Employers have sounded the alarm over the low literacy and numeracy abilities of job seekers as skills shortages start to bite across the economy.
The Australian Industry Group survey of 298 companies with a total of 111,209 employees across manufacturing, construction, mining and service industries found 99 per cent reported that low levels of literacy and numeracy were affecting the business.
The service industry includes medium sized companies in the retail, wholesale, transport, professions, real estate, IT, media, health, education, cafe and hotel sectors.
"Widespread issues with workplace literacy and numeracy are leading to critical errors on workplace documents and general communication problems which negatively impact on productivity and teamwork," Australian Industry Group chief executive Innes Willox said.
"This is disturbing at a time when the workforce increasingly needs higher levels of literacy and numeracy skills, as well as more advanced digital skills for our changing workplaces.”
The survey found three in four employers reported an increasing shortage of technicians and trade workers, employees with STEM skills. They also reported shortages of skills for business automation, artificial intelligence and Big Data roles had emerged.
"Difficulties remain with the recruitment of employees with STEM skills. There has been an increase in the percentage of employers engaging apprentices and trainees – a substantial proportion being of mature age," Mr Willox said.
"The main strategy being used to meet skill needs is to retrain existing staff on the job, although there has been a significant increase in employing workers with basic skills and upskilling them.
"The percentage of employers reporting links with universities and VET providers has increased since 2016, while links with secondary schools have been maintained over the past two years. Employers with no links to education sectors have decreased considerably."
David Fox, general manager of L&A Pressure Welding in Revesby, said his business - like others - was investing more in training his own apprentices to address growing skills shortages.
Mr Fox said his manufacturing company has had difficulty attracting the skills he needed because of a perception there was a limited future in manufacturing.
He has apprentices aged in their early twenties and established relationships with a local high school, TAFE and university to create apprenticeship training pathways from school to professions including trades and engineering.
Students get hands on experience in an apprentice welding bay and are offered digital skills training as part of a trade course.
"We need a young vibrant workforce to re-energise and move us from focusing on a product to being able to lift services, engineering and design," he said.
Mr Fox said some workers had difficulty filling out safety forms and transitioning to office roles because of literacy problems.
The AIG's 2018 Workforce Development Needs Survey Report found employers were prioritising technology capability for managers with 62 per cent of employers reporting a lack of leadership and management skills is having a high impact on their business.
ANZ economist David Plank said the number one question in the economy was when skills shortages would start showing up as increases in wages.
He said there were increasing reports of skills shortages, but still only limited evidence the shortages were putting pressure on wages.
"It seems firms are are complaining, but they are not yet bidding up the cost of labour in response to that," he said.
"Wages have risen off the lows. If we look at wages including bonuses we are doing quite a bit better than headline wages.
"But all wage indicators are lower than you might think given what firms are telling us in terms of shortages."
Anna Patty is Workplace Editor for The Sydney Morning Herald. She is a former Education Editor, State Political Reporter and Health Reporter. Her reports on inequity in schools funding led to the Gonski reforms and won her national awards. Her coverage of health exposed unnecessary patient deaths at Campbelltown Hospital and led to judicial and parliamentary inquiries. At The Times of London, she exposed flaws in international medical trials.