Skills are critical to Australia’s productivity - that’s why we need a common language for them

Skills are critical to Australia's productivity. And so is how we manage them. To help Australians develop the skills needed for a digital future, reduce barriers, and future-proof the nation's workforce, we need to consider how they are recognised, accredited, and transferred.

The reality is that the workplace of the future – and even now – is vastly different to what it looked like just decades ago. The way we plan and manage our workforces must change too.The Productivity Commission's interim report on Building a Skilled and Adaptable Workforce and draft recommendations are an important step towards building a highly-skilled and agile future workforce.

According to the report, the average Australian will change occupations at least two times over the next few decades. With this, they'll need to learn new skills, as well as adapt and apply existing ones.The report found that while there are reforms underway to boost the quality and quantity of skills in Australia, yet there is less focus on the adaptability of our people. To achieve both, there needs to be a fundamental shift from a jobs-based view of talent to a more dynamic, skills-based approach, with a technology-driven framework to manage this nationwide.

A skills-based approach to workforce development

Shifting from a jobs view to a skills-based approach may seem new to some, but it's already underway in many organisations. A skills-based approach focuses on the specific capabilities an organisation needs, such as customer service or data analysis, rather than relying on credentials, qualifications or job titles. Such an approach brings big benefits, and research by Workday have found that organisations with a skills-first approach see gains in productivity, agility and overall employee engagement.

The Productivity Commission found Australia's economy could be $5 billion bigger by reducing restrictive entry needs for roles like plumbing, psychology and company auditors. These strict requirements are linked to skills shortages and impede the flow of labour; 73% of workers that need a licence or registration are in occupations in shortage, according to the report.

For example, a large Australian telecommunications company uses Workday to analyse critical skills needed, identify gaps and how best to fill them, and then create holistic workforce plans. It tracks more than 20,000 skills using Workday's Adaptive Planning system.

For Australia as a nation, the first step to this is developing a common language for skills and boosting Australia's skills intelligence capabilities.This will facilitate moving past credentials and job titles which often hinder people from changing occupations or using skills learned overseas.

The National Skills Taxonomy initiative, currently being developed by Jobs and Skills Australia (JSA), is  an important step in developing a common language for understanding skills via a clear, consistent framework for both workers and employers. This makes it easier to identify transferable skills and pinpoint skills gaps to create targeted training and optimise workforce utilisation.

At Workday, we believe that a common skills language provides the shared understanding necessary for organisations to shift from a rigid, job-title-based model to an agile, skills-based operating model which will be the bedrock of a future-ready, adaptable workforce. With the National Skills Taxonomy, both government and industry can make more informed decisions about talent, policy and education well into the future.

Unlocking market labour data

Shifting to a skills-based approach means leveraging the right data. But to do this, we need to first unlock accurate and up-to-date labour market data. In fact, building skills intelligence capabilities for the nation requires not just improving access to existing data, but changing how and what data is captured and used.

Australia's current landscape is held back by fragmented and outdated information, especially around work-related training. This makes it hard to get a clear view of skills gaps and policy effectiveness to guide career decisions.

Unlocking access to comprehensive labour market data, plus advanced skills capabilities, will be a powerful way to address these issues and help planning for a skilled, adaptable workforce.

Combined, this could:

●      Provide a real-time view of in-demand skills nationally and regionally, and allow SMEs to accurately identify critical skill gaps within their own talent.

●      Inform students and workers of education and career pathways, telling them which skills are in demand to make informed choices about their education and careers.

●      Recognise diverse learning by verifying skills from diverse pathways – formal, informal, work experience or micro-credentials, by integrating with a National Skills Passport and using a National Skills Taxonomy.
 

Building Australia's skills intelligence capabilities will not happen without the right data. We need reliable, up-to-date and detailed data on work-related training, employer expenditure and skill demands to make this a reality. Making this easily accessible to policymakers, businesses and individuals will equip Australians with the tools they need to adapt and succeed.

  
The role of digital technologies

Digital technologies – especially AI – are key to delivering these solutions, strengthening Australia's skilled workforce and enhancing productivity overall. At Workday, we believe that AI is powering the future of work by unlocking human potential and driving business value.

We recently shared feedback on the Productivity Commission's interim report on Harnessing Data and Digital Technology. Widespread adoption of AI can boost national productivity, both applying to skills and beyond. In fact, 83% of executives surveyed by Workday believe AI helps mitigate skills shortages.  When coupled with workable safeguards that seek to both build trust and drive innovation, AI will help unlock Australia's skills intelligence capabilities.

Australia has the opportunity to make powerful changes that will set our workforce up for a productive, digitally-enabled future. By embracing a skills-based approach to workforce development, expanding access to Australia's labour market data and establishing trusted AI frameworks, Australia can unlock major productivity gains and speed up its transition to a modern, skills-based economy.