Spotlight: Australia’s Talent Shortage

Posted On 1 Oct 2018

Spotlight: Australia’s Talent Shortage

1 Oct 2018
Spotlight: Australia’s Talent Shortage

October 2018

According to official data released in September by the Australian Bureau of Statistics, over the 12 months to June 2018, the Australian economy experienced its fastest pace of economic growth since 2012 as gross domestic product expanded by 3.4%. [i] Concurrently, the national jobless rate is down to a six-year low while Australia’s labour market is predicted to grow by almost 8% by 2022. [ii] On the surface, the outlook is bright, but when increases in productivity create more job openings while joblessness declines, competition for jobs also declines. Faced with a vast array of job opportunities, this then prompts talent to be more selective and less inclined to ‘settle’ for a role that is less than perfect.

At a local level, employers in Sydney – more than any other capital city – are reporting increasingly challenging recruitment conditions. According to the latest Survey of Employers’ Recruitment Experiences by the Australian Government Department of Jobs and Small Business, 16% of higher skilled vacancies and 12% of lower skilled vacancies remained unfilled in Sydney compared with 10% and 5% respectively for other capital cities. [iii] The latest data from SEEK mirrors this finding, with a sizable decrease in job ad views compared to this time last year in the Administration & Office Support category (as well as many others) for New South Wales. [iv]

In this current climate, it should come as no surprise that competition for talent within the Sydney labour market is now stronger than it has ever been, not just across Administration and Office Support but the majority of job categories. At EST10, it is common to place exceptional candidates within an unprecedented 48-hour timeframe. The balance of power has shifted firmly in favour of candidates – and more than we had ever anticipated.

Naturally, employers have a number of questions on the back of these findings, and indeed, based on their own experiences:

  • What other factors are contributing to the talent shortage?
  • What are the short- and long-term impacts of the talent shortage?
  • How can we best attract and secure top talent?

This report aims to answer these questions.


Factors contributing to the talent shortage

Ageing population
Australia’s population is ageing as a result of sustained low fertility rates and increasing life expectancy. In 2017, there were 3.83 million Australians aged 65 and over, comprising 15.6% of the total population, or 1 in every 6 people. This compares to just 1.65 million Australians aged between 20-24 (6.7% of the total population). [v] This disparity between Australians typically leaving the workforce and Australians typically entering the workforce (assuming individuals in the latter age bracket are transitioning into more skilled, full-time positions following tertiary education) naturally presents a challenge for employers. Granted, some of this challenge is offset by the fact that older generations are remaining in the workforce longer than previous generations, with participation increasing from 47% in 2000 to 67% at present amongst people between 55 and 64. Concerning those who have reached traditional retirement age, labour force participation by people aged 65 and over has more than doubled since 2000. [vi] But relying too heavily on these trends without planning for future talent needs is undoubtedly short-sighted.

Graduate trends
According to the Centre for Labour Market Research at the University of Canberra, domestic undergraduate enrolments grew by 33% between 2009 and 2016. [vii] This represents a valuable and growing talent pool of individuals who will enter the workforce with specialised knowledge and skillsets. That being said, the availability of this talent to work in a full-time capacity is likely to take longer than you might anticipate. Recent data from the cohort study of completion rates for domestic bachelor students produced by the Department of Education and Training has revealed that only 45% of domestic bachelor students are finishing their degrees within four years. [viii] One may be quick to jump to conclusions about the apathy of today’s youth, but the graduation rate in Australia remains at around 82%. To put this into perspective, the average for OECD member countries is 70%. [ix] Additionally, young Australians continue to seek work and life experiences overseas, with the number of students studying abroad as part of their Australian university degree growing fourfold between 2005 and 2014. [x] This growth is accompanied by high satisfaction ratings for overseas study programs and experiences, leading to favourable attitudes toward overseas employment prospects and thus further limiting Australian talent pools.

Job mobility
Millennials often have a poor reputation when it comes to job tenure but HILDA survey findings from the University of Melbourne reveal that the average job tenure of individuals under the age of 25 was the same four decades ago as it is today: 1 year and 8 months. [xi] Interestingly, it is older Australians who are following the lead of our nation’s youth, with more retraining, career changes, house moves and shifts from employment to self-employment (and back) than ever before. Four decades ago, workers aged over 45 averaged almost 10 years per job, compared to 6 years and 8 months today (See Table 1). Job tenure for individuals 25-44 is likewise much shorter than it once was. Being cognizant of these new norms is essential; employers run the risk of narrowing talent pools even further when they reject talent for not conforming to outdated standards.


Table 1: Job tenure by age group in Australia today
Source: McCrindle

Age group Average job tenure
Under 25 1 year 8 months
25-35 2 years 8 months
35-44 4 years
45+ 6 years 8 months
Average 3 years 4 months


Psychology of talent
Research by internationally renowned HR thought leader Dr John Sullivan has found that the top 10% of candidates on the market are no longer available within just 10 days. [xii] This statistic may come as no surprise given the findings reported thus far, but it is interesting to consider how knowledge of this turnaround time affects candidate mindset and behaviour. When word spreads about the speed with which industry peers are able to secure a new position, this creates a frame of reference and a subsequent feeling of cognitive dissonance when their own experiences don’t match this. According to a recent report, 60% of candidates have pulled out of an application process because they felt it took too long. [xiii] Combine this with the fast-paced connectivity of mobile phones and social exchange via online platforms and we start to get a sense of the immediacy that is now necessary to fulfil our expectation for instant gratification. Further, 80% of people would take one job over another based on personal relationships formed during the interview process. [xiv] Some may see these behaviours as fickle, but the need for personal connection and the feeling that one is desired cannot, and arguably should not, be understated.

