Mind the (digital skills) gap
Nearly half of surveyed employers admit they aren’t prioritising training budgets to close skills gaps, with four of five of the top skills gaps in digital.
According to Deloitte Access Economics’ latest Ready, Set, Upskill report for RMIT Online, Australian businesses are expecting to spend approximately $8 billion on learning and development in 2024. The expected spend on learning and development per employee reflects an increase of approximately 15% year-on-year. This estimate is based on a survey of approximately 400 employers in Australia.
While training spend is expected to increase overall in 2024, there is a question about whether this will be enough to address skills gaps. One in eight Australian surveyed businesses are planning on spending less on learning and development in 2024 compared to last year. Modelling finds that the fall in learning and development investment from these businesses will mean missing out on skills valued at approximately $2 billion in 2024, equivalent to $5.6 million per day.
While overall learning and development spend is increasing, it is chasing a moving target when it comes to digital skills, and significant gaps are likely to remain. Four of the top five skills surveyed employers said they lacked were digital, including Generative Artificial Intelligence (AI) or machine learning, data science, coding and cyber security. Across a range of digital skills, between 29-36% of employees surveyed said they don’t have the skill level required, or the skill is out of date.
This skills gap has been further exacerbated by the emergence of critical technologies such as AI. Analysis shows 1.8 million tech skills will be needed by 2030 if workers are to keep pace with changes. Crucially, employees lack understanding regarding the extent to which Generative AI is expected to disrupt their roles. Almost half (47%) of surveyed employees had never used Generative AI in their role, and 73% say this is because they don’t believe Generative AI is relevant. This is contrasted to research which shows that 86% of all occupations will be affected. All considered, there is an imperative for businesses to be strategic with their learning and development spend to maximise return on investment and keep pace with change.
There are four ways for businesses to increase their training budget’s return on investment:
- First, is simply measuring it. Almost one in five (17%) of organisations surveyed don’t measure, or don’t know how to measure, training return on investment (ROI).
- Second, is to match training programs to skills gaps more explicitly. Nearly half (45%) of surveyed employers admit they aren’t prioritising training budgets to address skills gaps.
- Third, is to try and better capture on-the-job training activities. Surveyed employers and employees see on-the-job training as the most cost effective and impactful form of training. Research indicates employees value learning in contexts where there is direct line of sight to the application of newly acquired skills.
- Finally, utilise technologies like Generative AI, which has the potential to make training more effective, by identifying skills gaps in the team, making learning more collaborative and helping to personalise content. But considering two-thirds of surveyed employees don’t use Generative AI in training, there is an opportunity for growth.
According to surveyed employees, much of the benefit from training is realised by the employee themselves.
Chart 1: Percentage of surveyed employees who believe training has contributed to the following
Source: Deloitte Access Economics calculations based on employer survey fielded by Ipsos (n=416)
Over half (52%) of employees believe training leads to being able to perform their job more efficiently, with a significant share suggesting a personal benefit may also arise from training – a promotion, higher remuneration or more responsibilities in the workplace.
This newsletter was distributed on 26 March 2024. For any questions/comments on this week's newsletter, please contact our authors:
This blog was co-authored by Simon Street, Senior Economist at Deloitte Access Economics
Click on the links below to read our previous Weekly Economic Briefings: