The Skills Gap Is Costing Australia $3.5 Billion a Year

A new research report released by Year13 – a purpose-driven digital enterprise focused on empowering young Australians through education, career discovery, and skill development – in partnership with HedX, has shed light on a critical gap in Australia’s school-to-career transition. The findings highlight the growing economic burden caused by job uncertainty among young Australians, costing the economy a staggering $3.5 billion each year.

Titled “Upgrading the School to Work Transition for Social and Economic Impact”, the report by the platform (which collaborates with employers, educators, and industry leaders to provide resources that guide students towards meaningful employment pathways) reveals that an alarming 70% of Year 12 students experience anxiety, fear, and depression due to uncertainty about their future careers. Even more concerning, only 27% of students feel their school has adequately prepared them for life after graduation. With a national student-to-career counsellor ratio of 560:1, the current system is struggling to provide the necessary guidance and support for students facing an increasingly complex job market.

The cost of inaction

According to Year13 Co-Founder and Co-CEO Will Stubley, failure to address the challenges of the skills gap in Australia is not just an issue for young people – it has significant economic consequences. “What starts off as a small problem – young people finishing school unsure of their next steps – becomes a major issue down the line, leading to lost productivity and economic loss,” Will said.

The research underscores that the Australian skills gap is contributing to daily economic losses of approximately $9 million. Looking ahead, the global job skills gap is projected to cost US$11.5 trillion by 2028, according to the OECD.

A call for systematic reform

One of the key recommendations of the report is the integration of career education within the Australian curriculum. North Carolina has already implemented a similar model, requiring all middle and high school students to complete a career development plan, ensuring they are equipped with the knowledge and tools to make informed career decisions.

The report’s findings are based on a survey of more than 3,000 young people aged 15 to 24, along with insights from high school principals, career practitioners, employer workforce development managers, and government policy leaders. Their collective input reinforces the urgent need for reform in Australia’s career counselling system to bridge the gap between education and employment.

Leveraging technology for change

Will believes technology can play a vital role in addressing these issues. “If we want to support young people and create real economic impact, we must prioritise the school-to-work transition and invest in innovative solutions,” he said.

As an ed-tech platform dedicated to enhancing this transition, Year13 has developed digital tools such as its e-learning Academy and Virtual Work Experience programs. These initiatives help students explore in-demand careers while building essential life skills, including financial literacy, wellbeing, and digital fluency.