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Adjusting to skill shortages in Australian SMEs

Author

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  • Joshua Healy
  • Kostas Mavromaras
  • Peter J. Sloane

Abstract

Skill shortages are often portrayed as a major problem for advanced economies, yet there is surprisingly little empirical evidence about how firms adjust to skill shortages and their associated effects on firm performance. This article provides new evidence from the Business Longitudinal Database, an Australian data set with unusually rich information on the causes and consequences of skill shortages in small- and medium-sized enterprises. We document the range of alternative strategies that firms adopt when responding to skill shortages and show that certain types of adaptation are used in some cases and not in others, depending on the type of shortage encountered and other attributes of the firm. Further, we show that certain types of skill shortage are more likely to be long-lasting and difficult to resolve, while others are alleviated relatively quickly with minimal adjustment. Our findings yield lessons for the skill utilization strategies of firms and for the labour market policies of governments.

Suggested Citation

  • Joshua Healy & Kostas Mavromaras & Peter J. Sloane, 2015. "Adjusting to skill shortages in Australian SMEs," Applied Economics, Taylor & Francis Journals, vol. 47(24), pages 2470-2487, May.
    • Handle: RePEc:taf:applec:v:47:y:2015:i:24:p:2470-2487
    DOI: 10.1080/00036846.2015.1008764
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    Citations

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    Cited by:

    1. Kishor Sharma & Edward Oczkowski & John Hicks, 2017. "Skill Shortages in Regional New South Wales: The Case of the Riverina," Economic Papers, The Economic Society of Australia, vol. 36(1), pages 3-16, March.
    2. Groiss, Martin & Sondermann, David, 2023. "Help wanted: the drivers and implications of labour shortages," Working Paper Series 2863, European Central Bank.
    3. Horbach, Jens & Rammer, Christian, 2020. "Labor shortage and innovation," ZEW Discussion Papers 20-009, ZEW - Leibniz Centre for European Economic Research.
    4. Brunello, Giorgio & Wruuck, Patricia, 2019. "Skill Shortages and Skill Mismatch in Europe: A Review of the Literature," IZA Discussion Papers 12346, Institute of Labor Economics (IZA).
    5. Mangan, John & Trendle, Bernard, 2017. "Hard-to-fill vacancies: An analysis of demand side responses in the Australian state of Queensland," Economic Analysis and Policy, Elsevier, vol. 54(C), pages 49-56.
    6. Nik Dawson & Marian-Andrei Rizoiu & Benjamin Johnston & Mary-Anne Williams, 2020. "Predicting Skill Shortages in Labor Markets: A Machine Learning Approach," Papers 2004.01311, arXiv.org, revised Aug 2020.
    7. Afris Widya-Hasuti & Abbas Mardani & Dalia Streimikiene & Ali Sharifara & Fausto Cavallaro, 2018. "The Role of Process Innovation between Firm-Specific Capabilities and Sustainable Innovation in SMEs: Empirical Evidence from Indonesia," Sustainability, MDPI, vol. 10(7), pages 1-26, June.
    8. Sharma, Kishor & Oczkowski, Edward & Hicks, John, 2016. "Skill shortages in regional Australia: A local perspective from the Riverina," Economic Analysis and Policy, Elsevier, vol. 52(C), pages 34-44.
    9. Seamus McGuinness & Konstantinos Pouliakas & Paul Redmond, 2018. "Skills Mismatch: Concepts, Measurement And Policy Approaches," Journal of Economic Surveys, Wiley Blackwell, vol. 32(4), pages 985-1015, September.
    10. Brunello, Giorgio & Wruuck, Patricia & Maurin, Laurent, 2019. "Skill shortages and skill mismatch in Europe: A review of the literature," EIB Working Papers 2019/05, European Investment Bank (EIB).
    11. Pouliakas, Konstantinos & Wruuck, Patricia, 2022. "Corporate Training and Skill Gaps: Did COVID-19 Stem EU Convergence in Training Investments?," IZA Discussion Papers 15343, Institute of Labor Economics (IZA).
    12. Arnold, Daniel & Hillerich-Sigg, Annette & Nolte, André, 2017. "Fachkräftemangel: Reaktionen der Betriebe sowie Auswirkungen auf Investitionsentscheidungen und Wachstum. Studie im Auftrag des Bundesministeriums für Wirtschaft und Energie: Abschlussbericht," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 162879.
    13. Aleksandr Yu. Kokovikhin, 2020. "Skills management in regional economic policy of the OECD and the EU member countries," Upravlenets, Ural State University of Economics, vol. 11(5), pages 81-96, November.
    14. Giorgio Brunello & Patricia Wruuck, 2021. "Skill shortages and skill mismatch: A review of the literature," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1145-1167, September.

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