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KEY APS CAPABILITY TRENDS

The changes in the size and structure of the APS in recent years, outlined in Chapter 2, have important implications for building APS capability. While significant in themselves, these changes also need to be viewed in the context of a lengthier period of significant change for the APS, and its capability requirements and challenges. These include substantial increases in workload and outputs in many areas, the need to deal with increasingly complex programs, and the need to be responsive to Government and the public, in an environment of some turbulence.

There have been major changes in the classification structure of the APS since 1980 (see Figure 9.1). In 1980, 52.4% of ongoing staff were at the APS 1—2 classification levels (and equivalents).² By 2004 this had fallen dramatically to only 6.4%.

This decline has been offset by proportional increases at the APS 3—4, APS 5—6 and EL classifications. SES staff, as a proportion of total ongoing staff, have also risen from 1.1% in 1980 to 1.5% in 2004.

Figure 9.1: Proportion of ongoing staff by classification, 1980 and 2004

Source: APSED

This shift in classification profile reflects a number of changes in the APS. Advances in technology, and to a lesser extent outsourcing of some functions, complemented by job redesign and multiskilling, have led to a decline in some areas of work such as typing pools, mail delivery and clerical assistance, which once required large numbers of employees. In many cases, these changes have led to a change in the skill set required in APS agencies, with a decrease in the demand for lower level, less skilled work and a shift from some narrow technical skills to broader administrative and professional skills.

These changes are illustrated by the change in the nature of engagements to the APS (see Figure 9.2). Engagements in 1994—95 were predominantly at the APS 1—2 levels. Engagements in 2003—04 are predominantly at the APS 3—4 levels, followed by the APS 5—6 levels.

Figure 9.2: Engagements to the APS, by classification

Source: APSED

The change in skill requirements has also been reflected in an increase in the demand for staff with higher educational qualifications. Results from the employee survey show that around 46% of APS employees have a bachelor degree or higher qualification, with an additional 18% having another form of post-school qualification (see Figure 9.3). The survey confirmed a definite trend to increased qualifications for APS employees in recent years. For example, the proportion of employees with a bachelor degree or higher was 64% among those with less than one year’s service, compared to 44% for those with over five years’ service. These results are consistent with APSED data which, while incomplete, shows that the trend for new recruits to have tertiary qualifications has increased substantially, from around 30% in 1985—86 to over 60% in 2003—04.

Figure 9.3: Employee qualifications

Source: Employee survey

While the continued fall in employment at the APS 1—2 levels reflects the increased emphasis on graduates and other skilled staff, and hence an increase in overall capability, it also limits career pathways for young people and may lead to the unintended consequence of excluding some people who, with more on-the-job and off-the-job support, would add to the talent pool over time.

An increased emphasis on tertiary qualifications has particular implications for Indigenous Australians. APSED data shows that, for employees where information on educational qualifications are available, only 28% of Indigenous employees in the APS have a degree, compared to 49% of non-Indigenous employees. People with a disability are also slightly less likely than other employees to have a degree (40% compared to 49%). However, employees from non-English speaking backgrounds are more likely to have a degree than other employees (74% for NESB1 employees, and 57% for NESB2 employees).

The overall capability of the APS is also affected by mobility, both between APS agencies and through movements into and out of the APS. Greater mobility has the potential to act as a vehicle for professional development and an opportunity to exchange ideas and better-practice approaches. Mobility between APS agencies has the potential to contribute to enhancing whole of government approaches, by improving cooperation among public service agencies and contributing to the maintenance of a Service-wide culture. Mobility beyond the APS, with other jurisdictions, the private sector, the not-for-profit sector and academia, can enhance the range of experience and expertise available to the APS and the Australian Government both in practical service delivery and in theoretical analysis.

External recruitment (i.e. engagements) into the APS has increased over the years. The increase in engagements at APS 3—4 levels primarily reflects the change in the base-level entry point that has occurred across most APS agencies, but the increase in engagements at higher classification levels suggests that more people with non-APS backgrounds are interested in applying for APS positions, and the APS is benefiting from the experience and skills of a broader range of people. Figure 9.4 shows trends in engagements as a percentage of both promotions and engagements into positions at various classification levels over the last ten years.

