The skills shortage in Australia is a growing concern for companies as the financial impact of this shortage is expected to increase in 2023.
According to a recent study conducted by specialised recruiter Robert Half, 70 per cent of Australian employers surveyed believe that not having access to the required skills will negatively impact their finances in 2023.
The findings of this study highlight the urgent need for companies to address the skills gap and find creative solutions to attract and retain talent in a competitive job market.
Unemployment rates are near a 50-year low, but employers face a skills shortage as their biggest challenge in 2023, with 44 per cent of employers and 52 per cent of CIOs seeing it as the main staffing challenge.
Despite declining job ads, competition for qualified talent, especially specialised talent, has risen, with 83 per cent of employers reporting an increase. 87 per cent of CFOs and 81 per cent of CIOs also feel the rise in competition for specialised talent. Only 2 per cent of employers believe competition has decreased.
Key highlights:
- A significant percentage of employers, 44 per cent, believe the lack of skilled workers will be the biggest challenge they face in 2023.
- The majority of business leaders, 70 per cent, anticipate that the shortage of skilled workers will result in financial losses for their business, which is expected to increase in 2023.
- In the past year, competition for qualified finance, business support, and technology talent has intensified, with 83 per cent of employers reporting an increase.
Intensifying competition for talented employees
Despite the low unemployment rate, employers are worried about the intensifying competition for talented workers in 2023. Although job advertisements have decreased, they still need to be seen at a high level since 2008. This has resulted in an increase in competition for qualified talent. Nearly 83 per cent of employers believe that the competition for talent has increased in the past year, with specialised talent being in particularly short supply.
The CFOs and CIOs feel the impact of this talent shortage the most, with 87 per cent and 81 per cent, respectively, stating that the competition for specialised talent has increased compared to 2022. Only a small percentage of 2 per cent of employers believe that competition for talent has decreased in the past year.
“Coming into the new year, we are still seeing historically low unemployment and high job vacancy rates. With business confidence soaring despite whispers of a potential recession in Australia, the skills shortage for finance, technology and business support talent continues to plague the labour market, causing financial impacts on businesses at a time when the focus on cost management has heightened.
“The notion that the skills shortage would ease after the end of the pandemic has not proven to be the case, or at least not yet. Though some companies are reverting to hiring freezes or reducing their headcount, finding the right skilled talent remains essential at a time when companies are actioning their growth initiatives for the new year,” said Nicole Gorton, Director of Robert Half.
Staffing shortages to cost businesses in 2023
Staffing shortages are expected to have a significant financial impact on businesses in 2023. According to 70 per cent of business leaders, the cost of not having the required qualified staff in-house will only increase in 2023.
Among the different types of business leaders, 33 per cent of general hiring managers expect the financial impact to increase significantly, while 17 per cent of CFOs and 14 per cent of CIOs share the same sentiment. On the other hand, only 13 per cent of business leaders believe the financial impact will remain the same, and a mere 3 per cent believe it will decrease. These findings highlight the pressing need for businesses to address the staffing shortage issue in 2023.
The key to addressing the talent shortage is through collaboration between the government, education providers, and employer groups, according to 26 per cent of employers. This solution is particularly favoured by CFOs (29 per cent) and CIOs (30 per cent).
Another 23 per cent of leaders believe that investing in training and upskilling/reskilling workers is the solution, while 20 per cent believe that increasing the availability of skills through international migration and retaining more overseas students is the answer.
Only 4 per cent of leaders think that hiring remote talent is the solution, even though it became a popular hiring strategy during the Covid-19 pandemic. Only 5 per cent of employers prefer initiatives to bring retirees back into the workforce, and only 3 per cent believe in encouraging disadvantaged groups such as Indigenous people, people with disabilities, and those with poor English skills to enter the workforce.
Significantly, 17 per cent of employers cite all factors as being equally important in tackling the skills shortage, and therefore a variety of approaches should be taken.
“We know there is no – single –silver bullet to fixing the skills shortage in Australia, but strategies like the government, employers, and education providers working on joint initiatives plus a focus on upskilling and reskilling professionals could allow more effective usage of the talent we have in our nation.
“Although there is no certainty as to when international talent will arrive and in what numbers, relying on international talent remains essential in stemming the skills shortage in our nation.”
“Employers are feeling the burn of the skills-short market and are looking for talent who tick all their boxes. In order to fill growing skills gaps, however, companies must hire candidates based on their potential to grow into a role and invest in internal training, professional development, and succession planning to find and retain the skills their business requires,” concluded Gorton
According to the study, the key to addressing the talent shortage is a collaboration between the government, education providers, and employer groups, according to 26 per cent of employers. This solution is particularly favoured by CFOs (29 per cent) and CIOs (30 per cent). Another 23 per cent of leaders believe that investing in training and upskilling/reskilling workers is the solution, while 20 per cent believe that increasing the availability of skills through international migration and retaining more overseas students is the answer.
Only 4 per cent of leaders think that hiring remote talent is the solution, even though it became a popular hiring strategy during the Covid-19 pandemic. Only 5 per cent of employers prefer initiatives to bring retirees back into the workforce, and only 3 per cent believe in encouraging disadvantaged groups such as Indigenous people, people with disabilities, and those with poor English skills to enter the workforce.
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