Published on the 14/03/2023 | Written by Heather Wright

And it will cost $1.5b to fix it…

Existing digital skills gaps in Australia are costing large businesses $3.1 billion a year –  or $9 million a day – and it’s going to cost businesses $1.5 billion to address through upskilling.

That’s according to research from RMIT Online and Deloitte Access Economics, which also shows that 58 percent of Australian businesses say their workforce lacks or has outdated digital skills.

“The cost to businesses will also grow if decisive action is not taken to address these gaps.”

The $3.1 billion only covers costs attributed to existing employees for existing digital skills gaps, not costs associated with new employees needed to fill the anticipated future gaps. And while the need for more advanced digital skills such as cybersecurity, data analytics, coding and AI is part of the equation, more basic digital skills are also needed, Deloitte says. Demand is also continuing to run high for soft skills, with leadership identified as the most critical skill in the next five years, along with communication and collaboration.

It comes hard on the heels of a Gallup report which found 73 percent of Australian employers, and 69 percent of Kiwi employers, are looking to fill openings requiring digital skills, with the majority struggling to do so. That report also flagged the immense economic benefits to individuals, organisations and national economies of digital skills, claiming AU$41 billion was being added to Australia’s GDP, and NZ$7.3 billion to New Zealand’s through advanced digital workers’ higher incomes and productivity.

Previous Deloitte research noted that digital adoption could add $22.6 billion to the Australian economy between 2020 and 2024.

Despite the predictions of slow economic growth, 80 percent of business leaders are expecting to increase headcount this year, hiring at least as many as they did last year.

Unemployment, meanwhile, is at a record low at 3.5 percent, with job postings up 15 percent year on year – and the opening of borders hasn’t improved the digital skills gap in the last 12 months, Deloitte says.  

It’s report digs into employee and employer sentiment on training – and how to get it right.

Businesses surveyed don’t show a strong preference between upskilling existing employees (48 percent) or hiring externally (52 percent). External hiring can a good way to get specific skills quickly – assuming they are available – but the talent often comes at a premium, with businesses paying on average 18 percent more for new staff – the equivalent of $12,000 per year.

Reskilling, however, brings its own benefits, with companies surveyed saying they believe internal solutions generate benefits including increased retention, strengthened team culture and raised cost-effectiveness.

There are benefits for employees too. In the last 12 months, employees who were promoted had spent 50 percent more time training than those who didn’t, suggesting some digital training could be an opportunity to gain a pay increase. The report says digital skills training can bolster wages by nine percent on average – providing nearly $6,000 extra a year for the ‘average’ Aussie worker.

Employers too, are watching their employees training – 24 percent say they consider the frequency of engagement in training, upskilling or reskilling opportunities when promoting internally.

For businesses, the $1.5 billion investment needed in digital skills training represents around 0.3 percent of total business expenditure for each large Australian business.

Claire Hopkins, RMIT Online interim CEO, says while the upfront cost may seem high, there are substantial and long-lasting benefits to be gained.  

“Now is the time for businesses to invest in skills and development capabilities if we are to grow a resilient and competitive workforce,” Hopkins says. “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.”

John O’Mahony, Deloitte Access Economics partner, says training needs to be viewed as an investment, not just a cost.

“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,” he says.

Finding time for that training, remains the biggest obstacle, however, followed by high cost and lack of support from employers.

“Businesses need to create a culture of learning inside their organisations so people have the time in order to study.”