Is the Australian Skill Shortage Effecting Your Business in 2022?

A skill shortage that is impacting business growth

The lack of skilled employees in Australia has been a major topic of debate over the past few quarters. When the international border shut in 2020 due to COVID, visa processing in Australia came to a standstill, causing a lot of uncertainty and unrest for industries including farming, healthcare and aged care. Larger companies found it very difficult to attract top talent to the cities, since workers were worried about unforeseen lockdowns and border closures. However, as the world begins to get back on track, Australia is finding it increasingly difficult to attract top-talent to the region. In addition, there has been a backlog on the number of skilled working visas being processed.

According to a recent study from Hays, over 90% of Australian and New Zealand businesses believe that the skill shortage will impact the growth of their business in the next year.  Although the federal government is looking to prioritise 60,000 permanent visa applications lodged by skilled workers based overseas, there is a large visa backlog that could take several months to catch up on.

Diving deep into the skill shortage


The ACCI report claimed that, despite the efforts made in recent years to improve Australia’s skills shortage situation and to hire professionals with a range of skills, there has been limited progress. According to a report released by the Australian Skills Quality Authority (ASQA) in 2017, there are still areas where the country’s skills are lacking, with demand outweighing supply. Despite a high number of job vacancies in Australia, employers say they are having difficulty filling basic roles.One in three reports indicate this is due to the current economic climate and the lack of experienced workers in Australia. Many believe that the situation is only likely to worsen. 

The demand for particular occupations varies depending on local and global factors. The healthcare, banking, and finance sectors continue to be areas of need across the country, with the demand for financial services expected to increase. In addition, healthcare and professional service workers are in high demand as the population ages and the need for new health care services and professions continues to grow. 

Other industries of concern are engineering, mining, construction, information technology and tourism. Engineers and architects are also in high demand because the construction sector is growing at a record rate and employers are finding it challenging to meet the demand for new housing and infrastructure. We also predict that the need for IT professionals will increase as the world continues to shift towards a digital narrative. 

The ACCI report suggested that to address the skills shortage, the government should focus on the following key areas: 

– Continue to invest in training programs to ensure the Australian workforce has the right skills to meet the demands of the economy. 

– Employers sponsor skills programs so that employees can continue to enhance their skillset over time. Employing people with a range of skills can help businesses to avoid running into technical or regulatory problems, which otherwise can slow down the business’s operations. 

– Incentives for employers who sponsor skills programs for their employees. 

– Expand the use of innovative digital tools to improve engagement and skill development between employers and employees.

The need for a highly trained workforce


The ACCI report claimed that businesses are still experiencing an undersupply of skilled workers. It highlighted that the number of people employed in part-time jobs with a desire to work full-time has increased to more than 5 million people. Furthermore, the report also suggested that the number of people who have been unemployed for more than 12 months has remained high. The report also claimed that both of these issues pose major challenges to businesses, as they can find it difficult to attract skilled workers and fill positions such as managers, directors and executives.

Current skill level of the Australian workforce


The current skill level of the Australian workforce is relatively low. Having a low skill level poses a major threat to the economy. Why? Because workers are not being adequately trained for roles, causing the Australian workforce to fall behind in particular areas such as technology. As a result, there is strong belief that this will have significant impacts on the Australian workforce over the next few years.

Employees are quick to leave jobs


The ACCI report also pointed out that there is a significant dropout rate in education and training among potential employees. Furthermore, the report said that the number of people who voluntarily left their job without giving an official explanation has risen to more than 900,000 people. Having a high dropout rate among potential employees poses a serious challenge to the labour market. Employers are likely to experience difficulties filling vacant positions and will experience challenges retaining their existing employees.

Employee dropout is a major concern for employers because it interferes with an individual’s job search and career progression. More than one-third of employers indicate that the dropout rate will increase in the next year.

The growth potential of the workforce


The total number of people actively participating in the workforce is expected to decline according to the ACCI. The report said that the demographic challenges and skill shortage pose severe challenges to the Australian economy. However, employers believe they can draw from the experience, knowledge, and services from the ageing population and find new ways to increase revenue and improve customer experience.

Employers believe that the growth potential of the Australian workforce will increase, with 60% of organisations in Australia and 60% in New Zealand expecting an increase in the growth potential of the Australian workforce. There is also a high level of confidence across all sectors that the Australian workforce will grow. However, employers report that they are experiencing challenges in finding skilled labour, especially in engineering and construction. This issue is expected to worsen with the expected increase in skill shortages.

What can be done?

Test different recruitment strategies

Many employers have been trying to persuade more Australians to look for jobs, while also encouraging more migrants to find work in Australia. For example, job ads have been placed in local newspapers with the aim of making them more accessible to the public. Employers have also been trying to make their job vacancies more visible online.

Expand visa processing for skilled workers

As a major global exporter of advanced services, Australia has a lot to gain from an immigration policy that opens the borders to the best and brightest people from around the world. It would make all the sense in the world for Australia to relax its stringent 457 visa program, which has been used to fill low-wage roles in industries such as hospitality and construction. And it would also help to address the skills shortage by easing the burden on businesses that are struggling to fill jobs due to a lack of suitable candidates. With plenty of career opportunities and higher salaries, employers will find it easier to attract top talent with new strategies, including offering better compensation packages, career advancement opportunities and more flexible work arrangements.

Increase the number of 485 visas granted

While the number of migrants looking for work in Australia has increased, the number of temporary visa holders has fallen. This indicates that many of the recent workers are staying in Australia on a permanent basis could help address the current skill shortage. It could also help to reduce the role of temporary workers who tend to be younger and have fewer skills than permanent residents.

Facilitate flexible working and career progression

Australia has a history of providing highly skilled workers to key industries, such as mining, through the 457 visa program. This has allowed businesses to access skilled workers, while also allowing these employees to change jobs without having to leave Australia through the off-shore (or onshore) migration stream. However, the 457 programs have been criticised as a “backdoor” approach to permanent migration. Employers will also need to improve their communication and commitment to providing training programs for employees.

Improve employee retention

By making it easier for employees to change jobs, the 457 visa program could help to ease the retention issue. Many Australians have been reluctant to take on a new role because they do not want to move to a different part of the country and have to start from scratch. It can be difficult for older workers and those who have had a career break to find another job, particularly when there is no guarantee of receiving a similar salary. However, changing jobs under the 457 visa program could address this issue.

What's next for Australia?

In conclusion, the government of Australia should address these short-term and long-term issues of the workforce shortage, including allowing more migrants to enter into the country to fill these positions. The government should continue to invest in skills programs and training to ensure the Australian workforce has the right skills to meet the growing demands of the economy and introduce incentives for employers who do end up sponsoring skills programs for their employees. Employers need to adapt and transform their business strategies accordingly to overcome these challenges as trends are not enough to offset the difficulties posed by the increasing skills shortages.