Talents Shortage Remains the Top Challenge For Australian Businesses: KPMG Survey

Australian Businesses are experiencing profound workforce and skill shortage post-pandemic. (Photo by Saeed KHAN / AFP)

Recruiting, retaining, and upskilling staff remains the top challenge concerning Australian business leaders in 2023, according to the latest annual report by KPMG Australia, which surveyed 473 senior executives.

The fifth edition of  Keeping us up at Night, released in the first week of the new year, shows that 77 percent of business leaders nominated talent as the biggest concern in 2023, up from 69 percent last year.

Optimizing organization value from digital transformation has risen to the second major concern at 46 percent, followed by managing cyber risks at 40 percent. This depicts a different picture from last year when remote working and ESG strategy ( environmental, social, and governance) were cited as top issues.

Alison Kitchen, KPMG Chairman, cited a choppy business condition anticipated as the driving force behind the re-emergence of traditional priority areas, including “revenue growth, the training and up-skilling of staff, and operational security (albeit now with a technology focus).”

“It’s notable that this year’s findings show a return to ‘nuts and bolts’ issues, such as staffing and the state of the economy, “ she said, adding that “These are notably different from a year ago when their concerns involved staff working remotely, designing an ESG strategy, and ensuring diversity in organizational leadership.”

“Given this year will be challenging economically, it makes sense for businesses to focus on fundamentals while remaining flexible and open to new opportunities.”

Skill Shortage Highlighted Post-Pandemic

Kitchen attributes the shortage of skilled workers to the large uptick in focus on talent.

“Finding and keeping good quality staff is vital at the best of times, but with unemployment, at its lowest level in over 50 years, the challenge has become greater due to a smaller pool of talent,” she said.

“As a nation, we are past full employment and into territory where there is a mismatch between the skills required by employers to fill vacant jobs and the skills of the remaining unemployed people to do those jobs.”

The concerns over access to talent reflect the country’s chronic skill shortage across industries, which was exacerbated by the pandemic. Such challenges are also highlighted in a survey published last November by the Australian Industry Group (AI Group), a national peak employer organization.

The biennial Skill survey, which covers 342 businesses with over 200,000 full-time employees, has found that 71 percent of the businesses are struggling to secure technicians and trade workers. Furthermore,64 percent of businesses have listed improving digital as the top three “highest priority”.

The survey concluded, “Australian businesses are experiencing significant, many would say unprecedented, skills and workforce challenges.”

No Quick or Easy Fix  for Chronic Challenge

Notably, the top three issues for 2023 identified in the KPMG survey– talent, digital, cyber–are also seen as the most important over the next 3-5 years, suggesting the business leaders have recognized that there is no quick fix for these issues.

In response to the talent challenge, 44 percent of the businesses surveyed by AI Group intend to employ skilled migrants, a significant jump from seven percent in 2021. Meanwhile, 51 percent plan to increase expenditure on staff training and development in the coming year.

As a strong advocate for skilled migrants, KPMG has argued that talent shortage could be solved in part by aggressively targeting talents in countries like the US and the UK, which were in a recession or heading for a recession.

Based on the assumption that the new migrants are 20 percent more productive than the incumbent workforce on average,  its modelling indicates that a cumulative increase in net overseas migration of 265,000 people over the next five years would boost GDP in 2030 by up to $35bn.

However, the AI group highlights the need for a multi-pronged strategy that involves a more responsive and flexible training and education system, saying, “skilled migration is a key piece of the puzzle, but it is not the panacea. ”

“If the last two years have taught us anything, it’s that the global environment can change rapidly,” the report said. “We need to ensure our own house is in order and is as robust as it can be if we are to weather similar shocks or constraints in the future.”