When we talk about the “gray wave,” we are referring to the experienced baby boomers who are retiring, not only in the Chilean industry but in most other industrialized countries as well.
Chilean mining companies are grappling with the challenges associated with the gray wave, and although today’s senior generation – unlike the previous one – still has thread on the reel, it is common for these individuals to be forced to retire on their 65th birthday.
It is interesting to note that the official retirement age in most European countries has been raised to sixty-seven, not so in Chile, where people over sixty-five sometimes also simply do not have the luxury of leaving paid work yet.
The Study “Labor Force in Chilean Big Mining 2023-2032” by the Mining Skills Council (CCM) projects that, by the end of the decade, more than twenty-seven thousand people will have retired from mining companies and contractors.
Aside from the challenges of the replacement of senior employees combined with a large gap in new labor supply, this bleeding of experienced talent and knowledge presents companies with significant challenges – if not threats – including:
- Loss of Experience.
The retirement of experienced baby boomers means the loss of valuable expertise and institutional knowledge accumulated over decades, which can impact the efficiency and effectiveness of operations.
Additionally, the retirement of long-time employees can affect the morale of the remaining workforce, and leaders need to focus on effective communication, new leadership models, and creating a positive work environment to motivate and retain their teams.
- Skills Shortage.
The mining industry requires specialized skills, and finding qualified replacements for retiring workers is already proving difficult. There is a growing shortage of skilled workers, particularly in the maintenance- and equipment operation areas.
Moreover, the national technical-professional education system does not generate sufficient industrial talent in general and, moreover, for a sizable percentage of these students the mining industry is not the first choice.
The projected accumulated supply-demand gap by 2032 for the three most in-demand profiles is about 9.000 for Maintenance mechanics, 4.300 for Fixed equipment operators and over 5.000 for Mobile equipment operators.
- Safety Concerns.
Senior employees often know from experience where the risks lie and what risky behavior consists of, which is why the industry must place special emphasis on the permanent safety education of a younger and ever-evolving workforce. Ensuring a safe working environment for all age groups ought to be a priority.
- Operational Disruptions:
The departure of experienced staff can lead to disruptions in daily operations. Knowledge transfer and the seamless integration of new, well-skilled employees are crucial to maintaining productivity and avoiding downtime.
The most recent CCM study sets total labor demand to no less than thirty-four thousand jobs by 2032, which is a huge challenge for the industry.
- Economical consequences:
For context, it could be useful to put that supply-demand gap into dollar numbers.
The Chilean mining industry as a whole generated 13,6% of GDP in 2021, which was USS 316,6 billion.
Of total mining exports, the copper mining industry represented 79% (10,7% GDP) with Lithium a far second at 14,6% (1.9% GDP).
Copper mining represented a GDP in the order of 33,9 billion in 2021 and employed slightly under 199.000 people in its main value chain in 2023.
With the projected accumulated labor demand rising to 34.000 people by 2032, this would represent about 18% of the current total labor force, 6,1 billion in GDP and an average of 170.330 per worker.
What is particularly concerning is that even though contractors currently employ four times the labor force of big mining, 181.000 vs. 44.000 employees, respectively, we have not observed any efforts on behalf of these organizations to address the looming labor shortage.
This is in stark contrast to virtually all the large mining companies which are actively developing a number of actions, like reskill-, upskill- and apprentices programs, for example.
How to Counteract the Brain Drain of Senior Talent?
While mining companies are actively filling entry-level positions with Apprentice programs, for example, it is estimated that this is not sufficient to counteract the anticipated loss of talent and experience in the coming years.
Although one way to alleviate part of the pressure is to incorporate more technology, this is not enough by itself. It is necessary to adopt more initiative-taking strategies for talent acquisition, retention, and management, both at entry- and senior level, by investing in educational programs and through the development of employee value propositions.
The inevitable generational shift will create several peaks in the demand for human capital towards the end of the decade. In the year 2026, for example, it is estimated that 2.400 people will retire due to age, with an additional anticipated peak demand for new projects of over 11.500 jobs.
Moreover, the accelerated technological change, currently more pronounced in the area of remote operation of mobile and fixed equipment, creates a strong over-demand for talent in these areas of 32% and 51%, respectively (2023).
The CCM study cited projects an accumulated demand for more than 12.400 jobs this year, steadily growing to 20.500 in 2026 and approaching 30.000 by the end of the decade.
Part of this demand comes from personnel retiring due to age; however, the major part is due to new projects. To counter the challenges associated with the Gray Wave in the industry, organizations can implement a series of measures, among which:
1 – From Training to Permanent Education Processes.
Through various strategies, the industry is gradually adjusting to the anticipated talent shortage. All of these strategies require quality education aimed at developing specific and cross-functional skills.
Talent development is needed in hiring processes and in the professional improvement (upskill) or retraining (reskill) of the existing workforce to prepare them for the challenges the industry faces currently and in the future.
The loss of knowledge and experience from older collaborators can be counteracted through structured programs to transfer the expertise of retiring experts to younger employees. This can include mentoring initiatives, on-the-job training, and – far less commonly practiced – the documentation of processes and other mission-critical information.
