Australia’s ongoing skills gaps are hampering productivity for over half of employers (57 per cent), according to a recent report from AHRI.

The report, based on insights from 607 senior business decision-makers across a range of sectors, also found that almost one in five workers (19 per cent) are considered “not proficient” in their role by their employer, a statistic which is consistent with AHRI’s most recent Quarterly Work Outlook report. 

This problem is more significant in the public sector, where 24 per cent of employees aren’t fully proficient, compared to 18 per cent in the private sector.

With the integration of AI and other complex technologies moving at a rapid pace, it’s unsurprising that employers are lacking essential capabilities within their workforces. 

Skills and qualifications that previously sustained a career spanning 40 years or more now demand continuous updates and to remain relevant, posing significant challenges for learning and development teams to keep up with the speed of change. According to the World Economic Forum, the half-life of a skill is currently about five years. 

With that said, AHRI’s findings demonstrate that employers are not resting on their laurels. More than three quarters (77 per cent) are taking active steps to strengthen their talent pipelines. 

Below, HRM unpacks AHRI’s key findings on the driving forces behind Australia’s capability gaps, and how employers are responding.

Common causes of skills gaps

Employers identified a range of driving forces behind current skills gaps, mostly related to the rapid evolution of skill and business needs.

Figure 1 shows that evolving business or strategic needs are cited by 44 per cent of employers, while 42 per cent point to the constantly evolving skills landscape as a significant factor.

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The term ‘grey-collar worker’ has been around for almost twenty years, but it didn’t always mean what it does today.

When first coined in 2004, it referred to an older demographic of employees, those working past retirement age.

However, over time, the term has come to mean workers who possess a combination of technical and physical skills, which are usually the domain of white-collar and blue-collar workers respectively. Grey-collar workers sit somewhere in the middle – and they could soon represent the ‘ideal’ worker, if Australia’s skills gaps continue to widen.

Not enough time to read the whole article? Here are some of the key points:

• Grey-collar workers refer to workers who have a combination of traditionally blue-collar and white-collar skills.
• Employees with such a skill set can be leveraged across industries, including in the corporate world.
• Employers looking to capitalise on this opportunity presented by grey-collar workers should identify skills gaps within their organisation, and invest in internal talent development.
• Learning styles that are designed with the digital, post-pandemic world in mind are in increasing demand.

Who are grey-collar workers?

According to UKG’s 2022 HR Megatrends whitepaper, grey-collar workers will be one of the year’s defining trends. This is because these are workers with skills that are hard to automate; they bring soft skills as well as technical prowess.

Organisations looking to stay ahead of the game should capitalise on the rising prominence of multiskilled workers, the report says.

But who exactly are we referring to when we say grey-collar workers?

A Canadian survey of grey-collar workers interviewed over 500 employees from a variety of fields, including:

• pilots and flight attendants
• farmers
• real estate brokers
• childcare workers
• engineers
• lab technicians and IT professionals
• nurses and emergency services personnel
• police officers, military and security workers
• professional musicians
• teachers

All these professionals work in the intersection between soft and hard skills.

Think of a healthcare worker who carries out all the duties expected from working in the health sector – such as conducting patient checks, writing referrals and administering medication – but who also takes on administrative and leadership duties as part of their role.

And grey-collar employees can be leveraged across industries, including in the corporate world.

In a job market where certain skills – such as AI or web development – are in high demand, savvy employers looking to tap into that wealth of technical know-how could upskill their workers to have the best of both worlds.

For example, an IT professional could be put to use across an organisation by training them in communications. This would enable them to work a customer service role in addition to their core duties of installing software, troubleshooting technical issues and monitoring computer networks.

The value of a varied skill set

For Nora Koslowski, Executive Director of the Organisational Learning Group at Melbourne Business School, it’s important to contextualise the discussion about grey-collar workers against the broader backdrop of skills shortages.

Koslowski, whose work at Melbourne Business School sees her move across a variety of fields including the financial, health and public sectors, both within Australia and globally, says most of her clients are dealing with the same problem.

“I would start by [asking], what is the problem that organisations are facing?” she says. “Most of the organisations we work with [are] seeking to solve the problem of skills shortages. In addition to that, there’s a real problem with not being able to retain people for as long as you used to in the past.”

The answer to why this is happening could be to do with the Great Resignation.

“Data from Treasury shows that in the three months leading to November 2021, over one million workers started new jobs, and the rate at which people are taking up new jobs is now 10 per cent higher than what it was pre-COVID,” says Koslowski.

“People are happier to ‘job hop’,” she says. “If the job is not working out for them, they’re happy to go elsewhere.”

“We have to make a shift to see learning not as an activity that you do as an add-on, but as something you do throughout your lifetime.” – Nora Koslowski, Melbourne Business School

Such a momentous workforce shift is creating skills gaps in organisations – and some employers might not be aware how to plug those gaps.

