You’re hired, now let’s train you

Employers are finding that many new recruits are far from job ready in a tight market.

The Robert Half survey of employers found 84 per cent were reducing requirements to hire people but were likely to invest in training and upskilling. Picture: Amorn Suriyan

Australian employers have drastically lowered their expectations about the skill levels of new hires as business faces an acute shortage of staff in a historically tight labour market.

Recruitment firm Robert Half reports that 84 per cent of business leaders say they are willing to compromise on key credentials when hiring for hard-to-fill roles, while industry body, the Australian Industry Group (AIG), says government and industry must step up to train people even when they have jobs.

The skills challenge is a direct result of one of the lowest-ever levels of unemployment – 4 per cent – in almost 50 years: many employers cannot fill vacancies, but even when they do, some find their new hires’ lack of experience and skills mean they struggle to do the job.

It’s the flip side of the good news story of low unemployment and is demonstrated by the fact that before Covid-19, there were 3.2 unemployed people available for every vacancy, compared to now when there are 1.3 – the lowest supply on record.

That means some people previously unable to get jobs because of possessing fewer skills are now in jobs.

Economist Jeff Borland, professor of economics at Melbourne University, says it’s the kind of “problem” we don’t want to disappear because of the opportunities it gives to people to find work.

“It’s not a problem that you want to go away because the alternative is businesses would then be complaining demand is slow,” says Borland. “It’s a problem we want to address rather than thinking the best thing would be if we didn’t have it.”

The Robert Half survey of employers found 84 per cent were reducing requirements to hire people but were likely to invest in training and upskilling. That’s good news. Megan Lilly, the executive director of the AIG centre for education and training, says industry must do more to develop micro-courses for new hires.

She says: “There is evidence coming through that getting the right skills for the right job is much more difficult. You’re getting either less experienced people into jobs, or people with skills from different jobs. Getting that perfect, neat fit is much more difficult.

“The upside is we’ve got more people in jobs and we are giving more people opportunities. “But to make it successful, we need to provide much more skilling for people in work.

“That skilling will have to be much shorter, more flexible – micro credentials, short courses, tailored programs that are not necessarily for qualifications – and they will need to be quite specific to the work environment to help people become effective and productive as soon as possible.”

Lilly says a combination of employer and federal and state government funding is needed to expand the scale of existing programs and develop new short courses.

“Everyone’s going to have to help,” she says.

She says that while increasing immigration is important, it will not solve the shortages.

“This is an opportunity to give a whole lot of people a good go at skill development and meaningful employment, but it will require support,” she says. “We’ve never experienced such acute skill shortages.”

According to the recent budget papers, employment-to-population ratio reached a record high of 63.8 per cent in February and is expected to rise to 66.5 per cent by mid-year and stay at that level for another two years. The participation rate is also at a record high of 66.4 per cent. More than one million workers started a new job in the three months to November – an increase of 65 per cent from the low experienced in 2020.

Borland says the current acute lack of skills should be seen as a phase rather than a permanent feature of the labour market but there are longer-term issues around preparing people for work.

He says that till the “2010s”, Australia’s employment service, Jobactive, was too targeted at people who were “job ready” and did not need a lot of assistance. He was a member of a government panel which in 2018 reviewed the scheme and recommended that Jobactive direct more resources to people who needed help with job readiness.

“One thing that would help is putting in place the recommendations from (the panel) to direct resources to people who need help to be job ready. They need a sense of what job readiness is, they need vocational skills to do whatever kind of job they want or are going to be placed into. We also said you need support when you’re actually in the job because … there’s a lot of things you can’t be taught … it’s more like coaching when you are in the job.”

Borland says there will always be people who face barriers in getting work “but if you can get systems in place that assist people who are coming from a history without work, if you can get somebody who helps from outside to help them do the job, then it makes employers more likely to be willing to hire people”

“I think there is a transitory element to (the skills shortage) but there’s also a longer term issue here about the type of support we provide to help people get into work and stay.”