Skills shortages have improved slightly from last year – but they remain a big problem for over half of Australian small businesses, according to Localsearch’s 2025 State of Small Business Report.
The majority (65 per cent) of small-business owners say that skill shortages have put them under pressure; 53 per cent say they lack adequate resources and skilled staff.
While the most recent figures are grim, they represent an improvement when compared with last year’s. In 2023, 72 per cent of small-business owners said that there weren’t enough skilled workers in their sector. This year, however, only 46 per cent said the same.
What can SMEs do to combat skills shortages?
The Localsearch report found that small-business owners are combatting the shortages with a variety of tactics.
Almost a quarter (21 per cent) are offering work-life balance incentives – such as flexible working – to encourage new talent and keep existing employees happily. A quarter (25 per cent) are offering higher salaries to achieve the same ends.
Some small-business owners said they had changed their expectations of prospective employees in light of the circumstances. A quarter (25 per cent) said they are taking on more junior staff, while a third (33 per cent) are hiring based on personality and work ethic, as opposed to experience.
“While it’s encouraging to see some improvement in the availability of skilled workers compared to last year, small business owners are still navigating significant challenges when it comes to finding and retaining the right talent,” said Wes Graham, Head of People at Localsearch.
“Skill shortages don’t just impact day-to-day operations – [they also create] additional pressures, forcing business owners to wear more and more hats. What we’re seeing, though, is a remarkable adaptability among Aussie small business owners.”
