Australia's tech skills gap putting $10bn economy growth at risk

HRD explores why closing Australia’s skills gap is critical to a strong recovery

Australia's tech skills gap putting $10bn economy growth at risk

Australia is in the grip of a skills gap which could cost the economy $10billion in growth over the next four years.

According to the new report by RMIT and Deloitte Access Economics, Australia will need 156,000 more digital technology workers by 2025, representing one in four jobs created during that period.

One quarter of those surveyed said their data analysis skills are not at the level required or are out-dated compared with their employer’s requirements.

The report found if the Australian workforce can meet those needs through upskilling or migration, it could turbocharge the economy.

So how can Australia keep up with the growing demand?

HRD spoke to Chris Wright, associate professor of work and organisational studies at the University of Sydney Business School, who said Australia’s labour market has changed dramatically over the last 30 years.

“The government has put a lot of energy into changing policy in the years prior to COVID-19 to make the labour market and immigration policy as responsive as possible,” he said.

“The scenario has changed a lot now but addressing skills needs is still vitally important, especially for certain industries and in certain regions.”

Australia has a demand-driven system for immigration policy with visas like the temporary skills shortage and employer nominated visa designed to help employers tackle skills shortages with migrant workers.

Read more: Neurodiversity hiring – is this the key to plugging Australia's tech skills gap?

But the pandemic has halted the income of foreign workers, with net overseas migration set to fall into negative levels for the first time since World War II.

A loss of 72,000 people has been forecast for the 2020-21 financial year, with population growth predicted at just 0.2%.

Experts have warned this significant drop will have severe consequences on existing skills gaps and cause slow, sluggish economic growth over the next few years.

Pre-Covid, the biggest skills needs were in IT, professional services, health and social care, and to a lesser extent, hospitality.

The hospitality sector has experienced the biggest drop in the number of skilled workers arriving, while decline in the tech sector has been small.

With international borders closed, there is no reprieve on the horizon for employers looking to hire workers from abroad – unless they’re remote.

But Wright said the lack of physical migration is causing a different pattern to emerge.

“What we're seeing is a lot of people who are here on temporary residency are still having applications for permanent residency under the skilled program processed, so that's one way that the skills gaps are being addressed,” he said.

“The other thing worth mentioning in terms of the tech sector is that although there is still a high skills demand, unlike the health sector, it is work that can potentially be offshored.

“In the last few years, one of the sources of frustration from the IT sector in Australia is that they feel they haven't gotten enough support from government around the visa program.”

Read more: How wide is the digital skills gap in Australia?

In 2018, Atlassian co-founder Mike Cannon-Brookes criticised changes to the visa program which he said were suffocating Australia’s ability to become a leading nation in the tech sector globally.

In that year, the 457 visas were abolished and replaced with the more expensive Temporary Skill Shortage visa.

The TSS visas have an age cap of 45 and do not lead to permanent residency, both factors Cannon-Brookes said were hampering their ability to attract and retain the best talent from around the world.

Wright said migration will be a key driving factor in economy growth once borders reopen, but the system could be improved.

He said better rights for visa holders, especially in industries such as hospitality and tourism, are needed to ensure workers are not exploited.

For example, access to social support like childcare subsidy or healthcare for non-reciprocal countries would help those with families to relocate.

“There is a lot the government could do to make the visa program more responsive for employers but also more effective and protective for skilled workers,” he said.

Aside from migration, the closed borders have also highlighted the importance of upskilling and internal L&D programs to address skill deficiencies.

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