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Job Growth and Replacement Needs in Nursing Occupations

• 3 Growth and replacement needs in nursing occupations 
  • 3.1 Introduction 
  • 3.2 Growth 
  • 3.3 Gross replacement 

3 Growth and replacement needs in nursing occupations

3.1 Introduction

This chapter considers the job openings likely to be available on current policy settings for Nursing Workers in the years to 2006. Job openings are created by growth and by turnover.

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Growth

Growth projections are made using the MONASH model, a dynamic computational general equilibrium model, developed by CoPS. Full description of the model is beyond the scope of this report, however, details of the methodology underpinning the model and its assumptions can be found in Adams er al (1994), Dixon and Rimmer (1996), Meagher (1997) and Dixon and Rimmer (2000). An intuitive description of the model is contained in Appendix O of Industry Commision (1997).

In brief, MONASH is a sequence of single-period models, linked through time by the behaviour of capital and labour markets. It has three main elements—a database, theory and parameters—which are embodied in the model’s system of equations. These equations describe how industries and consumers respond to changes in policy. The core of the database is a large input-output matrix showing how each sector of the economy is linked to every other sector. These linkages are only for a particular point in time. Behaviour responses of different groups to policy changes are determined on the basis of economic theory. The model provides specification of likely responses of producers, consumers, foreigners and investors to policy changes. It also includes a government sector, the revenue and expenditure behaviour of which is modelled separately. While theory guides the model’s broad assumptions (which can be altered to accommodate different scenarios), actual numerical parameters are required to estimate the size of the responses. In MONASH these parameters are either derived from the input-output database or other external sources.

The latest available projections were made in June 2001 for the eight-year period ending 2008 and with the base period 2000. They incorporate, among other information, Access Economics’ March 2001 quarter Five Year Business Outlook of the Australian economy and other recently released data from the Australian Bureau of Agricultural and Resource Economics (ABARE), the Tourism Forecasting Council (TFC), the Productivity Commission (PC). Importantly, as far as employment in nursing occupations is concerned, it is assumed that government spending grows at an annual rate of 2.6 per cent, and, within this, spending on health grows at 2.1 per cent.

MONASH converts the forecast for aggregate output to forecasts for output by industry. These are then converted to forecasts of employment by industry, which in turn are finally converted to employment by occupation. Employment growth for a particular occupation can be decomposed into three components:

• growth in aggregate employment;
• industry share effect (result of changes in distribution of employment across industries); and
• occupation share effect (result of changes in the distribution of employment across occupations within industries).

The first component is already known from earlier computations. The second can be computed from growth rates in employment by industry using an industry by occupation employment matrix. Occupation share effects are considered primarily due to technical change and are forecasted by extrapolating historical trends.

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Replacement needs

The estimates of turnover and the resulting replacement of workers are from models developed by CEET. The two commonly used concepts of replacement need (or labour turnover) are:

• gross replacement, meaning the total number of jobs arising from individuals leaving an occupation; and
• net replacement, meaning the number of jobs arising from individuals leaving net of those re-entering an occupation, in essence the jobs available for new entrants.

These concepts can be explained with the aid of Figure 45, which represents the gross flows of individuals in and out of an occupation O in a given period. Gross outflows from occupation O in period (t-n, t) are B, C, and D, while E, F, G, H, I and J represent inflows into it. A represents stayers in occupation O, those who did not move out of the occupation in this period. It includes those who may have changed jobs but not occupation. B represents all those who leave the occupation to a job in other occupations, C the numbers moving from occupation O to unemployment while D includes all flows out of the labour force including emigration and deaths.

Inflows to occupation O come from three major sources, from other occupations (E and F), from unemployment (G and H) and from outside the labour force including immigration (I and J). Individuals from each of these sources can be either new entrants or re-entrants to occupation O. New entrants are persons entering the occupation for the first time. Re-entrants are those individuals who are returning to occupation O, after previously leaving it voluntarily or due to job termination.

Figure 45. Flows of individuals in and out of an occupation

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Gross replacement

Gross replacement is a measure of the total number of job openings resulting from individuals leaving an occupation including changing occupations or leaving employment. In terms of the component flows in Figure 45, gross replacement is the sum of the outflows B, C and D if employment expands in an occupation. Otherwise it equals the sum of inflows F, G, H, I and J, or alternatively, it is the sum of the outflows B, C and D less the decline in employment because not all those who leave are replaced. The Appendix contains a brief methodology for estimating gross replacement.

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Net replacement

Net replacement attempts to measure job openings for new entrants to an occupation. In terms of the flows in Figure 45, net replacement is the sum of the outflows B, C and D less re-entrants F, H and J into the occupation. Just as for total replacement, if employment declines then net replacement equals the sum of the outflows less the decline in employment because not all those who leave are replaced. The Appendix contains a brief methodology for estimating net replacement.

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Job openings

Job openings in an occupation are a result of gross replacement and growth. They provide indications of job opportunities for all those who are contemplating employment in the occupation, including those returning to it. If growth in an occupation is negative then job openings are a result of gross replacement needs only.