Impacts of the talent shortage

Increased pressure on existing employees
Insufficient staffing levels and staff turnover increase demands on existing employees, leading to workplace stress when employees are not adequately supported. Fortunately, by modifying demands (stressors) and/or improving job resources, workplace stress can be prevented or reduced (See Table 2).


Table 2: Workplace stressors and resources
Source: VicHealth

Stressors Resources
• job demands
• job control
• job insecurity
• exposure to noise and light
• skill level
• job experience
• equipment
• software/tools
• staffing levels


In a 2016 study by Barna Research, 29% of respondents reported feeling a high amount of stress in relation to their job “often” or “always”. [xv] 44% feel a high amount of stress at work “sometimes”. Significantly, for around a third of workers (35%), poor leadership at work is the most stressful part of their job. This statement rises to 57% for those who are experiencing frequent high work stress overall. This finding speaks to the importance of ensuring that managers are given the resources needed to manage and lead effectively, including the administration and office support employees who are integral to their productivity.

Compromised productivity
According to a report by VicHealth, as much as 40% of employee turnover and 60% of absenteeism is caused by workplace stress and stress-related illnesses. Workplace stress reduces workplace productivity through increased staff turnover, absenteeism (time away from work due to illness) and presenteeism (decreased on-the-job performance due to the presence of health conditions). [xvi] Further, it is worth keeping in mind that it takes new hires 8 to 12 months to gain full proficiency comparable to their tenured co-workers. [xvii]

Business reputation at risk
Employers who offer a poor recruitment experience run the risk of diminishing their reputation in the marketplace. Further, when long processes prompt re-recruitment as initial candidates accept other offers or become disengaged with the company or role, this risk increases. According to the Candidate Experience Study conducted by research firm Future Workplace in 2016, 60% of job seekers have had a poor candidate experience. [xviii] Of those job seekers surveyed, 72% reported having shared that experience on an online review site, on a social networking site or directly with a colleague or friend.

Decline in customer satisfaction
In a recent news article, the director of research for the American Customer Satisfaction Index (which analyses more than 200,000 consumer survey responses each year) affirmed, “As the competition for labour intensifies, the quality of service at businesses tends to deteriorate.” [xix] Employee turnover necessarily decreases the number of experienced employees in the workplace, placing the responsibility of top service and customer satisfaction levels on new employees who understandably take some time to develop their service delivery and performance.

Stunted business growth
Succession plans are key to preparing for the inevitable changes that occur when employees leave the business. This is even more critical in SMEs, but according to accounting firm Bentleys, only 19% of Australian small business owners have formal succession plans in place. [xx] The current talent shortage does little to help this situation; difficulty attracting and retaining talent makes it harder to put succession plans in place, putting businesses at risk of stunted growth.


Attracting and securing top talent

Ensure positive interview experiences
65% of job seekers report that they rarely receive notice on the outcome of recruitment processes from employers. [xxi] This is an alarming statistic, especially in light of the fact that 27% of people who have had a negative application experience would actively discourage others from applying with the company in the future. [xxii]

Embrace social media
79% of job seekers use social media in their job search activities. [xxiii] Given this data, it is surprising to discover that only 49% of Australia’s largest companies allow candidates to share a job on social media. [xxiv] Tagging friends and family members in company social media posts is the new word-of-mouth, so businesses with underdeveloped social media strategies are missing out on vital opportunities to engage potential new hires.

Optimise your application process for mobile devices
89% of job seekers say their mobile device is an important tool for job searching, with 45% using it to search for jobs at least once a day. [xxv] Surprisingly, only 29% of Australia’s largest companies have mobile optimised career sites. [xxvi] Businesses reluctant to invest in mobile optimised career sites should consider that 48% of job seekers believe mobile devices will be the most common way to search for jobs within two years, while 16% of submitted applications at present come via a mobile device. [xxvii]

Use your brand to your advantage
Social identity theory posits that a person’s sense of self is based on group membership. Applying social identity theory to the job market, a 2016 study found that job applicants have a higher intention to join and willingness to accept a job offer from organisations with more sustainable business practices. [xxviii] Unsurprisingly, people want to feel like their work contributes to more than just profits, so those businesses who are able to articulate their mission and meaning are better at attracting and retaining individuals who are motivated to support it.

Make the most of your relationship with your recruiter
According to the 2015 LinkedIn Global Talent Trends report, 70% of the global workforce are passive candidates. [xxix] These candidates are not actively looking for new positions, but they are open to the idea of a new job for the right opportunity. As such, it’s not likely you will find them on career sites or amongst your job applications, so a relationship with a well-connected recruiter can be invaluable. A good recruiter will act as an ambassador for your brand and proactively identify talent who are the right cultural fit for your business. We recommend that you consider this talent even when you don’t have a specific vacancy… as we’re sure you can appreciate by now, a superstar candidate won’t be available for long!

Should you require clarification on anything you have read, please do not hesitate to speak with one of our consultants. Further information can be found in our 2018/19 Salary Guide, in our Market Update and in the blog posts published on our website.




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