Strong and ongoing engagement between employers and education and training providers is key to meeting current and future skill needs.
Australia's workforce challenges are complex, and there is no one simple solution, Ai Group Centre for Education and Training Executive Director Caroline Smith added at an Australian Industry Group webinar last week on skills and workforce priorities for Australian businesses.
“Australia is experiencing an extremely tight labour market,” she said.
“This is posing significant workforce shortages for Australian employers at all skill levels, negatively impacting productivity, growth and financial performance.
“Australian Industry Group hears about the impacts of these shortages on businesses all over the country directly from our members every day.
“These shortages exist nationally but are pronounced in regional areas.”
Joining Dr Smith to explore this issue were Australian Industry Group’s Head of Economics and Research, Jeff Wilson, and Head of Northern Australia, Dean Deighton.
Skill shortages have been a perennial feature of the Australian economy for many years, Dr Wilson said.
“Australia's very tight labour market is exacerbating the problem, with full employment for the past three years. This effectively means Australia's labour supply is fully utilised.”
This has been driven by:
Australia was one of only four countries in the world to close its international border during the height of Covid, leading to the loss of several years of working-age migrants in 2020 and 2021.
Australia’s economic growth rate shot up to 6.8%, creating a huge demand for labour.
This has driven an increased demand for labour — skilled and unskilled.
“This is the tightest labour market we have on modern record,” Dr Wilson said.
“It has made skill shortages more difficult than they would normally be.
“Job vacancies are a terrible burden on business because they reduce productivity.
“You end up fixing problems to do with workforce shortages rather than looking to grow your business and taking it to the next step.
“If we don't have enough workers to do the work we've got at the moment, we're reluctant to seek more work.”
According to the most recent national Occupational Shortages List released last year, 112 occupations are classified as being in national shortage.
That equates to 4.75 million jobs, about a third of the national labour force.
Many are in the care economy and industrial sectors, including construction and some technical training areas in manufacturing and transport, particularly around plant operators and drivers.
The challenges are exacerbated the more regional and remote you get, Townsville-based Mr Deighton said.
“My region alone needs 41,000 new workers in the next five to 10 years in emerging industries, such as renewables and the critical mineral sector, and growing sectors such as resources and defence.
“Never mind trying to get a doctor or nurse in a regional community. The same with childcare workers. The lack of workforce development needs to be part of the same discussion.”
“With a $32 billion project pipeline in North Queensland, we're seeing a real shift in terms of ‘how do we grow our own talent?’,” Mr Deighton said.
“Whether that’s by businesses training their own people or upskilling from within. The economic outcome may be in question if we can't get these workforces to grow.”
To explore the challenges, Mr Deighton, Chair of Jobs Townsville North Queensland — the Regional Jobs Committee for the North — helped deliver the inaugural North Queensland Future Workforce Summit in Townsville last month.
“It marked the first time in my experience that we were able to get into the same room higher education, VET, industry across all sectors — defence, mining, resources and critical minerals — government agencies and community providers,” Mr Deighton said.
“There were some clear actions that came out of it. The clearest one for me was the need for industry and higher education and VET to collaborate a lot better.
“We're already working on that regional collaboration and having a real regional vision — not just talking about — and some real key actions, was critical.”
“The challenge from a regional perspective with a mobile workforce is housing,” Mr Deighton said.
“It's a challenge in every market, but the more regional you get, the more challenging it gets to secure accommodation, including rentals.
“We’re seeing regional mayors get together in their local government groups and look at how they can support regional workforces.
“There are some great defence projects up here where the skilled labour is being shared across SMEs.”
“From a workforce perspective, we've seen some great examples of diversity,” Mr Deighton said.
He told of an organisation that embraces high-end technology but trialled the use of workers from the Endeavour Foundation to perform repetitive duties.
“The Managing Director said the workers added much value to his business, in terms of both productivity and culture and is looking to expand that program significantly,” Mr Deighton said.
“It’s a model that can be replicated.”
It’s vital that industry and education understand each other’s needs.
“Industry needs to articulate what it requires from the training sector, and the training sector needs to listen rather than say: ‘Here's our perspectives to training; you make it fit’, because that's not going to work,” Mr Deighton said.
Dr Wilson added: “A lot of worker shortages stem from training issues, because many roles need more than just a few weeks’ training.
“Technical and trades roles require up to four years’ training.
“The shortage we have today is a result of a shortage of people going into the pipeline in 2019 before the pandemic. That's hard to fix. The tight labour market adds to the stress.
“The obvious solution would be to train more people, but many workers — especially some youth cohorts — are lured by the big bucks of in-demand but low-skilled jobs such as those in mining.
“Some mining roles such as plant operators and drivers can pay six-figure salaries and more with a short training period.
“It makes an apprenticeship or traineeship less appealing.”
Promoting the longer-term benefits of completing such training would help, Dr Wilson said.
“Young adults need to think beyond the next few years and understand how established training can provide them with a lifelong engagement with the labour market that may set them up better in the long term,” he added.
“That's not necessarily how pathways into training, particularly in some VET areas, have been communicated and marketed.”
A shortage of trainers and instructors doesn’t help.
“Employers with apprentices or other in-house training programs often say the biggest problem is in the short term — having to take a skilled person off a task to train a younger person,” Dr Wilson said.
“Skilled migration is part of the solution.”
“Young adults are often presented with a skill system in Australia that appears as a two-forked road: uni or VET,” Dr Wilson said.
“However, they need an understanding how the two paths can loop back to each other during the course of their lives.
“It doesn’t have to be an either/or situation. Mini credentials are extremely useful.”
A critical policy area that’s anticipated to be a focus of 2025 is apprenticeships and traineeships, including incentives arrangements, Dr Smith said.
“There is a need for further policy and program development in this area and for it to be better informed by the employer experience,” she said.
The CET recently invited businesses to complete a survey on their experiences with apprenticeships and traineeships.
“The findings, to be released soon, will support and inform our advocacy,” Dr Smith said.
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Wendy Larter is Communications Manager at the Australian Industry Group. She has more than 20 years’ experience as a reporter, features writer, contributor and sub-editor for newspapers and magazines including The Courier-Mail in Brisbane and Metro, the News of the World, The Times and Elle in the UK.
