associates (which require less education and training than engineers, who do the traditional four-year degrees).

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