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Cost of skills shortage
calculator

Put an annual dollar figure on the roles you cannot fill or cannot fully staff with the right skills.

Your numbers

Annual cost of the gap
 
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What is the cost of a skills shortage?

It is the value you lose while roles sit unfilled or staffed by people who are not yet fully capable. That shows up as lost output, slower delivery, and pressure on the people covering the gap.

How we calculated this

We multiply the roles you cannot fill or fully staff by the annual output or revenue each one should produce, then by the share of that output lost while the role sits empty or under-skilled, then by the fraction of the year the gap has been open (months divided by 12). The result is the value not produced this year because the capability was missing. It is a lost-output figure, so it sits alongside your recruitment and training spend rather than replacing it, and it leaves out the strain on the people covering the gap. The working, the assumptions and the sources are below.

New to the term? Read the plain-English definition of the skills matrix in the HR Glossary.

Your working
Assumptions
  • Output per role is your estimate. Revenue per role works for sales and billable roles; for support and operational roles use a defensible proxy (what the work would cost if outsourced, or the value of its throughput). An inflated figure inflates everything downstream.
  • The share of output lost is one number for the whole period. A vacant role loses close to 100%; an under-skilled person in the seat might lose 20% to 40%. The 30% default assumes a mix. If most of your gaps are vacancies, the real number is far higher.
  • Months exposed is capped at this year. Gaps that have been open for two years have already cost you last year's figure too, and with 29% of assessed occupations in national shortage on the Jobs and Skills Australia (JSA) 2025 list, the months rarely reset on their own.
  • Overtime, backfill contractors, quality problems and the burnout of the people covering are not counted. Nor is the churn a long gap causes. The figure is conservative.
  • Skills churn is treated as static. The World Economic Forum (WEF) Future of Jobs 2025 expects 39% of workers' core skills to change by 2030, so the roles counted today are the current gap; new ones open as the work changes.
Sources

What to do about it

The number above is output you did not produce, which is why it never appears on a report: there is no invoice for work that did not happen. Once it has a figure, closing the gap becomes a funded decision instead of a standing complaint. These steps are for whoever carries the gap day to day, not only the person who approves headcount.

1

List the roles and name the gap in each one, in skills

"We are short a data analyst" is a vacancy. "Nobody on the team can build the monthly model in the new system" is a capability gap, and a capability gap has more than one fix. Write each gap as a capability and a fair share of the roles stop needing a hire at all.

2

Check whether the occupation is in genuine shortage

Look up each role on the Jobs and Skills Australia Occupation Shortage List for your state. If it is in shortage and the driver is a long training gap, hiring will stay slow and expensive and building internally is the realistic route. If it is not in shortage, your problem is attraction or fit, and that needs a different fix.

3

Cost the four routes against the annual figure

For each role: hire (recruitment plus ramp), build (upskill someone adjacent), redesign or automate the work, or knowingly carry the gap. Compare each to the annual loss above. When the loss is bigger than the fix, the fix funds itself, and that is the sentence to put in front of finance.

4
Where a tool helps

Build a skills matrix for the affected teams and keep it current

People down the side, the capabilities the work needs across the top, who has each one at what level, and where the single points of failure sit. Most gaps were visible for months before they became vacancies. A matrix that is updated when people join, leave and learn is the early warning.

5

Report the gap in dollars, monthly, until it closes

Roles open, months exposed, annual cost, and what was done this month. Re-run this calculator with the current numbers. When the figure falls you can show why; when it does not, someone has to explain the choice.

A gap you cannot see
stays open.

Compono Develop is a learning management system (LMS) built around capability rather than course completions: it holds what each role needs people to be able to do and who can do it to what level, then builds the missing pieces through structured learning. It runs the training delivery you expect and adds what most LMSs skip: a live capability picture by person and by team, so step 4's skills matrix maintains itself instead of dying in a spreadsheet.

That is step 4 done as a by-product of the learning people already do, and step 1's gap named in the same language. The annual figure above is the price of not knowing where capability was short until the work stopped. Develop shows you before the work stops.

See how it works
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Common questions

How do I estimate output per role?

For revenue-generating roles, use the revenue each role typically produces. For others, use a reasonable measure of output value. Then adjust for time to productivity, since a partly ramped role still produces some value.

How big is the skills churn problem?

Significant and growing. The WEF Future of Jobs 2025 projects 39% to 59% skills churn across the workforce, meaning a large share of skills will shift or need rebuilding over the next several years.

Can I reduce this cost without hiring more people?

Often, yes. Building capability in your existing workforce closes part of the gap without adding headcount, and measuring capability accurately means you target the development where the cost is highest.

This page is general information, not legal advice. We check figures annually and update them on a best-efforts basis, but employment rules change and we cannot promise everything here is current or complete. Before you act on it, confirm the detail with the relevant authority in your country or your own adviser. Last reviewed July 2026.

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The skills matrix

The plain-English definition, with the calculators and rules that sit around it.

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