Training cuts will cost Australian businesses $2bn this year
Many Australian businesses will cut back on training and development this year, exacerbating the training gap between Australia and comparable nations, says RMIT Online.
Australian businesses expect to spend $8 billion on learning and development across the coming year – an increase of 15 per cent on last year’s spending.
That said, among the one in eight businesses that are expecting to spend less on training, the cuts are expected to be substantial. On average, those cutting their training budgets – disproportionately those with less optimistic business outlooks – are doing so by half.
Further, even among those looking to increase their training budgets, nearly half are not optimising their offerings to target existing skills gaps.
According to RMIT Online’s Ready, Set, Upskill report, this is troubling for several reasons.
Firstly, those businesses will fall further behind. Training can increase staff retention, business revenue, and customer engagement – all of which can help ease troubling economic conditions.
“In an era of uncertainty, there is still a strategic opportunity for businesses to make a robust assessment of their workforce skill needs,” said John O’Mahony, partner at Deloitte Access Economics.
Secondly, it threatens to exacerbate the training gap that exists between Australia and comparable nations.
For instance, Australia ranks 24th of the 32 nations within the EU in terms of adult non-formal learning rates. In the average EU nation, 47 per cent of adults participate in non-formal learning, while only 32 per cent of Australians do so.
Thirdly, it's doubtful whether this year’s increased training spend will move the needle on the Australian skills gaps.
According to Deloitte Access Economics, the projected spend on skills training will fail to capture $2 billion worth of skills that could be obtained with more comprehensive training. This is the equivalent of losing $5.6 million per day.
Seventy per cent of surveyed employees would like their employer to invest more in their learning and development, while 64 per cent agreed or strongly agreed that businesses are failing to close skills gaps.
Further, 78 per cent of employers see addressing the skills haps will be “crucial” for Australia’s economic health and “critical” for productivity.
The needed skills are nearly all digital (four in five) and range from generative AI and coding to data science and cyber security. Nearly half the surveyed employees reported having never used generative AI at work – 73 per cent of whom said it was not relevant to their role.
Employees “lack understanding” when it comes to how significantly their roles will be affected by generative AI, said RMIT, given that Deloitte forecasting suggests 86 per cent of all occupations will be affected by generative AI.
Employers too appear to have a blind spot when it comes to the technology, as they consistently undervalue generative AI skills – opting to pay only 8 per cent more for employees with data and digital skills.
On average, employers spent $1,334 on learning and development per employee across Australia last year. This year, the figure is estimated to climb to $1,538.
Increasing training and development is not just about money. Many employers (66 per cent) see it as fundamentally a function of government to ensure adequate skills training.
It is also a question of time. While businesses typically spend their training budgets on traditional training programs, there is also a case to be made for individual employee-led training.
One-quarter of employees see work and personal commitments as the biggest barriers to skills training suggesting, ironically, work might be getting in the way of upskilling.
