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An ongoing shortage of high-level skills means that Australia’s labour market is yet to find balanced ground, according to the Hays Global Skills Index. Questions remain about whether or not the country is able to deliver the high-skills needed.
The Index, which assesses the efficiency of the skilled labour market in 30 countries, or its ability to supply skilled labour, found that the Australian labour market is still not producing the right skills pipeline.
The Index scale ranges between 0 and 10, with the higher the Index score the greater the difficulty for employers in findings skills. A score greater than 5 indicates skill shortages; less than 5 indicates few if any signs of skills shortages.
The score of 5.5 for Australia suggests employers face difficulty when recruiting for high-skill jobs.
Nick Deligiannis, Managing Director of Hays in Australia & New Zealand said: “As the Abbott Government settles down in Canberra, boosting employment should be a priority. But central to this is arguably the biggest thorn in the side of Australia’s labour market: the ongoing shortage of higher level skills.”
“Yet while unemployment is expected to rise in 2014, as confirmed by Treasurer Joe Hockey earlier this month, employers still struggle to attract highly skilled and experienced professionals.
“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 labour 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,” Mr Deligiannis added.
The overall Index score is the average of seven indicator scores. Three indicators explore the supply of talent, namely education flexibility, labour market participation and labour market flexibility. One looks at talent mismatch. The final three are wage pressures indicators, looking at overall wage pressure, wage pressure in high-skill industries and wage pressure in high-skill occupations.
Mr Deligiannis continued: “Skills gaps can manifest themselves through wage pressures, a talent mismatch and/or supply. Our Index looks at all three areas. Of interest in Australia are the three scores for wage pressure.”
“Australia’s high ‘overall wage pressure’ score of 7.1 shows the country is expected to face overall wage pressures above historic norms. We expect to see growth in wages across the whole economy, after allowing for inflation. While overall real wage growth is expected to be down slightly from last year, this indicator continues to add upward pressure to the overall Index score of 5.5 for Australia.”
“There is also a widening in pay differentials between high and low-skill industries, as the score of 8.0 for ‘wage pressure in high-skill industries’ shows. New Zealand received the highest score possible of 10.0 for ‘wage pressure in high-skill industries’, exacerbating the problem for this part of the world.”
“Australia is also seeing a widening gap in pay differences between high-skill and low-skill occupations, as indicated by the score of 6.0 for ‘wage pressure in high-skill occupations’,” concluded Mr Deligiannis.
According to Hays, in Australia the top five skills in most demand are:
- Financial Analysts
- Specialist Nurses
- Software Developers
- Digital Marketing
The full Hays Global Skills Index can be found by clicking here.