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Skill shortages threaten to destroy $783bn output

Adam Zuchetti
Adam Zuchetti
03 May 2018 3 minute readShare
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The Australian economy faces a collective unrealised output of more than $783 billion if skill shortages plaguing various industries are not addressed by 2030, research suggests. But who is ultimately responsible for such shortages?

Noting that talent shortages are already a concern for many employers across a broad range of industries, Andrew Lafontaine of consulting firm Korn Ferry said this could blowout to $783.78 billion in unrealised output going to waste by 2030 — roughly a quarter of the entire economy.

And, he noted, Australia is not alone in this problem, with highly skilled and mid skilled workers in short supply across the Asia Pacific region — potentially increasing competition for existing workers between these countries.

“Companies must work to mitigate this potential talent crisis now to protect their future,” Mr Lafontaine said.

“Left to run its course, this shortage will severely impact the growth of markets in Australia and across APAC, which faces an imminent talent deficit of more than 12.3 million workers by 2020, rising to a shortage of 47 million workers and $5.652 trillion in unrealised annual revenue across the region by 2030.”

He added: “Companies and governments must act now to future-proof their business. Left unaddressed, the talent crunch will severely impact the growth of key markets and sectors across the region.”

Why are skills failing to meet demand?

Clearly the root cause of the problem is not population growth.

Australia’s population is rapidly closing in on 25 million. As of 10am on 3 May 2018, it sat at 24,922,789, according to the Australian Bureau of Statistics (ABS), and growing at an average rate of one person every 1 minute and 24 seconds.

Population is also growing strongly worldwide. The UN is predicting the global population will increase from its current 7.6 billion to 8.5 billion by 2030 (and a staggering 11.2 billion by the end of this century).

That suggests that the root problem is not in the number of people, but how those people are trained and allocated across the wider workforce:

1. Ageism by employers? With an ageing population comes an ageing workforce, meaning more and more workers are over the age of 50.

A blanket approach of ageism and discriminating against this sector of the workforce is locking out an increasing number of potential employees — and ones with decades of experience and skills under their belts.

2. Poor education standards? Employers have increasingly criticised our educational institutions for not producing work-ready graduates. Indeed, the University of NSW recently admitted that its accounting graduates were not up to scratch, due to the volume of skills and knowledge required of a modern practising accountant.

My Business has also heard from many SME owners who have complained about the quality of university graduates, and that they lack not just bespoke industry skills but even basic knowledge of their field.

3. Lack of business investment in training? There is an undeniable divide in the thinking of employers and their staff about who is responsible for funding upskilling and training. Recruitment firm Hays recently suggested that many jobseekers will boycott employers with poor or no training and development programs, while employers want candidates who take the initiative to upskill themselves.

The reality is more complex than a them-and-us approach. If businesses fail to train their workforces in the skills they need, they simply go without. If they stump up the funds for the training, they risk losing the upskilled employer to a competitor (usually a larger business with a bigger budget). If the employee pays for their own training, they will in turn expect higher remuneration from their current employer or move on elsewhere. Either way, SME employers in particular are effectively damned no matter what approach they take.

4. Uncertain career paths? We all know that technology is advancing at breakneck speed. And this is having a profound impact on career prospects. There are many jobs and even industries that did not exist 10 years ago (look at the worlds of artificial intelligence and fintech as just examples).

For graduates and even employees, this rate of change can be extremely difficult to navigate, given their learnings today can be irrelevant in a few years’ time, and their current jobs may not exist in the short-to-mid term.

So who is responsible for skills shortages?

While everyone will have their own personal take on the responsibility, the fact is that we are all part of the workforce in one way or another, and as such we all contribute to it — both positively and negatively.

As such, the only real solution to the problem of skills shortages is not finger-pointing, but committing to doing our own part in addressing the situation. Whether that be improving the training we offer, allocating more funds for educational investment, changing up the demographic mix or simply pulling our finger out to get ourselves more educated, we all have a role to play in addressing the problem.

For employers, business itself is a risk, and so the risk of investing in employee training only for them to go elsewhere is just part of the territory. It comes down to whether that risk is greater than the risk of not having skilled staff to enable ongoing business growth.

Skill shortages threaten to destroy $783bn output
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Adam Zuchetti
Adam Zuchetti

Adam Zuchetti is the former editor of MyBusiness and a senior freelance media professional, specialising in the fields of business, personal finance and property. In 2020, he also embarked on his own business journey – inspired in part by the entrepreneurs and founders he had met through his journalistic work – with the launch of customised pet gifting and subscription service Paws N’ All.

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