Figure 9.4: Ongoing staff: engagements as a proportion of engagements and promotions, 1994—95 to 2003—04

Source: APSED

One in four SES vacancies are now filled from outside the APS, and just under one in three vacancies in the combined EL group are filled from outside the APS, with results for EL1s and EL2s very similar. Many people engaged at APS 3—4 levels also have work experience outside the APS. Overall, APSED data shows that a substantial proportion, over 40%, of all employees engaged had been working in the private sector prior to entering the APS.³

The increasing importance of engaging with those outside the APS has been highlighted most recently in the MAC report Connecting Government.⁴ Apart from public/private partnerships, collaboration is increasingly required with other levels of government and community organisations, and with experts in research organisations both public and private. One way of improving these relationships is through greater staff interchange. While the external mobility trends for the APS are in the right direction, it may be that some agencies should be encouraging a greater level of applications for positions from outside, particularly from people with relevant practical experience. It is interesting to note that some other nations (e.g. New Zealand and the UK) seem to be taking a more pro-active approach to searching for external candidates for senior positions.

The interagency mobility rate (which comprises promotions and transfers between agencies) has declined from 3.4% in 1994—95 to 1.5% in 2003—04.⁵

Figure 9.5: Interagency mobility rates for selected classifications and total staff numbers

Note: Mobility rates have been calculated on the basis of ongoing interagency promotions and transfers, not movements within agencies or in and out of the APS.

Source: APSED

Figure 9.5 shows the mobility rates for ongoing APS employees at the SES, EL and APS 1—6 levels and total staff numbers for the period from 1994—95 to 2003—04. Mobility rates have been quite volatile over the period. Nevertheless, while not a perfect relationship, there appears to be some connection between the size of the APS and the mobility rate.

Mobility rates are highest for the SES, followed by EL staff and then by APS level classifications. Trends in the direction of the mobility rate have, however, been generally similar for the different classifications over the period.

It is difficult to identify an optimum level of mobility for the APS. Agencies have to balance the benefits to their agency and to the APS as a whole of encouraging such mobility, with the need to manage turnover rates and ensure capability is developed and maintained within their agency. Some of the decline in mobility amongst APS level staff may reflect, for example, more structured training and development in agencies and improved career development which also helps to improve retention. The need for mobility will also vary from agency to agency depending on the nature of their business and the skills required. Nonetheless, the decline in mobility within the APS amongst EL and SES employees may be of some concern.

Another significant trend affecting the building of capability in the APS is the significant change in the age profile of the APS. The APS is ageing, and on average, is now some three years older than a decade ago, and 12 years older than 30 years ago. In 2004 the median age was 41 years. In 1994 and 1975, the median age was 38 and 29 years respectively. This is an important issue, which has also been raised in Chapter 2, illustrating the broad impact that the ageing of the workforce is likely to have on the APS.

Staff in the 45 and over age group, who will be eligible (or are already eligible) for retirement within the next 10 years, account for 39.3% of ongoing employees.

The ageing of the APS workforce reflects a number of factors. In particular, these are the ageing of the Australian workforce generally; the large cohort of recruits into the APS in the late 1960s and early 1970s; and the skills structure of the APS with its emphasis on graduates and high level administrative skills, which has reduced opportunities for younger less skilled employees.

Despite the general ageing of the APS workforce, the APS continues to have a lower proportion of people aged over 55 compared with the wider Australian labour force, 9.3% compared to 12.9%.⁶ A major factor is likely to be the superannuation arrangements in the APS, with pensions available from age 55.

The MAC 2003 report Organisational Renewal, discussed in detail in the State of the Service Report 2002—03, found that the changing profile of the APS, including its age profile, posed challenges for the management of the APS and individual agencies and has significant implications for workforce planning, both in terms of optimising the contribution of older employees and planning for succession. Agencies need to ensure a continual building of the organisational capability required to deliver their outcomes for the Government of the day that take account of changing workforce dynamics.⁷

This issue is likely to be ongoing. The number of new entrants is expected to contract sharply as a proportion of the Australian labour market during the next two decades and the APS will be competing with other potential employers for young employees.⁸ It is likely that the APS age profile will continue to rise.⁹ The extent to which agencies are putting in place appropriate workforce plans is discussed in more detail below.

