3rd April 2023

Early retirement blamed for talent gap


Early retirement blamed for talent gap

According to a report by the Australian Industry Group, the talent gap is a significant challenge for many recruiters and companies that are struggling to acquire the right skills for upscaling their operations to meet the demand for products and services.

The report states that there is a shortage of skilled workers across a range of industries, including manufacturing, engineering, and IT. It also notes that the problem is likely to get worse in the coming years, widening the talent gap as many skilled workers retire as there are not enough younger workers to replace them.

The post-Covid trend known as ‘The Great Resignation’ has led to worker shortages. Another splinter of this, dubbed ‘The Great Retirement’, has also been identified as contributing to the talent gap.

The relationship between early retirement and inflation

Internationally, the stature of Australia is growing. Even though it is not a member of the G7, alongside India and South Korea, Australia features frequently in discussions to expand the group into the D10 because they are democratic nations that are important players in the global economy.

As a ‘league table’, the inflation rates of different countries worldwide are a key indicator of their economic strength. Australia’s inflation rate for February 2023 was 6.8%, month-on-month, a fall of 0.6%, with observers suggesting it is evidence that the worst of the cost of living crisis price rises has passed.

Despite this relatively optimistic outlook on inflation and the potential for a strong recovery, Australia’s skills gap is well established. If we just look at technology alone, the digital skills gap is costing Australian businesses $3.1 billion annually right now.

Over the coming years, this is set to deepen into a “skills and knowledge crisis,” as it is estimated that as many as 4 million workers from the baby boomer generation will retire in the next 10 to 20 years, resulting in a significant loss of knowledge and skills in the Australian labour market. Other factors feeding into the talent gap in developed economies worldwide are declining birth rates and ageing populations.

Recruiters need to focus on attracting 50+ workers

For recruiters, the takeaway is clear. Whether it is Australia or any other developed economy, there is a need to focus on getting older workers to return to work. Focusing on their needs and tailoring job descriptions to better fit their expectations are important factors in successfully recruiting from this talent pool.

A Mature Age Hub has been set up by the federal government to boost employment of older Australians, which includes a toolkit employers can use to test their treatment of mature-age workers.

Recruitment agencies need to evolve and should work with their clients to consider similar strategic moves that help reengage talent that is needed to return to work after leaving early.

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