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Why is the skills shortage still so concerning in 2024?

by Roxanne Calder

Coming out of the pandemic, our skills shortage has been one of the most heavily discussed, debated, and strategised topics. It appeared seemingly out of nowhere. But for those in the know, the talent crisis had been brewing for some time.

Post lockdowns, every business pushed for productivity. First there was the surge in job vacancies; a dramatic 111.97% increase, compared to February 2020. Then in turn, unemployment levels plummeted to 3.4%.  The lowest rate in nearly fifty years.

Instead of the much needed and expected uptake, organisations were reeling from the ‘great resignation.’ For the year ending February 2023 and the second year in a row, job mobility remained at 9.5%, the highest rate in a decade. For those in the professional space, 24% of you changed jobs.

In 2024, our skills shortage is still concerning. Here is why:

Our ageing population

In 2022, 28.69% of our population were aged 55 years and over, compared with 18.95% in 1982.  The average age of all retirees in 2020 was 56.3 years, a confronting figure when 19.4% of our total labour force, is aged 55 years and above, up from 10.5% in February 1980.

Then our birth rates are not nearly close to replacement levels. In 1961, birth rates were 3.55 compared to 1.63 in 2022. The ‘great unretirement’ presents good news. Some 179,000 Australians over the age of 55 have rejoined the workforce. However, with the majority of the ‘unretirees’ working reduced and part-time hours, it is not enough.

A skills shortage, not a labour shortage

The global economic downturn has brought change to our workforce and employment dynamics. Salaries are softening, job vacancies have decreased, employers are calling for more office time and the biggest potential indicator, the one we are all hinging our bets on…the unemployment rate.

It is slowly but surely rising; however, it won’t be our skills saviour. For Australia, the forecasted unemployment rate for 2024 is 4.1%, equating to 581,600 potential job seekers.  As a comparison, in October 2022, the unemployment rate of 3.4%, resulted in 483,800 seeking employment.  The difference is minuscule, and not a strong enough lever (yet) to suffice any meaningful change to our skills deficit.

Which skills?

It is across the board. Think our beautiful human skills as well as our technical skills. The first annual Jobs and Skills report, released in October 2023, shows 36% of all occupations assessed are in national shortage. It highlights our digital literacy gaps, stating that nearly 70% of Information and Communication Technology (ICT) professionals’ occupations are in short supply.

This should come as no surprise. Our 4th industrial revolution is evolving exponentially rather than at a linear pace.  It has application to every industry, specifically STEM skills, i.e., those utilising the knowledge of science, technology, engineering, and maths.

What of our education and training pipeline?

It appears misaligned to the skills required for today and the future. Only 61% of those aged 15-24 years are at school or enrolled in further study compared with 63% in 2022 and 65% in 2021. And of those courses studied, 21% were studying in the field of society and culture, 17% management and commerce, 16% health and those much needed digital and tech skills? Just 11% were studying engineering and related technologies.

The big ticket – our workforce

This is our greatest opportunity. In dealing with the acute hiring pain, employers rolled out the red carpet with higher salaries, training, change in management style and approach, wellbeing initiatives, hybrid, remote, bring your whole self to work and or dog, flexible working, flexible anything. The onus sits firmly with the employer, and this may have been our undoing.

The result, a misalignment of employer and employee expectations and with it, a slow decline in skills acquisition and even a de-skilling of our workforce. The promotion that we could only dream of or the 20 to 30 percent salary increases experienced in 2022 may have inadvertently removed our workforce’s ability for effort, application, learning, curiosity, and appreciation. It is misguided to think we don’t deserve the benefits of the time we are in. Our lives should be easier than for older generations, however, it would be wrong to dismiss the possible ripple effect of this condition on our workforce.

There is merit in working deliberately and progressively towards our goals. It feels deserving and good and is the real ‘balance’ we should be seeking at work. It strengthens our human skills, builds character, confidence, and self-esteem, and develops courage. In doing so, we also keep learning, the biggest skill at risk in our skills shortage. 

About the Author

Roxanne Calder, author of ‘Employable – 7 Attributes to Assuring Your Working Future’, is the founder and managing director of EST10 – one of Sydney’s most successful administration recruitment agencies. Roxanne is passionate about uncovering people’s potential and watching their careers soar.

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