Bosses bemoan skill gaps hurting nation’s productivity

Almost one in five workers not proficient in their job, a new report finds.

Workers are changing jobs in pursuit of higher pay.

A majority of employers believe skills gaps are having a negative impact on their organisation’s ­productivity, with almost one in five workers not proficient in their job.

The latest Australian Human Resources Institute survey of 607 senior HR professionals and ­decision-makers also shows a fall in pay increase expectations, with employers expecting pay rises to average 3 per cent in the next year, down from 3.7 per cent.

According to the survey, businesses continued to experience recruitment difficulties, with 40 per cent of employers involved in recruiting reporting issues. Almost a quarter of employers plan to make workers redundant in the June quarter, around the same level as the March quarter.

AHRI chief executive Sarah McCann-Bartlett said persistent high employee turnover could be an understated cause of sluggish productivity growth, both through staff vacancies and the time taken to train new hires and support them to be fully proficient.

“For me, overall, the report tells us that Australian businesses have productivity issues, with almost 60 per cent saying that skills gaps are having a negative impact on their productivity,” she said.

Thirty-two per cent of organisations reported an average annual employee turnover of 20 per cent and above, up from 25 per cent of organisations in the previous quarter.

Ms McCann-Bartlett attributed the increase to the ongoing tight labour market and the number of workers looking to increase take-home income because of the cost of living crisis but she said the data suggested concerns about productivity might have led employers to keep a tighter lid on wage rises.

“Conditions in the labour market are softer than they were six months ago, but these latest Work Outlook results suggest job prospects remain positive,” she said. “This is leading to persistent recruitment difficulties and relatively high levels of employee turnover in many workplaces.”

The survey uncovered significant differences between the public and private sectors when it came to pay expectations, perceptions of proficiency and intended skills investment.

Wage expectations were higher in the public sector than in the private sector but public sector employees were more likely (24 per cent) to be perceived as not proficient in their role than private sector employees (18 per cent).

In the next 12 months, 53 per cent of public sector employers intend to increase skills investment, compared with 34 per cent of private sector firms.

Ms McCann-Bartlett said the survey results underlined the importance of speed to competency as part of the induction and onboarding process to help support productivity, and employee engagement and retention.

“Organisations should also be giving serious thought to investing more in line management capability, especially given that evidence shows that a poor employee -line manager relationships can drive job dissatisfaction.

“It is also well-known that high-quality leadership and management results in higher productivity,” she said.

Ms McCann-Bartlett said organisations wanting to boost productivity should ask themselves what changes needed to be made to retain talented employees and attract the best new talent.

“They may need to consider if their offering is sufficient, and whether they need to offer better pay, increased training or greater flexible working opportunities. Each workplace is unique,which is why a nuanced, considered approach is important,” she said.