KPMG Enterprise survey finds mid-tier Australian businesses worry about hiring and retaining staff

KPMG says a surge of immigration and a cooling labour market has had little effect easing concerns about hiring and retaining workers by mid-tier firms.

A majority of Australia’s mid-tier businesses are worried about hiring and retaining staff in 2024 as many report struggling to attract skilled workers despite a record surge in immigration and a cooling labour market.

The KPMG Enterprise survey of 67 influential Australian mid-tier executives revealed leaders were also concerned about cyber threats and regulatory issues, although they expected the economic outlook to improve in the back half of 2024.

Hiring and retaining talent was the main concern for 60 per cent of executives surveyed this year as businesses said there were not enough workers with skills in areas such as digital technology to meet the needs of workplaces.

KPMG Enterprise national managing partner Naomi Mitchell told The Australian that while it had become easier to find workers, the level of concern about recruiting and keeping workers was similar to when Australia exited the pandemic.

“Our mid-market clients are seeing a big shift happening at the moment, so it might even be that the re-skilling of the existing staff is not falling into the right pieces of the business that they necessarily need,” she said.

“There is also an issue of talent wastage where the skills of too many of the migrant workers do not end up being leveraged in the sectors where they could make the biggest impact.”

Ms Mitchell said that the mid market was concerned about increased digitalisation of the workplace and that 6.5 million digital workers would be required by 2026, which was why 61 per cent of those surveyed were concerned about talent available over the next five years.

This was in stark contrast to the results of KPMG’s “Keeping Us Up at Night” survey of senior executives at large companies, which found they were less concerned about finding talent; just 42 per cent of respondents cited it as an issue, compared with 77 per cent in 2023 and 69 per cent in 2022.

“The difference between the mid market and the top end of town, is that cyber for the mid-tier is still the fear of the unknown and it’s that fast pace of change, which traditionally, hasn’t been in their comfort zone,” Ms Mitchell said.

“The mid market is a lot more prepared and willing to deal with issues around talent, issues around costs that they are much more comfortable with.”

KPMG highlighted that the arrival of 500,000 immigrants into Australia in the past year had helped to take some of the heat out of the issue. Ms Mitchell said that although it had become easier to find workers, some sectors such as manufacturing still found it more difficult to hire and retain employees.

Protecting and dealing with cyber attacks was the second most important issues at 57 per cent, in the wake of a series of incidents during 2023 that rocked the corporate world, including hacks affecting DP World and Latitude Financial, along with the hack of Australia’s biggest health network, St Vincent’s.

Ms Mitchell said that cyber was perceived as a challenge for mid-tier executives because most did not come from a technology or cyber background.

“Big business does resourcing in cyber a lot better than the mid market,” she said. “I wouldn’t say (mid-tier businesses) are avoiding it, but recent cases have been more focused on the big end of town, so it’s not a case of ignoring it, but its just not their main issue.”

Dealing with regulation was the third concern – listed by 49 per cent of respondents, followed by cost controls in an inflationary environment at 46 per cent, which KPMG noted had eased as businesses adapted to high inflation.