WORKFORCE CHALLENGES

The agency survey asked agencies whether they had faced specified workforce challenges during 2003—04.

The most common workforce challenges identified by agencies were difficulty in recruiting people (other than as part of a formal graduate program) with required skills (reported by 62% of agencies) and ensuring that employees’ skills and/or knowledge meet agency requirements (61%). Some agencies indicated that these difficulties related to specific skill areas, for example, HR specialist staff, conservators, IT specialists, finance or project managers. Reflecting the findings of Organisational Renewal, a majority of APS agencies (51%) also identified the loss of valued mature-aged employees as a workforce challenge.

Only a small proportion of agencies (10%) reported difficulty in recruiting graduates with required skills as part of a formal graduate program, reflecting views expressed by many agencies that the quality of the graduates they recruit is high. However, almost a third (31%) reported that the loss of valued employees recruited as part of a formal graduate program had been a challenge in 2003—04.

While the retention of graduates is clearly an issue for some agencies, APSED data suggests that the overall retention of graduates in the APS is fairly high. Of the 1994—95 cohort of graduates, 47.5% were still in the APS at June 2004. Of the 1998—99 cohort, 65.8% were still in the APS, and of the 2001—02 cohort, 86.6% were still in the APS, with 94.6% of this latter group still in the same agency.¹⁰

Figure 9.6 presents this data in terms of retention according to years since engagement. It paints a slightly more positive picture than the MAC report on organisational renewal which considered that, while retention rates have fallen slightly with more recent cohorts, the more important factor is the state of the wider labour market. In fact, retention rates have been increasing in more recent cohorts, despite the apparent inevitability of increased mobility in the labour market generally over time.

Figure 9.6: Graduates: Retention by year of engagement, 1989 to 2002

Source: APSED

When asked about issues of general employee turnover, the majority of agencies did not identify these as a specific challenge in 2003—04, although agencies were more likely to have found higher than acceptable employee turnover as a challenge (22% of agencies) than lower than acceptable employee turnover (11%). Lack of sufficiently strong leadership skills at the SES levels was also raised by a small proportion of agencies (14%).

Most of the specific workforce challenges were more likely to be reported by medium and large agencies than small agencies. Medium agencies were the most likely to have reported challenges in relation to loss of valued mature-age employees (70%) and difficulty recruiting people (other than for a graduate program) with required skills (74%). Large agencies were more likely than other agencies to have faced difficulty in recruiting and retaining graduates (24% and 52% respectively), and challenges in relation to turnover (38% higher than acceptable, 19% lower than acceptable). Medium and large agencies were as likely to report challenges in ensuring that employees’ skills and/or knowledge meet the agency’s requirements (71% and 70% respectively).

2 Excludes some ongoing staff in some specialist classifications that could not be assigned an APS equivalent classification.

3 This data is incomplete and should be viewed as indicative. APSED specifications are currently being revised and the quality of data on prior employment should improve in the future.

4 MAC, op. cit.

5 The mobility rate between agencies is calculated as the number of movements (promotions and transfers) between agencies during a financial year, divided by the average of the number of staff at the beginning and end of the period. It does not include non-ongoing transfers or temporary assignments. Ongoing staff promotion rates and transfer rates between agencies are shown separately in Chapter 2 (Figure 2.11).

6 APSED and ABS Australian Labour Market Statistics, Cat. No. 6105.0.

7 MAC Report 3, Organisational Renewal, 2003,< http://www.apsc.gov.au/mac/organisationrenewal.htm>. This report specifically addressed the challenge of building ongoing capability within the APS workforce.

8 See Commonwealth of Australia, Intergenerational Report 2002—03, May 2002, <http://www.budget.gov.au/2002-03/bp5/html/index.html> and Access Economics ‘All in it together’, a paper prepared for the Department of Health and Ageing, Canberra, June 2000, <http://www.health.gov.au/internet/wcms/publishing.nsf/Content/ageing-ofoa-research-accessecon.htm>

9 Based on Australian Government actuary projections reported in MAC, 2003, op. cit.

10 Machinery of Government changes mean that it is difficult to look at retention rates within a particular agency over a longer time period.