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Net job openings

Net job openings in an occupation are a result of net replacement needs and growth and are less than total job openings. They provide an estimate of the number of jobs available in an occupation to those entering it for the first time. Such information provides an indication of the minimum training requirements, and hence it is useful information for formulating policy on resource allocation in education and training. Just as for the calculation of total job openings, if growth in an occupation is negative then net job openings are a result of net replacement needs only.

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Scope of analyses in this report

In the context of this report, net job openings have a more important relevance since they provide a basis for planning nurse education and training. However projections of job openings are important in their own right and form part of useful advice for all those who are looking for employment in nursing occupations. Therefore both types of projections for the five-year period ending 2006 are reported. All analyses that follow are at the national level.

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3.2. Growth

In the derivation of the growth projections in Table 10, the implied average growth rate for the 2001-06 period from MONASH has been applied to employment levels in 2001. Based on these calculations Nursing Workers’ numbers are projected to grow by 4 900 over the 2001-06 period, at an annual average rate of just 0.4 per cent. In contrast labour demand across all occupations is projected to grow at an average rate nearly four times this. The growth in Registered Nurses numbers are projected to be 7 700.

Employment in the two managerial nursing occupations and of Registered Midwives’ is expected to grow strongly. The growth rates for Registered Mental Health and Developmental and Disability Nurses should be viewed with caution because of the continuing restructure in the areas where these nurses work. Negative growth rates are projected for both Enrolled Nurses and Personal Care and Nursing Assistants. It reflects the employment decline in this occupation in last few years (Figure 33 and 39). On the other hand they run counter to anecdotal reports of shortages, especially in the area of aged care. However these rates are not uniform across States and Territories. MONASH projections at the state level (not included in this report) show Enrolled Nurses’ numbers are expected to grow in Queensland and Western Australia.

Table 10. Projected growth in nursing occupations in Australia, from 2001 to 2006

Note: Growth forecasts are reproduced here with permission from CoPS, Monash University. Estimates for the smaller occupations are subject to large standard errors and should be interpreted with caution.

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3.3 Gross replacement

Gross replacement needs are estimated using data mainly from the Labour Mobility survey, for 2000. Table 11 shows projections of replacement needs in nursing occupations for 2002-06. Aggregate replacement in all occupations is estimated to be 6 600 000 over five years at an average annual rate of 14.5 per cent. For Nursing Workers the rate is much lower at 8.3 per cent, with replacement needs of 103 000 over the five years.

The rate varies across individual nursing occupations. For the three main nursing occupations of Nursing Professionals, Enrolled Nurses and Personal Care and Nursing Assistants, the rates are 6.8, 10.2 and 12.7 per cent, respectively. The highest replacement needs of 56 000 are expected for Registered Nurses. For Nurse Educators and Researchers and Registered Developmental Disability Nurses the replacement needs are negligible. This is because employment in both occupations has contracted and there have been no inflows into them in the period between February 1999 and February 2000. The structural change that has affected employment of Registered Mental Health Nurses, and which has been discussed in the previous chapter, means that estimates for this occupation should be interpreted with caution. The replacement rate for Nurse Managers are relatively high compared to other Nursing Professionals because most nurses attain such positions after a number of years of experience which means the average tenure of a job in this occupation is short. The average tenure jobs in an occupation is one the factors that determines the rate of replacement needs. Estimates for small occupations, such as that of Directors of Nursing, should be interpreted with caution because of large sampling errors associated with the estimates.

Table 11. Projected gross replacement needs in nursing occupations in Australia, from 2001 to 2006

Note: Estimates for the smaller occupations are subject to large standard errors and should be interpreted with caution.

Table 12 shows the destination of those who left nursing occupations between February 1999 and February 2000. Just over half the Directors of Nursing who left went to another occupation, with the rest leaving the labour force. However these figures are only tentative because of the relatively small numbers in this occupation. The proportions of leavers to other occupations from each of the other three groups are about 30 per cent with the proportion for Enrolled Nurses a little higher than this. The differences in the proportions who leave to become job seekers⁷ or who move out of the labour force are, however, quite different. Enrolled Nurses and Personal Care and Nursing Assistants leavers have a higher propensity to become job seekers. While about two-thirds of leavers from Nursing Professional occupations move out of the labour force only half the leavers from Enrolled Nurses do.

Table 12. Occupational outflows (%) of Nursing Workers by destination between February 1999 and February 2000

Note: Estimates for the smaller occupations are subject to large standard errors and should be interpreted with caution. Other occupations include other nursing occupations. Job seekers

Table 13 shows the source of inflows into nursing occupations between February 1999 and February 2000. Most inflows into the Directors of Nursing occupation are from other occupations, but in the case of the other three occupations less than one out of five are from other occupations.

Table 13. Occupational inflows (%) of Nursing Workers by source between February 1999 and February 2000

Note: Estimates for the smaller occupations are subject to large standard errors and should be interpreted with caution.

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