Australia fails to meet demand for highly-skilled professionals in 2018, Hays reveals
Australia’s talent mismatch between the skills jobseekers possess and those employers want has increased for the fifth consecutive year, according to the 2018 Hays Global Skills Index, released today.
The report, published in collaboration with Oxford Economics, shows that despite an existing pool of labour, employers are finding it harder to secure the right talent, particularly in high-skill industries and for roles that require highly-skilled professionals.
This year’s Overall Index score increased slightly from 5.3 to 5.4, suggesting that the global labour market has come under greater strain in the last year. The Overall Index score is an aggregate of the seven key indicators across all 33 markets surveyed. However, a subtle movement in the Overall Index score often masks a wealth of insight and information at an individual country level.
The Index revealed the main factor behind this tightening is the growing mismatch between the skills workers possess and those required by employers. This trend was seen across almost half of the markets assessed (16 out of 33) and is highlighted by a growing number of open job vacancies coupled with a higher rate of long-term unemployment, with the largest rises coming from within Europe (most notably Austria, France and Belgium).
The Index also highlights the economic damage being caused by the ‘global productivity puzzle’, which has seen labour productivity levels across the world flatline since the financial crisis a decade ago. The research indicated that many countries across Europe, the Middle East and the Americas are stuck in a low growth trap, whereby weak productivity growth has led to reduced investment in labour and capital, further weakening overall productivity levels. Most worryingly, this stagnation may be part of a longer-term trend; the result of macroeconomic forces such as an ageing population; a downturn in global trade; and reduced investment in education and training.
Finally, the data also presented a pattern of narrowing wage gaps between lower-skilled jobs and higher-skilled occupations, which may serve to reduce wage inequality levels globally. The research also showed across all markets covered in the report that the gender pay gap persists. It also revealed women are less likely to participate in the labour market than men and when they do, are less likely to find skilled employment.
The fast-changing work environment has led to the global labour force failing to develop the skills required to fill today’s roles. To bridge this gap, education programmes and on-the-job training need to be prioritised; low interest rates and stable global economics need to be utilised to increase investment in technology and infrastructure to help boost productivity; and diversity of all forms must be promoted. This may enable businesses to boost productivity and empower workers across the world to retain good quality jobs and boost wage growth.
Alistair Cox, chief executive at Hays plc, said, “This year’s Index has highlighted a growing mismatch between the skills workers possess and the skills that are required by businesses. It’s already a problem if employers can’t find workers with the necessary skills and experience for today’s roles, and going forward the issue will only become more challenging with further advances in technology, particularly in AI and machine learning”.
“The Index has also exposed the alarming signs behind the global lack of growth in productivity and wages. Labour productivity across the globe has flatlined as firms fall behind with investing in new technology and crucial infrastructure development post the financial crisis, both aspects that can drive productivity forward.
“There are important long-term trends to consider here and the reasons behind them are important for business, policymakers and workers themselves. It is crucial that going forward more investment is made in education and on-the-job training so that workers can fill the roles their employers are creating and boost productivity. We are at a critical junction, where if we don’t seek to address these issues in the very near future, then the skills crisis risks spiralling out of control and the global labour market will struggle to keep up and provide the skills the world needs.”
Nick Deligiannis, managing director of Hays in Australia & New Zealand, said, “Demand for highly-skilled professionals and in high-skill industries such as IT, engineering, financial services and professional services now far surpasses demand in low-skill industries and for low-skill workers who perform repetitive tasks that can be automated (see the ‘wage pressure in high-skill occupations’ and ‘wage pressure in high-skill industries’ indicators below).
“At the same time, the available labour force is shrinking (‘labour market participation’). Given these findings, all professionals must continuously upskill to remain relevant and employable in our increasingly automated world of work.”.
Australia’s increase to 5.7 on the overall Index – up from 2017’s 5.5 and the highest since 2012’s peak of 5.9 – shows increased pressure in the job market. I.e., it’s harder to secure the right talent now than it was a year ago.
The Index is calculated through an analysis of equally weighted indicators, each scored out of 10 (1 being an extremely low pressure point, 10 being an extremely high pressure point). They include:
• Talent mismatch: Australia scored 5.6. This figure has risen for five consecutive years (up from 5.2 in 2017, 4.5 in 2016, 4.2 in 2015, 4.1 in 2014 and 4.0 in 2013), which shows that readily available candidates are less likely to possess the skills employers want;
• Wage pressure in high-skill industries: Australia scored 8.7, a high pressure score that shows wage pressure in high-skill industries is rising much quicker than in low-skill industries relative to the past. This suggests there is a shortage of talent in high-skill industries;
• Wage pressure in high-skill occupations: Australia scored 6.2, suggesting there is a shortage of highly-skilled professionals;
• Labour market participation: Australia scored 5.2, up from 4.8 last year and 3.8 in 2016. A rise of 1.4 points over two years shows increasing pressure, underscored by rising vacancy activity and fewer working age people looking or available for jobs;
• Overall wage pressure: Australia scored 5.0, which shows that employers are holding tight and keeping salary increases restrained rather than using remuneration to compete for talent;
• Labour market flexibility: Australia scored 4.4, which suggests our labour market legislation is fairly flexible.
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