“There are a number of interesting solutions to the problem of skills shortages and talent retention,” says Koslowski. “One is to utilise existing workforces differently.

“There’s a pool of underappreciated and underutilised talent. If anything, the pandemic has redefined what an essential worker really is.”

The ‘essential worker’ term has been bandied about across the past two years, but their value cannot be understated. Workers in the care, food and transport industries, for instance, who often operate at the intersection between blue-collar and white-collar work, are invaluable.

“In the past, we’ve probably underappreciated, underpaid and undervalued those workers,” she says. “The pandemic has shown that they have a considerable amount to offer.”

There is also a slight nuance to the Australian context compared to other countries.

“The Australian data suggests that what we’re seeing is people moving around to a greater degree,” says Koslowski. “In other countries, people are leaving the workforce altogether.

“People talk about the Great Resignation. That gets felt to a larger extent in other economies like the US, whereas in Australia I think it’s been called ‘the Great Reshuffle.’”

Workers who operate in the sweet spot between blue-collar and white-collar prove attractive when employers go hunting for talent to plug the gaps left behind by job-hopping ex-employees.

New ways of learning

Coming hand-in-hand with this evolution of talent are changing ways of training employees.

According to Koslowski, the traditional linear career pathway of school followed by a university degree capped off by a professional career is dead in the water.

“We have to make a shift to see learning not as an activity that you do as an add-on, [but as] something you will do throughout your lifetime,” she says.

Just as reevaluating the value of grey-collar workers can boost an organisation’s strategic advantage in the market, approaching on-the-job training through a new lens could help employers pre-empt skills shortages.

“[For] learning to be embedded in the flow of your working life it has to be engaging,” she says. “It has to hold a modern attention span. You can’t expect people to sit down and watch an hour-long lecture – nobody wants to do that anymore.”

A possible alternative to long video lectures or one-off training sessions, says Koslowski, is a series of shorter, snappier and more engaging videos that an employer could get an employee to watch on the job. 

The employee could then be engaged in an activity that takes those principles and apply them to a relevant business context.

This weaves learning into the fabric of the working day, maximising employee engagement and building an organisation’s capacity to plug skills gaps as or even before they emerge.

Photo: Chevanon Photography, Pexels

Continuous skills development is fast becoming industry standard, says Koslowski, as are learning styles that are designed with the digital, post-pandemic world in mind.

“We will likely see a further disaggregation of learning, which means that degrees and courses will be broken up into component parts that people can assemble and stack into their lives as they see fit,” says Koslowski.

“It’s a bit like a Netflix of education, in the sense that you will be choosing from a menu of content and learning experiences, from different providers and in different formats, and you will be able to undertake only the parts you need.”

In a bid to cultivate grey-collar workers via on-the-job-learning, some people may question the relevance of traditional education paths, such as a degree. As a university academic, Koslowski still sees value in tertiary education as a prerequisite for employment in some sectors.

“If you’re going to build an individual with a comprehensive, generalist skill set, and if you’re looking to build deep capabilities around things like critical thinking, synthesising information and how to construct an argument, those are skills that you build over time, typically through a degree,” she says.

But the nature of tertiary qualifications will still change, she says.

“In the future of learning, there’s going to be a real question around the relevance of degrees and how universities partner with industry to deliver their education. Education will have to be relevant and practical. This requires very close collaboration between education and industry to define which skills need to be built and developed. Many providers go about such collaboration by co-creating offerings – for example, Melbourne Business School partnered with Tesserent last year to create a cyber leadership program.”

Solutions for employers

It’s clear that many employers are in a position to utilise workers with a combination of skills and professional attributes. But the way forward is more complex than simply recruiting new workers to an organisation.

“It is actually the employer’s responsibility now to take care of on-the-job skilling and capability building,” says Koslowski.

“As an employer, [ask yourself] how can you be very deliberate about what skills gaps [you’re] facing, and what is the training, support and investment [you’re] going to make into building that capability?”

When it comes to next steps for employers looking to capitalise on this opportunity, Koslowski recommends taking the lay of the land.

“The first thing you have to do is an analysis of where your skills gaps are, and where your business is not able to deliver because you don’t have the right talent,” she says.

Next, Koslowski recommends employers ask themselves the following questions:

• Where are our sources of strategic advantage and potential value to our customers and our stakeholders?
• Do we have the right kind of capabilities in those areas of strategic advantage?
• How do we build our capabilities? Do we build with external expertise or internal expertise?

It might seem like stating the obvious, but investing in internal talent development strengthens the skills and capability of employees and the strategic advantage of an organisation.

“You can make a significant difference as an employer by upskilling your internal workforce and offering that extra level of training and skilling support.”

Looking to build a balanced hybrid workforce? Ensure your organisation has the right people with the right skills by enrolling in AHRI’s HR Strategy Planning short course.

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