The implementation of robust knowledge management systems contributes to the documentation and preservation of experience and critical information still present in the most experienced, facilitating their organization and accessibility. This ensures that knowledge and institutional culture are preserved and easily accessible to the “heirs”.
Additionally, providing continuous training programs to current employees allows them to adapt to technological advances, which may include digital literacy, automation skills, and other relevant competences.
For Academia.Holtec, the incorporation of senior tutors, sometimes already retired, has had a very positive impact on the evaluation of various courses, as students highly value the transfer of practical- and applicable knowledge in their daily work lives.
2 – Plan Succession and Talent Development.
It is crucial to implement comprehensive succession planning strategies to identify and prepare potential leaders within the organization. Although career planning and preparing potential successors are of utmost importance, they are of no use without clear talent management and retention strategies.
While a fair salary remains a significant incentive, it is no longer sufficient, especially for the new generations entering the industry, who require more employer attention and retention. What distinguishes young professionals from previous generations is their prioritization of work-life balance and their lesser loyalty to employers.
The Employee Value Proposition (EVP) is a strategy that seeks to incorporate a series of non-monetary incentives for employees, ranging from changes in leadership styles – from more authoritarian to more horizontal – the creation of inclusive work environments that stimulate creativity, collaboration, and healthy interpersonal relationships, and an offering of personalized training options – highly appreciated by employees – opening up opportunities for personal- and professional growth.
A well-executed EVP strategy not only helps retain scarce talent but also allows an organization to position itself as an attractive employer, potentially improving recruitment opportunities while reducing difficulties in the process.
3 – Take the initiative to build the necessary talent pool.
The various CCM studies indicate that the Chilean mining sector has historically conducted around 1.200 internship- and apprentice processes annually, even though these halved during the pandemic.
Fortunately, in 2022 the number grew to over 2.300 Apprentices, 55% women, with an average hiring rate of 24% – which is less than six hundred people (CCM study 2023-2032).
Comparing this number with the projected demand toward the end of the decade – an average of 2.200 talents per year only for the three most demanded profiles – we must conclude that the level of education-labor connection in the industry is well below its optimum.
In comparison, Australia recently set a goal to have 14.000 apprentices in training and qualifying 3.000 per year to address its talent gaps.
In light of the numbers, Technical Formation Centers (CFT) and Professional Institutes (IP) are also not producing the amount of talent required to ensure the sustainability of mining operations and even of the industry.
Considering that enrollments in programs associated with mining in Technical Professional Education have been declining since 2015, and that only 12% of students in institutions participate in so-called “dual” curricula – where the student spends three days at school and the other two in the company – there are ample opportunities to create “in-house” formation initiatives.
An additional advantage is that there is at least anecdotal evidence that such programs may also serve to build better, longer-lasting relationships with the particular talent a company needs.
However, this requires a clear formation strategy, the necessary resources, and the willingness to genuinely engage in creating- and sustaining the formation of human capital within the organization.
Main data source: CCM-Eleva: https://ccm-eleva.cl/estudios/estudio-fuerza-laboral/efl2023
The commitment made by CODELCO Corporate and the Andina-, Chuquicamata-, Ministro Hales-, El Teniente-, and Ventanas Divisions is a clear example of how companies can take the initiative to close their talent gaps. During the year 2023, we executed the following projects:
The labor retraining program developed for the Ventanas Refinery aims to retrain workers who previously worked in smelting and who, due to closure, needed to acquire new skills and tools to work in other areas of the division.
As part of this reskilling program, we conducted courses on Electro Refining Equipment, Electro Refining Operation Techniques, and Risks in Electro Refining, among others. Similarly, with personnel starting to work in the Fire Refining area, we conducted courses on Crane Bridge, Boiler, and Molding Wheel, among others.
- 100% face-to-face, 86 students, 5,000 student hours.
Result: • 73 People upskilled. • 13 People reskilled and relocated to other positions.
In 2023, we won the bid for onboarding programs for CODELCO at the corporate level. It has two execution alternatives of 236- and 400 hours respectively and will be executed in all the companies’ divisions.
The program includes courses such as Corporation History, Mathematics, Collaborative Work Techniques, Time Management, Working with Commitment, Identification of Industrial Equipment and Machines, Metrology, and Safety in the Mining Industry, among others.
In 2023 we developed and executed the following programs:
- Onboarding Program, El Teniente Division. E-learning, 60 students, 24.000 student hours.
- Onboarding Program, Andina Division. E-learning, 100 students, 35.000 student hours.
- Onboarding Program, El Salvador Division. E-learning, 80 students, 18.000 student hours.
- Onboarding Program, Gabriela Mistral Division. E-learning, 40 students, 10.000 student hours.
During this year, we also developed three Operations Apprentices programs for women, which summarize as follows:
- Mine Apprentices Program, El Teniente Division. E-learning, 60 students, 18.000 student hours.
- Operations Apprentices Program, Andina Division. E-learning, 100 students, 25.000 student hours.
- GFUN-GPTA Apprentices Program, El Teniente Division. E-learning, 40 students, 17.000 student hours.
Considering the profile and satisfaction of the students, the company is not only investing in filling the positions it needs but has also started an important process to build loyalty among its employees, which we consider an excellent investment in the long-term sustainability of the organization.