Why do we need a National Workforce Strategy?

How we work and the composition of our workforce continues to evolve. Having the right policy settings to adapt quickly to these changes is key to Australia’s future prosperity.

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Australia faces near and long-term workforce challenges

Increased globalisation, technological advances, and the digitalisation of workplaces, together with changing social norms, are driving changes in how government, businesses and individuals operate and work.

In the near-term, workforce shortages in some sectors are a key concern, particularly with continued challenges posed by the impact of COVID-19 on the labour market.

Despite disruptions and setbacks, the labour market has recovered well. Job vacancies reached a record high of 396,100 in November 2021 while the unemployment rate fell to 4.0% in February 2022.2 However, businesses in some sectors and regions across Australia were reporting increasing difficulty finding suitable workers.

The positive labour market conditions will likely see these workforce pressures continue. The Reserve Bank of Australia's central forecast is for the unemployment rate to fall to below 4% later in the year (i.e. in 2022) and to remain below 4 per cent next year (i.e. in 2023). 2 The safe and phased re-opening of Australia’s international border will enable the gradual return of temporary migrants and recent measures to boost workforce participation and maximise opportunity will help to alleviate some workforce shortages.

The COVID-19 pandemic has accelerated the pace of change as businesses and workers adapt, with increased use of digital technology and more flexible ways of working being adopted.

These changes will affect different groups, industries, and regions to varying degrees. Some sectors and jobs will grow rapidly, while others will decline or need new skills.

Moving forward, increased technology use will benefit many, creating new jobs, increasing job mobility, and freeing up people to focus on more complex, non-routine, higher value tasks.

But it also risks leaving those with less education and fewer skills behind.

Like other comparable countries, Australia has seen a structural shift towards higher skilled jobs. Changes in technology have reduced the need for routine job functions and increased the need for skills not easily replicated by machines, such as communication skills, creativity, and advanced reasoning. It will be important that our workforce’s skills keep pace with these changes as they occur.

This is exemplified by manufacturing – new technologies will enable us to work smarter and safer. Australian manufacturing capability is likely to grow as industry increasingly transforms and competes on value. This will see the creation of new high-quality, high-skill and well-paid jobs across the manufacturing value chain. These range from pre-production (including research and development, design, and demonstration), right through to post-production (including distribution, sales, and services), underpinning growth across the economy.

At the same time, Australia’s ageing population will see growth in our domestic workforce slow, making it more challenging to sustain improvement in living standards, and increasing the risk of workforce shortages over the long-term. This will also see growing demand for the care and support workforce.

Other sectors also face challenging outlooks. There are estimated shortfalls in the infrastructure workforce of 93,000 workers in 2023, and 42% of Technicians and Trades Worker occupations have been assessed as in shortage nationally.3 This issue will be more acute in Australia’s regions, and reflects the impact of female underrepresentation in the growth of the infrastructure workforce.

How we meet these challenges will be key to our future prosperity and international competitiveness and resilience.

1 ABS, Job Vacancies, Australia, November 2021; ABS, Labour Force, Australia, February 2022

2 RBA, Monetary Policy Decision, March 2022

3 Infrastructure Australia, Infrastructure workforce and skills supply, October 2021; NSC, Skills Priority List, June 2021