Australian Industry Group (Ai Group) CEO, Innes Willox, explains why upskilling the workforce, particularly in the area of literacy and numeracy, has become a national imperative.

A new report by the Ai Group has identified critical skill issues facing Australian businesses with 75 per cent of employers reporting skill shortages and 99 per cent impacted by low levels of literacy and numeracy.

The 2018 Workforce Development Needs Survey Report has come at a time when digital technologies are increasingly disrupting workplace environments, and when education and training is being recognised as one of the most important enablers for successful, future-focused companies.

It is clear we need new approaches to education, training and re-skilling to maximise the benefits of the digital economy. This is particularly important as employers reshape workforce capabilities and seek higher level skills, advanced technical and soft skills, digital literacy and change management know-how.

Our survey has found major skills demand issues facing employers. It provides an important gauge of employer sentiment around skill needs, education and training at a critical time for industry transformation.

Without conducive policy settings and closer collaboration between industry and education sectors to drive education and training that adapts quickly to the needs of the digital economy, Australia's business sector will suffer competitively into the future.

The survey found clear pressure points affecting employers. For example, 75 per cent of respondents reported skills shortages, a jump from 49 per cent in the previous survey conducted in 2016.

Shortages are most often in the technician and trades worker category, with difficulties recruiting for STEM skills, and new shortages for roles in business automation, Big Data and artificial intelligence solutions.

Some 99 per cent of employers (up from 96 per cent in 2016) are affected in some way by low levels of literacy and numeracy in their workforce. This is disturbing at a time when the workforce increasingly requires foundation skills that include not only literacy and numeracy but digital literacy and advanced soft skills.

Employers are prioritising technology capability improvements for managers, 62 per cent of whom believe a lack of leadership and management skills is having a high impact on the business (up from 56 per cent in 2016). This reflects the major changes needed in the way work is done and managed as entire business processes and organisational cultures are upended in the digital economy.

The survey showed employers are intensifying their actions to implement strategies that alleviate some of these pressures.

A greater percentage of employers than previous years (52 per cent) intend to increase expenditure on training in 2018. They are recognising in the age of digitalisation all workers will need digital skills at various levels.

Employers report a significant increase in their internal company training and support from supervisors and mentors to boost literacy and numeracy skills. They have increased their engagement of apprentices/trainees and have steadily increased their links with education and training sectors – a vital strategy in the faster moving economy.

As Australian industry transforms through digitalisation it requires the necessary skills to adapt. This in turn will increase the number of people able to be involved in the digital economy.

Change is happening at a frightening speed and our education and training systems need to renew at this same pace.

About the Survey: The Workforce Development Needs Survey 2018 was also conducted in 2016, 2014 and 2012. The 2018 survey attracted responses from 298 companies employing a total of 111,209 employees. The company responses are divided into four main industry sectors: manufacturing, services, construction and mining. In this survey the construction sector provided the largest group of responses (43.9 per cent), followed by manufacturing (27.5 per cent), services (25.8 per cent) and the mining sector (2.6 per cent).

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