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BUREAU OF TRANSPORT AND REGIONAL ECONOMICS Skill Shortages in Australia's Regions Working Paper No. 68 EXECUTIVE SUMMARY Skill shortages are commonly reported across Australia and overseas. While the effect of skill shortages on the economy is not well defined, in many sectors it means decreased output and the delay or cancellation of new projects. Skill shortages are most common at times of high economic growth and low unemployment. However, they can occur in regions of high unemployment where there is a mismatch between the skills available and the skills demanded. There are a number of perspectives of what is a skill shortage. This paper uses the definition of a skill shortage from Shah and Burke (2003): "A skill shortage exists when the demand for workers for a particular occupation is greater than the supply of workers who are qualified, available and willing to work under existing market conditions." There are two other related concepts that often get confused with skill shortages. The first is a recruitment difficulty, where a business finds it difficult to fill a vacancy, even though there is not a broader skill shortage. This may be due to the characteristics of the business, the location or the skill set required for the position. The second is known as a skill gap. Skill gaps occur when existing staff do not have the skills for the required positions. |
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