Skills Shortages Impacting on Business

Skills shortages are posing real problems for businesses when it comes to production and service delivery and are set to intensify, according to a recent report from the Australian Industry Group (Ai Group). Some argue they are the number one future threat to economic growth.

The greatest shortages are of metal fitters, machinists and engineers, for whom over 50 per cent of positions are unfilled. Shortages are also significant for other metal trades and business administration managers, for whom a third of vacancies remain unfilled.

The difficulties in filling vacancies stem from a variety of causes – businesses not being able to find applicants with the required specialised skills, applicants not possessing the necessary general skills (communication, team work, literacy and numeracy, and problem-solving skills), and lack of local training leading to a dearth of local people with the skills needed by industry in their area. For many positions, there are simply not enough applicants.

How businesses are coping with skills shortages

Over a third of businesses believe there is a high to extreme risk of skills shortages negatively impacting their business this year. This rises to almost half (47.5 per cent) when businesses project this risk to 2015.

As a result, almost half of businesses have placed skills shortages as a high priority and are currently implementing strategies to deal with the issue. The strategies they are using include increasing house training, increasing their focus on apprentices, helping employees to multi-skill, improving skills utilisation by better aligning skills with work performed, and redesigning jobs around available skills. Outsourcing or sub-contracting work is also a popular strategy.

Still, almost 13 per cent of companies are forced to limit production levels because of skilled staff shortages. One in ten companies would like to recruit from overseas to help fill the shortfall, though this is a much less attractive option to those in the construction industry compared to the manufacturing and services sectors.