How To Bridge the Skills Gap To Get Your SME Thriving

Skills shortages are a growing concern for Australian businesses, impacting productivity, retention, and long-term competitiveness.

According to ADP’s People at Work 2025 report, only 24% of workers globally feel confident in their skills for career progression. In Australia, that figure drops to less than one in five. In fact, older employees (aged 40 and over) report even lower confidence in their ability to keep up with workplace demands.

Medium and large enterprises in Australia spend about $1,538 on skills training for each employee annually, according to FutureCampus. How does that compare to what your business invests?

With rapid technological advancements, evolving job roles, and shifting industry requirements, bridging the skills gap is no longer optional—it’s key for business sustainability.

Understanding the factors driving this gap and implementing targeted strategies can help businesses unlock their workforce’s potential while strengthening long-term resilience. Consider what skills you might be overlooking in your workplace.

How the Skills Gap Impacts Business

A workforce lacking the right skills can create multiple challenges for SMEs:

• Staff struggle to meet job requirements.
• Productivity drops.
• Workloads increase for some workers.
• Inefficiencies and potentially costly mistakes can happen.
• Employee morale and retention take a hit.

Businesses that fail to invest in upskilling often experience higher turnover rates. ADP’s research shows that employees with strong access to training opportunities are twice as likely to stay with their employer. As well, workers who receive adequate upskilling support are six times more likely to recommend their company to others. That’s a significant boost for brand reputation and recruitment efforts.

In a competitive hiring market, relying on external recruitment to fill skill gaps is not always a sustainable solution. Instead, a targeted internal upskilling strategy can slash hiring costs while fostering a more engaged, capable workforce.

• Conduct a skills audit: Identify existing workforce capabilities and compare them against your business needs to help pinpoint gaps and prioritise training areas.
• Consider redesigning jobs: Incorporate new skills and technologies that could improve your employees’ readiness for change.
• Invest in targeted training: On-the-job learning, mentoring, and external courses can strengthen both technical and soft skills. Digital and green skills are a focus for many businesses; check out these insights into Australian Business Statistics for more info.
• Use AI and personalised learning: AI-driven training platforms can tailor programs to individual employee needs, ensuring targeted and effective learning experiences.
• Encourage cross-training: Allow employees to develop skills outside their immediate roles, which enhances workforce flexibility, so they can better adapt to changing business demands.

• Foster an inclusive learning culture: Support employees of all ages, professional work experience and backgrounds to engage in lifelong learning creates a stronger, more resilient workforce. That means adopting flexible and inclusive learning models.
• Collaborate with training organisations and educational institutions: Streamline your SME’s transition to Industry 5.0.
• Develop your action plan: You need an overarching view of how your SME is addressing identified skills gaps.
• Measure progress and impact: Regularly review training outcomes to ensure upskilling initiatives meet your business goals and workforce needs.

The Future of Work: A Data-Driven Approach

To effectively address the skills gap, businesses must adopt a long-term, data-driven approach. Using insights from workforce reports such as People at Work 2025, along with industry-specific data, enables employers to tailor their training strategies to address regional and sector-specific needs.

Employers who prioritise workforce development gain a competitive advantage, benefitting employee engagement, innovation, and operational resilience. In an unpredictable economic landscape, investing in skills is one of the most effective ways to future-proof a business.