Workforce

Workforce Shift: Tackling Skill Gaps, Boosting Retention, and Prioritising Safety

Key Findings

92% of Australian insurers report a moderate to significant impact on their ability to grow and manage claims efficiently due to labour market issues.
74% of Australian insurers identify enhanced employee benefits as a top strategy for managing turnover.
Compared with last year, there has been a 20-percentage point decrease in Australian insurers and a 23-percentage point decline globally in signalling an intention to invest in training and development as a retention strategy.

Skill gaps and labour shortages: A pressing concern

Though maintaining a low unemployment rate of 4.1% as of October 2024, the Australian labour market remains challenged by geographical, industry, and skill disparities. While worker participation has increased to 67.2%, skill-matching inefficiencies persist, leaving many sectors grappling with workforce constraints.^[¹^] These dynamics are particularly acute in healthcare, where the demand for registered nurses and aged care workers continues to outstrip supply, exacerbating existing workforce challenges.

Broader implications ripple through other sectors as well, with skill shortages, particularly in roles requiring technical expertise, making it increasingly challenging for businesses to find suitable candidates. Among Australian insurers, 92% report that labour market constraints are affecting their organisational ability to grow and manage claims efficiently, outpacing the global average of 72%. This underscores a unique intensity of workforce challenges in the region.

The shift towards stability and holistic benefits

Ensuring the retention of engaged and motivated employees is crucial for an organisation’s long-term viability, particularly for those facing challenges in filling key roles. Today, employees focus more on constancy and see stability as a top driver of attraction.^[²^] In response, Australian insurers have revamped their retention strategies by offering enhanced benefits packages to boost satisfaction and loyalty, signalling that traditional approaches like higher compensation are no longer sufficient to meet the needs of the current workforce. Notably, there has been a 54-percentage point decrease in offering competitive salaries as a retention tool compared to last year. Instead, 74% of Australian respondents highlight enhanced benefits packages – such as wellbeing programs and flexible work arrangements – as their top strategy for managing turnover.

Globally, 60% of insurers also cite enhanced benefits as their primary approach, while 58% emphasise flexible work arrangements. In Australia, training and development remain a focus but have seen a decline, with 48% of insurers investing in this strategy— a 20-percentage point decrease from the previous year. This shift reflects a broader trend toward creating holistic workplaces that prioritise employee satisfaction and long-term engagement.

Building resilience through collaboration

Navigating workforce challenges requires coordinated efforts across industries, policymakers, and insurers to mitigate risks. Strategies such as workplace modifications, targeted policy enhancements, and employee wellness programs can play a pivotal role in safeguarding employee health while improving operational efficiency. By leveraging actionable insights and embracing data-driven approaches, insurers can build resilient workforces capable of meeting the demands of an evolving market.

Collaboration with experienced partners who understand the complexities of workforce risks and claims management can provide valuable support. The right partnerships can present the opportunity to address these challenges effectively by implementing effective solutions that prioritise safety, enhance employee retention, and streamline claims processes — fostering long-term sustainability in an increasingly competitive landscape.

Combating workplace violence and psychosocial hazards

Workplace violence is an escalating concern and pressing issue with often overlooked impacts on productivity. In Australia, serious workers’ compensation claims for assault and aggression have risen by 56% over the last six years.^[³^] This growing issue not only impacts employee safety, but also creates psychosocial hazards that undermine morale, trust, and productivity across industries.

Psychosocial hazards arise from how jobs are designed, organised, and managed and are influenced by social factors such as workplace relationships and interactions. To address these concerns, the 2024 Commonwealth Code of Practice for Managing Psychosocial Hazards at Work was introduced under the Work Health and Safety Act 2011 (WHS Act). This has been brought in to ensure the proactive identification and management of

psychosocial risks, management of psychosocial risks, particularly for vulnerable groups such as those new to the task or culturally diverse. Employers also required to uphold workplace behavioural standards in the workplace and establish fair and transparent processes to address misconduct and ensure psychological safety.^[⁴^]

This new regulatory framework calls on organisations to implement robust workplace safety policies and proactive strategies to mitigate these risks. Beyond compliance, fostering a positive workplace culture that prioritises employee welfare and psychological safety can help organisations improve workforce resilience and meet both regulatory and employee expectations.

Empowering people, enhancing performance

Tackling skill gaps, enhancing employee

strategies, and addressing workplace hazards are pivotal steps in creating a thriving workforce. By focusing on holistic employee wellbeing, operational efficiency, and proactive risk management, Australian insurers can not only navigate current challenges but also position themselves for long-term success in an increasingly competitive and dynamic industry.

^{[1] “}^{Labour Force Survey, Australia, October 2024}^{”, Australian Bureau of Statistics, released 14 Nov 2024}
^{[2] “}^{Gartner HR Survey Finds Australian Employees Are Looking for Career and Organizational Stability in 2024}^{”, Gartner, Newsroom Press Release, 14 Feb 2024}
^{[3] “}^{Workplace and work-related violence and aggression in Australia report}^{”, Safe Work Australia, Data Website, 04 Sept 2024}
^{[4] “}^{Work Health and Safety (Managing Psychosocial Hazards at Work) Code of Practice 2024}^{”, Federal Register of Legislation, October 2024}