Australia is currently facing a skilled labor shortage crisis

Australia is currently facing a skilled labor shortage crisis, due to a continuous lack of high level skills among native Australians. This includes jobs such as specialist nurses, software developers and financial analysts, according to the Hays Global Skills Index, which assesses the efficiency of the skilled labor market in thirty one countries. A nation’s overall index score is arrived at by averaging seven indicator scores. The first three indicators measure the nation’s talent supply by examining educational flexibility, labor market participation, and labor market flexibility. The second set measures wage pressure through overall wage pressure, wage pressure in high skill industries, and wage pressure in individual high skill occupations. The final indicator is talent mismatch, which measures the gap between the skills that employers are looking for and the skills that are available in the labor market. This data is compiled to give a country a rating from zero to ten. On this scale, zero indicates no skill shortage, while ten indicates the most severe skill shortage. Australia’s rating of 5.3 shows that things are not yet as bad as they could be, as only numbers greater than five are considered to indicate a shortage of skills.

Unfortunately, the Australian labor market is not producing the needed skills in the kind of quantity needed to keep up with demand, leading to an anticipated rise in unemployment in 2014, up to an average of 5.9%. In the words of treasurer Joe Hockey, “It is a bitter paradox, caused by employers being unable to find the skilled workers they need, particularly in more technical areas such as IT, construction, and engineering. Demand is not evident in every function in every region of Australia, but we are seeing sustained demand for high skill professionals. So instead of a balanced labor market where employers can easily recruit, retain, or replace their key talent at generally prevailing wage rates, a shortage of professionals for jobs in high skill industries and high skill occupations is still evident.”

This shortage has led Australian businesses to look to foreign markets to recruit the talent that they need. Currently, this is the only viable option for finding skilled workers to fill critical jobs that otherwise would be vacant. While this works out for the businesses, at least in the short term, it means fewer and lower paying jobs for Australians. When asked about possible solutions to this conundrum, Nick Deligiannis, the managing director of Hays in Australian and New Zealand, had this to say: “The jobs market needs to deliver the talent necessary for businesses and ultimately societies to thrive. It is critical for education authorities and businesses to work closely to ensure educational systems are designed to provide students with the skills that their future employers require.”

Even if this suggestion were acted on immediately, it would take years to have any effect on the labor shortage. Until that time, Australian businesses remain in dire need of foreign workers to fill positions requiring a high level of skill and education.