Estimated Read Time: 7 minutes

As businesses in Australia continue to evolve in a digital-first market, companies of all sizes and industries are finding themselves struggling to find qualified workers to fill open positions.

our company

Business leaders are faced with a dilemma. They recognise that a key principle to success lies in having cutting-edge technical capabilities to strengthen their service offering and stay ahead of their competitors. But unfortunately, they’re facing a major obstacle in their quest for market success. Many organisations are experiencing an expertise deficiency and competency crisis as they lack the quality and quantity of specialised talent necessary to achieve their business objectives. It's a challenge that many organisations are facing today, and it's not expected to go away anytime soon.

- Nicole Gorton, Director

So why is there a skills shortage in Australia, and what can be done about it?

In this blog post, we'll explore the driving factors behind Australia's skills shortage, the implications for businesses, and the short and long-term solutions available to employers.

Why is there a skills shortage in Australia?

Australia’s skills shortage is a complex issue affecting companies of all scales and sectors. There are several factors contributing to the skills shortage in Australia, including:

Ageing workforce

Australia's population is ageing, with a significant portion of the workforce set to retire in the next decade. This means that many businesses are struggling to find qualified workers to replace retiring employees.

Lack of investment in training and education

There has been a shortfall of training and education pathways tailored to emerging skills needs, which has resulted in a shortage of workers with the skills and qualifications needed to fill open positions in emerging sectors such as cyber-security or data analytics. While the Australian government is aiming to introduce 650,000 more tech workers by 2030, only 20,000 university openings have been created to support this development.

Immigration policies

Changes to immigration policies have made it more difficult for businesses to bring in skilled workers from overseas, which has further exacerbated the skills shortage.

Industry growth

Certain industries, such as healthcare and information technology, are experiencing rapid growth and require more skilled workers than are currently available to support both the expansion of existing lines of business and the delivery of new products or services.

How does Australia’s skills shortage impact a business?

The sustained skills shortage in Australia is continuing to put pressure on businesses, with Robert Half research finding that 7 in 10 Australian business leaders think that not having the required in-house skills will pose an increasing financial impact to their business in the coming year. Challenges include:

Difficulty finding and retaining skilled workers

The skills shortage in Australia has made it challenging for businesses to find and keep employees with the necessary expertise, knowledge and qualifications. This can lead to higher recruitment and training costs as well as increased employee turnover.

Reduced productivity and competitiveness

When businesses can't find the skilled workers they need, it can limit their ability to deliver projects and services efficiently, which can negatively impact productivity and competitiveness. This may also result in lost business opportunities to competitors who are better able to meet demand.

Rising labour costs

In industries where the skills shortage is most acute, wages for skilled workers can be driven up as businesses compete for a limited talent pool. This can lead to rising labour costs, which can affect the profitability of businesses and make it more difficult to remain competitive.

Innovation and growth hampered

Without access to the skilled workers they need, businesses may find it difficult to innovate, invest in new technology or expand into new markets. This can limit growth potential and stifle opportunities for companies to stay ahead of the curve in their industries.

What are the pathways to solving the skills shortage in Australia long term?

To address the skills shortage in Australia in the long-term, public, private and government organisational collaboration is needed. Some long-term solutions that could help to address the issue include:

Encourage training and education

Public and private stakeholders can work together to encourage the development of vocational training and education programs that equip workers with the skills businesses need. This can include investing in apprenticeships, internships, and other forms of work-based learning, as well as offering tax incentives for businesses that provide training opportunities.

Promote immigration

Given the shortage of skilled workers in Australia, government stakeholders can encourage immigration policies that attract skilled workers from overseas and retain international students as part of the Australian workforce.

Encourage investment in technology and automation

Investing in technology and automation can help businesses to become more efficient and productive, freeing up the capacity of employees to focus on high-value tasks - ultimately making businesses more competitive in turn.

Tap into a broader talent pool

A diverse workforce can help businesses tap into a broader talent pool and access a wider range of skills and perspectives. By attracting workers from different backgrounds and with different experiences, businesses can bring fresh ideas and innovative solutions to the table. This can be particularly important in industries that are undergoing rapid technological change or facing other disruptions. Partnering with a recruitment firm can also assist this process, as they have access to a wide pool of passive talent.

Related: Discover more industry insights in Robert Half’s Salary Guide

What are the short-term solutions available to employers?

Unfortunately for business leaders, the reasons why there are skills shortages in Australia are largely structural, and not easily remedied overnight.

On an organisation level, hiring managers need to consider how to take advantage of their existing resources and develop a skills pipeline to support their digital transformation efforts and long-term growth. Short-term solutions that businesses can employ to address the issue include:

Adopt a flexible hiring mindset

Employers that are open to hiring candidates who may not meet all of the job requirements but show potential to learn and grow within the company will be more competitive in the race for talent. By considering candidates whose skill level is relevant but underdeveloped, hiring managers have access to an expanded talent pool which will often come with lower salary expectations. Once hired it is important to develop and execute a tailored training program to bring the employee up to the required skill level at speed.

Upskilling existing employees

Businesses can invest in training and development programs to upskill existing employees, helping to fill open positions through internal pathways and prepare for future growth. This could include in-house training sessions, workshops, online courses, mentorship programs, or external training programs. In order to reinforce the value of training, introduce opportunities for practical application such as assigning team members to work on projects that allow them to use their new skills.

Foster a culture of knowledge sharing

Conduct an organisational skills audit to identify where there are gaps or pockets of technical capabilities, and consider methods to share this information internally through cross-functional collaboration, mentoring, and peer learning opportunities. For example, a finance team who undertake business forecasting may already possess the key data analytics skills marketing teams require to understand customer behaviour trends, while the marketing team may be able to deliver customer behaviour insights that frame the finance teams commercial strategies. A knowledge sharing program between teams not only leads to more effective and high-quality work, but it can eliminate the need for a new role addressing a specific skills gap altogether.

Hire contract workers

Contract workers provide access to a wider pool of specialised skills and knowledge, without the need to commit to long-term employment contracts. This allows companies to quickly bring in expertise to address specific projects or initiatives, without having to spend time and resources on training and development. Additionally, contract workers can often work remotely, providing employers with access to talent from anywhere in the world, further expanding the pool of available skills and knowledge.

Related: Explore our hiring and management advice

Do you need help attracting and retaining specialist talent in Australia? Robert Half is a leading recruitment agency with a specialisation for finding and placing experts.

The study is developed by Robert Half and was conducted online in November 2022 by an independent research company, surveying 300 hiring managers, including 100 CFOs and 100 CIOs, from companies across Australia. This survey is part of the international workplace survey, a questionnaire about job trends, talent management, and trends in the workplace.