Australia’s skills shortage is getting worse, with the nation’s apprenticeship and traineeship system struggling to meet the needs of employees and the broader economy.

Described as the most significant analysis of its kind in years, the Australian Industry Group (Ai Group) Centre for Education and Training (CET) reveals that employers are facing mounting challenges in recruiting apprentices and trainees.

Ai Group chief executive Innes Willox says that a skilled workforce that matches employees is a critical piece of Australia’s productivity uplift.

“Workforce shortages are already a huge problem, impacting productivity and stopping businesses from running their operations in the most efficient way possible or growing their business,” he says.

The report draws on the experiences of businesses employing some of the more than 300,000 active apprentices and trainees in Australia. It makes clear that the system is under pressure. Employers report increasing costs, complex processes and difficulty finding suitable candidates, which all deter participation.

Some of the most concerning findings from the report include: 96% of surveyed employers said they face barriers when hiring apprentices and trainees and two-thirds struggle to find appropriate candidates. The report estimates that Australia will need an additional 186,800 skilled technicians and trade workers by 2034.

“Apprenticeships and traineeships lead to jobs across a range of industries, not just traditional trades like plumbing or electrical work,” Innes says.

“They are essential to areas like housing and infrastructure, the clean energy transition, national security, sovereign manufacturing and high-quality service delivery.”

Many smaller employers are also hesitant to engage. The report points to complexity, limited support, and financial concerns as key deterrents.

“Employees are telling us the system is increasingly costly and difficult to navigate,” Innes says.

“If financial incentives were removed, more than half of the employers surveyed said they would be less likely to hire an apprentice or trainee. That’s a clear signal that government support is still a necessary part of the equation.”

In response, Ai Group has put forward ten key recommendations aimed at reforming the apprenticeship and traineeship system to ensure it remains viable, attractive and aligned with industry needs.

“We simply cannot maintain the status quo,” Innes states.

“This report lays bare the systemic and human issues that employers have in hiring apprentices and trainees. If employers lose heart or stop supporting the system, thousands of young people will miss out on vital employment opportunities.”