One in eight businesses cutting training puts $2 billion of skills at risk

MELBOURNE, 12 March 2023 — New research released today by RMIT Online in partnership with Deloitte Access Economics, reveals that medium and large Australian businesses are expecting to spend approximately $8 billion on learning and development in 2024, up 15% year-on-year. 

However, nearly half of businesses surveyed (45%) admit they aren't prioritising training budgets to address skills gaps, with four of the top five skills the employers surveyed said they lacked were in the digital space - including Generative Artificial Intelligence (AI), data science, coding and cyber security. 

The ‘Ready, Set, Upskill’ report highlights that while spending is increasing overall, one in eight surveyed Australian businesses are planning on almost halving their crucial learning and development budgets this year, leaving them at risk of a serious skills gap. Further, businesses who are predicting poorer prospects for their business are twice as likely to be cutting spending in learning and development, compared to those who are predicting a more positive outlook. 

Along with a possible impact on staff retention, revenue and customer engagement, the report estimates that the fall in learning and development investment for businesses cutting spending will mean missing out on skills valued at approximately $2 billion in 2024, equivalent to $5.6 million per day. 

Against a backdrop of declining productivity growth in Australia, two thirds (62%) of the businesses surveyed for the report identified the broader link between the benefits of addressing the skills gap and productivity growth for the country's economic recovery. Nearly two-thirds of surveyed employers (64%) believe businesses are not doing enough to address skills gaps.

Among medium and large businesses that are planning to reduce their expenditure on learning and development in 2024, for every $1 that is cut from learning and development budgets, businesses lose skills which are valued at $3.40 on average. 

A lack of investment in learning and development also means that Australian businesses are at risk of falling behind their international peers. Almost half of adults in the EU have participated in some form of non-formal learning, whereas Australia lags behind with just 32%, coming 24th out of 32 surveyed EU countries. Australia’s participation in non-formal learning has been on a downward trend since 2013, putting it in stark contrast to the EU which has seen an increase.  

"Australian businesses have a strategic opportunity to evaluate workforce proficiencies and gaps, and to develop learning and development frameworks that fortify teams for the future. If businesses are to maximise their return on investment, they must get their priorities in check to develop capabilities in the areas the workforce most needs" Says Nic cola, CEO of RMIT Online.

In an era of uncertainty, there is still a strategic opportunity for businesses to make a robust assessment of their workforce skill needs. It’s imperative that those businesses who are considering cutting learning and development budgets are aware of the possible ongoing impact this may have. Encouragingly, those businesses that do appear to recognise the training imperative and have, on the whole, increased their learning and development budgets for 2024 will build on the skills they need for success. However, the question remains as to whether this will be enough to meet the rapidly evolving nature of work 

-John O’Mahony, Partner at Deloitte Access Economics.

Interested in reading the full report? Download it from our insights page below.