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Unravelling Australia’s Workforce Landscape: Insights from the 2023 Skills Priority List (SPL) Report

Jobs and Skills Australia recently took the lead with the annual release of the 2023 Skills Priority List (SPL) Report. This pivotal report serves as a crucial instrument for policymakers, dissecting occupations in scarcity, not only on a national scale but also delving into each state and territory, projecting future demand.

It provides invaluable insights for policymakers, educators, and job seekers alike.

Navigating the Skills Priority List

The SPL, crafted by Jobs and Skills Australia, is a robust assessment released annually, capturing a snapshot of the labour market’s pulse.

It meticulously evaluates occupations categorised under the Australian and New Zealand Standard Classification of Occupations (ANZSCO) at the six-digit level and Skill Levels 1 to 4.

This focus is strategic, given the strong link these skill levels have with post-secondary education and training. The litmus test for occupation shortages is the ability of employers to fill vacancies, gauged through data modelling, statistical analyses, employer surveys, and extensive stakeholder engagement.

As we explore the depths of the 2023 SPL, the report unveils the nuanced methodology that underpins its findings, emphasising the collaborative effort of various stakeholders.

State of the Labour Market (2022–23)

As of June 2023, the labour market conditions remain tight, reflected in a surge of 409,900 employed individuals over the past year, holding the unemployment rate at a historically low 3.5%.

This apparent tension in the market prompts employers to intensify efforts to secure available talent. A nuanced analysis of recruitment dynamics and demand metrics surfaces, with the Internet Vacancy Index witnessing a slight dip and fill rates experiencing fluctuations.

Despite a low unemployment rate, the fill rates underscore the challenges in finding suitable candidates, hinting at the delicate equilibrium between demand, supply, and workforce utilisation.

Insights from the 2023 SPL

The Surge in National Shortages

The 2023 SPL reveals a significant uptick, with 36% of occupations facing scarcity, a five-percentage point rise from the previous year. The cumulative impact of recruitment challenges, stemming from a persistently tight labour market since late 2021, contributes to this surge.

Supply-Side Constraints and Cumulative Effects

Over the past 12 to 24 months, supply-side constraints have created consumer demand backlogs, intensifying shortages. The 2023 SPL assessments reflect a more apparent cumulative effect on businesses’ ability to meet consumer demands than in 2022.

Comparative Analysis with 2022 SPL

A comparative analysis exposes 66 newly identified occupations in shortage, in high-skilled professional categories. Professionals and Technicians and Trades Workers consistently face shortages, emphasising the dynamic nature of Australia’s labour market.

Skill Shortages by Major Occupation Groups

Professionals Occupations

In 2023, 48% of Professional group occupations are in shortage (compared to 39% in 2023), driven by health and ICT professionals.

Over 82% of Health Professional occupations faced shortages, and nearly 69% of ICT Professionals grappled with similar challenges.

The heightened demand for health services, driven by an aging population, exacerbated by the strains imposed by the COVID-19 pandemic, and amplified by the digitalisation surge across the economy, may have led to an imbalanced equation where demand in these sectors significantly outstripped the available supply of appropriately skilled workers.

Widespread shortages affected health professionals, including medical practitioners, registered nurses, specialists, and allied health professionals.

The health sector’s skill shortages were particularly acute, with a 44% fill rate and 1.3 suitable applicants per vacancy during the 2023 SPL, significantly lower than the 2022–23 average rates.

Specific roles, such as general practitioners, psychiatrists, speech pathologists, and sonographers, experienced notably low fill rates, indicating heightened shortages.

These deficits stem from a consistent demand for high-level skills, qualifications, and experience, as SERA data cites a lack of specific skills or experience as the primary reason for applicant unsuitability.

Technicians and Trades Workers

Half of the technicians and trades workers face shortages, particularly in construction and food trades workers. This suggests that challenging labour market conditions only worsen the persistent shortage issues in the sector.

Even in a substantial downturn in the construction sector, numerous construction roles will remain in shortage. Fill rates for construction-related occupations, typically among the lowest in the labour market, have significantly decreased from 54% in the 2020–21 fiscal year to 29% in 2022–23.

Shortages extend to trades beyond the construction sector. All five major non-construction works faced shortages, including chef, motor mechanic (General), fitter (General), hairdresser, and metal fabricator. SERA data indicates that for construction and non-construction occupations, the number of suitable applicants per vacancy hovered around or below the average for all fields, at 2.3 for the 2022–23 fiscal year. The primary reasons cited by employers for considering applicants unsuitable were lack of experience, qualifications, or registration.

Community and Personal Service Workers

The percentage of Community and Personal Service Workers occupations in shortage grew by 24% in 2023 (an increase from 21% in 2022), particularly in the health, care, and support sectors.

The health sector, compounded by an aging population and the aftermath of the COVID-19 pandemic, sees demand outpacing the supply of skilled workers.

In the Health and Welfare Support Workers sub-group, shortages were observed for enrolled nurses, ambulance officers, diversional therapists, and residential care officers. Carers and aides, aged or disabled carers, childcare workers, and personal care assistants have consistently been in shortage across all three SPLs from 2021 to 2023. At the same time, nursing support workers and out-of-school hours care workers experienced scarcity in 2023.

Historical analysis indicates that childcare workers faced shortages as early as the late 2000s, suggesting the need for long-term solutions to address skill shortages in this occupation.

Inadequate working conditions, contributing to low staff retention, might significantly contribute to skill shortages in the care sector.

Additional Insights and Implications

Large Employing Occupations

The implications of Skill shortages are evident when analysing the top 20 largest occupations in need, covering diverse sectors. These occupations represent 22% of all people employed in SPL-focused occupations, highlighting the ripple effect of shortages across crucial sectors.

In 2023, the SPL identified notable shortages in aged or disabled carers, retail managers (general), primary school teachers, and secondary school teachers, constituting 8% (731,800 people) of total SPL employment.

Addressing these shortages is crucial due to their economic impact. Newly identified deficiencies included sales and marketing managers, waiters, and solicitors, posing increased challenges for employers.

Long-term and Persistent Shortages

Persistent shortages since 2021, like aged or disabled carers, electricians (general), childcare workers, and carpenters, require comprehensive, long-term solutions, considering factors like education, working conditions, pay, and government policies.

What the 2023 Skills Priority List (SPL) Report Mean for RTOs

The 2023 SPL Report is crucial for registered training organisations (RTOs) as it provides insights into skills shortages. Here’s what it means for RTOs:

  • Identifying Priorities: Helps RTOs prioritise training for occupations in demand.
  • Tailoring Courses: Enables RTOs to align courses with specific skill gaps.
  • Strategic Planning: Informs strategic planning to stay responsive to the labour market.
  • Partnerships: Highlight collaboration opportunities with industries facing shortages.
  • Government Funding: Influences funding priorities, allowing RTOs to leverage support.
  • Adapting to Changes: Keeps RTOs informed about industry shifts, aiding proactive adjustments in course offerings to meet emerging needs.

Conclusion

The 2023 Skills Priority List (SPL) reveals Australia’s skills shortages, emphasising the interplay of demand, supply, and economic factors. Addressing these shortages requires a nuanced, occupation-specific strategy, reflecting the dynamic job market.

Jobs and Skills Australia’s SPL guides informed decisions, supporting policymakers and stakeholders in cultivating a robust workforce.

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