Why Australia's brain drain is stifling innovation …. and the SME sector
As we head into 2016, I will be writing a series of articles reflecting on the links between innovation, finance and the future of our younger generations.
In my first post I take a look at some of the issues around recruiting qualified talent, STEM talent pipelines and the gender pay gap.
Australia appears to be undergoing some post GFC digestional reflux as it transitions from a three-speed to a ten-speed economy. The Governor of the Reserve Bank of Australia, Glen Stevens, in parallel with the Government, has been steering the economy for some time towards a ‘new world’ multi speed economy underpinned by high growth rates in professional services, health services, and information and technology - and this is where the problem starts to get interesting.
Australia is in a unique position. According to various sources such as the Turnbull Innovation Paper and LinkedIn’s Cliff Rosenberg on the “brain drain”, we're simply not creating sufficient STEM talent and the talent we do create is seeking better opportunities overseas.
I’m talking now about science, technology, engineering and mathematics (STEM) and how as a country we need more of it. (Interestingly gender diversity is a subcategory within the lack of STEM talent – these areas are still struggling to attract and retain women throughout.)
Whether this is because there are a lack of opportunities for young people, or that these areas are traditionally not seen as particularly appealing or sexy, or perhaps for other reasons, I’m not sure. However this “brain drain” and lack of STEM talent is stifling our innovation in general and inhibiting our ability to solve these old problems.
"Australia is under-performing internationally compared to STEM-strong countries such as India and China.” Cliff Rosenberg
You might wonder why I’m interested in this.
- Here at Banjo we plan to employ around 50 new people over the next 2 years.
- At the moment 8o% of the team have STEM qualifications.
- And being a technology company that provides financial services to SMEs, STEM skills are core to our DNA
Usually the people providing customer service would have a combination of customer relationship and credit/risk skills. So I’m keen to see our current workforce demographic transition to around 50% of our workforce comprising marketing, credit risk, banking, compliance regulatory skill sets, and the remaining 50% with STEM qualifications – software developers, data engineering, statisticians, mathematicians and designers.
Ideally we’d also like to be known as an employer of choice - known for workplace flexibility and other attractive workplace practices and opportunities that help to attract and retain talent, including women. In an ideal world, I would also like 50% of those 50 new starters to be female.
As a specialist SME provider of growth funding; we observe that:
- one in three of our clients are female, and
- this group make up the fastest growing cohort of small business owners in Australia.
We’re a technology company that provides financial services to SME’s in Australia – so it makes sense that 50% of our staff should also be female.
Projecting forward, I’ll have problems with executing this, because previously when we’ve put panels together with this goal in mind it’s been really challenging to achieve on both the STEM and gender requirements. And it would appear we’re not alone in this.
According to the STEM Country Comparison report, in general Australia is falling behind its peers in start up formation and creation of talent. We have a real pipeline issue of lack of 15/16 year olds through to retirement age who have shown a passion to work in STEM related fields.
Additionally the gender split issue is not just a Banjo issue, with men far outnumbering women in both tech education and technology careers globally.
“30% is the average percentage of women working in the tech industry, based on diversity reports published by 11 of the world's largest tech companies in 2014.”
Gender Pay Gap
Frequently it’s said that from a gender diversity perspective, men get really interested when they have daughters. Certainly this is true for me. On a more personal level, I have a family of four with a daughter who is equally as engaged in looking at bugs in the garden, maths and other typically curious activities, as her brothers. What worries me is that in less than two or three government terms she’ll be making decisions about her future and I’d like her to have options. There are a couple of things that need to change. One is about the perception of people working in STEM which I’ve addressed above, and the other is the gender pay gap.
In an 8 December article in the Sydney Morning Herald, Small Business Minister and Assistant Treasurer Kelly O'Dwyer says:
"A legally mandated pay gap of 25 per cent under many employment awards was abolished in 1969, but as at November 2015, ……. the national gender pay gap for a full-time base salary is 19.1 per cent."
Quite frankly as a father I’m appalled. If it’s taken us 46 years to get the gender pay gap from a legally mandated 25% down to 19.1% - things won’t be much different by the time my daughter is ready to enter the workforce. This is enough to worry any father in the country. Obviously I want my own children to follow their own journey but I’d like to see an even playing field so they have choices.
So what can we do about it?
Commissioned by the government of the day in 2012 and at great expense the Securing Australia’s Future – STEM: Country Comparisons Report is a high quality report and provides us with some clear guidelines for the future. This report, in conjunction with the National Innovation and Science Agenda establishes some clear frameworks for moving forward.
- We need to look at education, research and financial infrastructure initiatives in a drive to change the current state of inertia
- We need to embrace initiatives that support STEM education, make STEM education sexy and keeping STEM talent in the country – stem the brain drain (pun intended)
- We need to support initiatives such as the Geek Girl Academy whose rallying catch cry of “get your geek on” and mission of teaching one million girls to build apps and create startups by 2025 is creating a global movement. Plus they aren’t necessarily focused on simply attracting young teens into the industry which is refreshing, and clever all rolled into one.
“We want to focus on the women who are change-career geeks. So it’s the women who are lawyers, marketers or nurses who are looking for a change in career, want to learn about technology and want to work in start-ups,"Tammy Butow, Geek Girl Academy
- We need to address the gender pay gap issue sooner rather than later so that there is a level playing field and talented women are keen to work in STEM, and join the industry.
- Hopefully, they will view STEM related industries as greener pastures and places to impart their passion, unique gifts and talent.
Andrew Colliver is the CEO of Banjo, an Australian based online lender providing secured and unsecured loans to Australian SME’s. He is passionate about the furious and fast business builders of Australia.
He is also a father of four with a healthy concern about the future for younger generations