A skills recession is upon us. How will employers adapt?
Published: 20 June, 2023
- 88% of organisations in Australia are experiencing a skills shortage;
- 40% say the impact of skills shortages has intensified in the past 12 months;
- To address this systemic skills shortage crisis, employers must move beyond individual solutions to collective action.
Almost nine in ten (88%) organisations in Australia are now experiencing a skills shortage, according to the latest Hays Salary Guide.
Recruitment and workforce solutions specialists Hays found 78% of employers believe the skills shortage will impact the effective operation or growth plans of their organisation.
They say the impact will be greatest on productivity (63%), increased workloads for existing staff (62%), project delivery (59%), growth and or expansion plans (49%), employee engagement and morale (46%), employee turnover (44%), revenue and profit (41%) and customer service (also 41%).
Furthermore, 40% of employers say the impact of skills shortages has intensified in the past 12 months.
The key drivers of the skills shortage, according to employers, are a lack of people with the necessary qualification/s or experience (77%) and increased competition from other employers (64%).
“Australia’s skills shortage narrative is well entrenched in our labour market, but this year our survey shows its impact continues to intensify in many industries,” says Matthew Dickason, CEO Asia Pacific at Hays.
“There’s growing concern among employers about the lack of skilled professionals in today’s labour market. Despite these challenges, vacancy activity remains remarkably resilient. After normalising from last year’s historic peak, today’s headcount expansion plans suggest current economic uncertainty will not impact all workforces.
“It’s clear we’re heading for a skills recession as a shrinking talent pipeline threatens the effective operation and growth plans of organisations.
“With the skills shortage predicted to last well into the 2030s, employers must guard against the long-term impact.”
They say the impact will be greatest on productivity (63%), increased workloads for existing staff (62%), project delivery (59%), growth and or expansion plans (49%), employee engagement and morale (46%), employee turnover (44%), revenue and profit (41%) and customer service (also 41%).
Furthermore, 40% of employers say the impact of skills shortages has intensified in the past 12 months.
The key drivers of the skills shortage, according to employers, are a lack of people with the necessary qualification/s or experience (77%) and increased competition from other employers (64%).
“Australia’s skills shortage narrative is well entrenched in our labour market, but this year our survey shows its impact continues to intensify in many industries,” says Matthew Dickason, CEO Asia Pacific at Hays.
“There’s growing concern among employers about the lack of skilled professionals in today’s labour market. Despite these challenges, vacancy activity remains remarkably resilient. After normalising from last year’s historic peak, today’s headcount expansion plans suggest current economic uncertainty will not impact all workforces.
“It’s clear we’re heading for a skills recession as a shrinking talent pipeline threatens the effective operation and growth plans of organisations.
“With the skills shortage predicted to last well into the 2030s, employers must guard against the long-term impact.”
How employers are addressing the skills shortage
The Hays Salary Guide identified the common steps employers are taking to address the skills shortage.
Three quarters of employers have offered higher salaries than planned to attract skilled candidates. In addition, 62% are upskilling staff to help overcome skills gaps, while 37% are considering employing or sponsoring overseas candidates, up from last year’s 7%.
According to Hays, Diversity, Equity and Inclusion initiatives, streamlining the recruitment process and improving employer branding are other strategies employers have adopted.
Three quarters of employers have offered higher salaries than planned to attract skilled candidates. In addition, 62% are upskilling staff to help overcome skills gaps, while 37% are considering employing or sponsoring overseas candidates, up from last year’s 7%.
According to Hays, Diversity, Equity and Inclusion initiatives, streamlining the recruitment process and improving employer branding are other strategies employers have adopted.
Beyond individual solutions: The importance of collective action
“While investing in their own strategies is crucial to remain competitive, employers must take a wider view and work together to address the skills shortage crisis,” says Matthew.
“The issue of skills shortages isn’t specific to one organisation or industry but is a systemic problem impacting the entire labour market. We must shift mindsets and collaborate to address skills shortages collectively.
“These findings highlight the need for employers, the government and educational institutions to work together to address the root causes of the skills shortage and build a strong future workforce.”
The Hays Salary Guide is based on a survey of 6,903 organisations and 7,392 professionals. Download your copy today.
“The issue of skills shortages isn’t specific to one organisation or industry but is a systemic problem impacting the entire labour market. We must shift mindsets and collaborate to address skills shortages collectively.
“These findings highlight the need for employers, the government and educational institutions to work together to address the root causes of the skills shortage and build a strong future workforce.”
The Hays Salary Guide is based on a survey of 6,903 organisations and 7,392 professionals. Download your copy today.
- Ends -
For further information please contact Kathryn Crowden at kathryn.crowden@hays.com.au.
About Hays
Hays is the leading specialist in recruitment and workforce solutions.
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