Digital skills gap costing Aussie businesses $9m per day

Australia’s digital skills shortage is costing Australian businesses $9 million per day, and closing the gap would take an investment of $1.5 billion, according to new research from RMIT Online and Deloitte Access Economics.

The research found that the skills gap is costing large Australian businesses $3.1 billion annually, equivalent to the economic output of the entire internet publishing and broadcasting industry in Australia.

In addition, this figure only reflects the costs attributed to existing employees who lack digital skills, excluding the costs associated with the need for new employees to fill digital skills gaps. The report notes that previous research by Deloitte Access Economics found that the adoption and use of digital could add $22.6 billion to the Australian economy between 2020 and 2024.

Despite the current harsh economic climate and predictions of slow economic growth, 80% of business leaders expect to hire at least as many people in 2023 as they did last year, the report suggests.

But almost half (48%) of employers surveyed for the research reported that they prefer upskilling or reskilling existing employees over hiring externally, in order to benefit from increasing retention, strengthening team culture and raising cost-effectiveness. On average, businesses pay 18% more for new staff, equivalent to $12,000 per year for the average Australian employee.

Modelling for the report suggests that to properly address the existing digital skills gap, large Australian businesses would need to spend a combined $1.5 billion this year on digital skills training, which would be equivalent to an additional $885,355 investment per business.

But this represents only around 0.3% of total business expenditure for each large Australian business.

RMIT Online interim CEO Claire Hopkins said such an investment would be likely to pay off. “While the upfront cost to solve our upskilling and reskilling crisis may seem high, our research shows investing in training is necessary for Australian businesses to reap substantial and long-lasting benefits, and to mitigate the impact of the digital skills gap,” she said.

“Now is the time for businesses to invest in skills and development capabilities if we are to grow a resilient and competitive workforce. As the demand for digital skills continues to grow, the cost to businesses will also grow if decisive action is not taken to address these gaps.”

Deloitte Access Economics Partner John O’Mahony added that digital skills training should be seen as a long-term investment.

“If businesses underinvest in digital skills training it can result in a loss of revenue, additional costs of outsourcing work to external staff or contractors and reduced productivity. That’s why training is an investment, not just a cost,” he said.

The study also found that nearly one in four employers consider the frequency of engagement in training, upskilling or reskilling opportunities when promoting internally, and 21% believe that increased pay and remuneration is the most effective tool to attract new staff. This is followed by offering greater location flexibility (17%) and hours (15%).

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