Are we moving quickly enough on the skills crisis?
Addressing the urgent need for digital skills in Australia
Australia has been labouring, so to speak, under a significant skills gap for a while now. Just last year, a report commissioned by RMIT Online and Deloitte Access Economics found that this skills gap is costing Australian businesses $3.1 billion every year, and would require an investment of $1.5 billion to properly address. Those are some frightening numbers.
The digital skills gap Australia is experiencing has been further exacerbated by the emergence of critical technologies such as AI,” says RMIT Online CEO Nic Cola. “We must not be complacent in our attitudes to reskilling and upskilling if we are to keep pace with our international counterparts.
So what’s been done to address this issue? Well, there has been some movement on a federal level. As part of the May 2023 Budget, the Australian Government announced a series of $11 million grants for the establishment of AI and digital capability centres around the country. There’s also been the National Skills Agreement: a five-year joint move between the Commonwealth, states and territories to boost the vocational education and training (VET) sector – although this investment is targeted more at vocational training, rather than tech skills.
The bigger issue seems to be business itself, and its unwillingness to face the talent crunch head-on. There are two sides to this story. A new report from RMIT Online has revealed that medium and large Australian businesses are expecting to spend approximately $8 billion on learning and development this year. That’s up 15% year-on-year. So far so good.
The Real Cost of Inaction
On the other hand, the same report also found that nearly half of employers (45%) aren’t prioritising training budgets to reflect legitimate skills gaps. And this despite four of the five top skills gaps being digital: Generative Artificial Intelligence, data science, coding and cyber security. Even worse, one in eight businesses are actually planning to cut training, which is putting $2 billion of valuable skills at risk. Roughly $5.6 million per day.
In other words, things are moving, but arguably not fast enough. And this can have real flow-on effects, both for businesses and the wider economy. On the in-house side, insufficient training and upskilling can impact staff retention, revenue and customer engagement. Recent surveys have found that 76% of employees are more likely to stay with a company that offers continuous training. There’s also a false economy going on when it comes to cost-cutting. Studies have shown that skimping on employee training doesn’t actually save you money. Quite the opposite, in fact. For every $1 businesses cut from their training budget, they lose out on skills valued at $3.40.
Australia’s Global Standing in Non-Formal Learning
Zooming out for a second, we can also see the effects of this on a macro scale. By cutting learning and development programs, and leaving skills gaps wide open, Australia runs the risk of falling behind our international competitors.
In fact, Australia’s participation in non-formal learning has been steadily dropping since 2013. Almost half of adults in the European Union, for example, have participated in some form of non-formal learning, compared to just 32% here in Australia. That puts us 24th out of 32 surveyed countries in the EU. There are a couple of ways to look at this. One: we’re neglecting tech skills, and have been for a while. Or two: Australia has an incredible opportunity to re-invent its workforce and unlock a sleeping tech sector.
“Australian businesses have a strategic opportunity to evaluate workforce proficiencies and gaps, and to develop learning and development frameworks that fortify teams for the future,” says Nic Cola. “If businesses are to maximise their return on investment, they must get their priorities in check to develop capabilities in the areas the workforce most needs.”
Deloitte Partner John O’Mahony agrees.
In an era of uncertainty, there is still a strategic opportunity for businesses to make a robust assessment of their workforce skill needs. It’s imperative that those businesses who are considering cutting learning and development budgets are aware of the possible ongoing impact this may have. Encouragingly, some businesses do appear to recognise the training imperative and have, on the whole, increased their learning and development budgets for 2024. However, the question remains as to whether this will be enough to meet the rapidly evolving nature of work.
To find out more about the Australian skill landscape, download this year’s Ready, Set, Upskill report here.