The WA Skills Shortage in 2026: What's Really Going On, and What Employers Can Do About It

Western Australia has the lowest unemployment rate in the country.

On paper, that should mean a relaxed labour market. On the ground, it means the opposite: businesses across mining, engineering, professional services and the not-for-profit sector are still telling us they can't find the people they need.

Low unemployment and a persistent skills shortage aren't a contradiction, they're the same problem seen from two different angles.

Here's where the numbers actually sit going into the second half of 2026, why "just hire more" doesn't fix it, and what we'd recommend doing instead.

Where the numbers actually sit

• Australia's national unemployment rate rose to 4.5% in April 2026, the highest it has been since November 2021, according to ABS Labour Force data (reported via Western Australian Treasury Corporation).

• Western Australia's unemployment rate was 3.4% in January 2026, the lowest of any state or territory in the country, again per ABS Labour Force data reported by WATC.

• Jobs and Skills Australia's Occupation Shortage List, released in October 2025, assessed 1,022 occupations nationally and found 29% of them (293 occupations) in shortage. That's an improvement on the 33% recorded in 2024, but it still means close to one in three roles assessed nationally are hard to fill.

Put together: WA employers are competing for staff in the tightest labour market in the country, against a national backdrop where a third of assessed occupations are still short-staffed even after some easing since 2024. That's a genuine capacity constraint, not a motivation problem.

The scale of Australia's offshoring industry

Offshoring is already a bigger part of the answer than most employers realise. Staff Domain, citing an IBISWorld report from January 2019, puts the value of Australia's Business Process Outsourcing (BPO) industry at $35 billion, with more than 30,000 Australian businesses offshoring some part of their operations.

That industry hasn't shrunk since. IBISWorld's latest analysis values the same industry at $49.6 billion in 2024-25, with 35,587 businesses now operating in it as of 2025, a base that's grown at an average 2.4% a year since 2020. Offshoring and outsourcing are mainstream, and still-growing, parts of how Australian businesses fill capacity gaps, which is exactly why the how matters as much as the whether.

Where AI fits

AI is the fourth lever we get asked about most, and it deserves a place in this conversation. Used well, AI and automation tools can take genuinely repetitive tasks (scheduling, first-draft reporting, initial candidate screening, routine data entry) off already-stretched teams, freeing experienced staff for the higher-value work only they can do.

It won't fix a shortage in a specialised trade or profession on its own, and it isn't a replacement for the people you're short of, but treated as a practical support tool rather than a strategy in itself, it's one of the more useful, lower-cost levers available right now.

Why "just hire more" doesn't fix it

Three things we keep coming back to with clients:

1. Retention has to sit alongside recruitment, not after it. It's easy to treat hiring as the whole strategy and retention as an afterthought. In practice, every person who leaves a hard-to-fill role adds directly back to the same shortage you're trying to hire your way out of. A workforce plan that only looks at the front door and ignores the back door will keep losing ground.

2. Offshoring and outsourcing are legitimate parts of the answer, but only when they're planned properly. Work that's moved to another provider or location without genuinely understanding its complexity, and without proper transition and change management, tends to come back onshore within a few years, usually after a period of visible service problems. Skipping that groundwork to save time is usually the more expensive option in the end, not the cheaper one.

3. Workforce risk is now a supply chain and delivery risk, not just an HR issue. Skills gaps show up as delayed projects, missed tenders and service failures long before they show up as an HR statistic. Treating workforce planning as a standalone HR exercise, separate from operational and delivery planning, misses where the actual risk sits.

What we'd actually recommend

Start with a workforce plan, not a job ad. Our Discovery Session and Blueprint maps the work that actually needs doing, the capability and capacity you have today, and where the real gaps are, before any recruitment decision gets made.

Want to work through this yourself first? If you'd rather start by working through your own workforce plan before talking to anyone, Jude's self-paced Strategic Workforce Planning training is a practical place to start - you will build a workforce plan as you progress through the training.

Put a retention plan next to the hiring plan.

That includes the basics (pay, flexibility, career pathways) but also underused levers most competitors ignore entirely, such as supporting women through menopause in the workplace, which keeps experienced staff in the workforce at exactly the point many organisations quietly lose them.

If work genuinely needs to move, whether that's insourcing, outsourcing or offshoring, run it as a proper project with structured change management, not a quiet handover. That's the difference between a transition that sticks and one that quietly unwinds eighteen months later.

Where a role genuinely has to be filled externally, particularly a critical or senior appointment, use confidential retained search rather than competing in the same open job-ad market as everyone else chasing the same short supply of people.

Identify where AI or automation can take genuinely repetitive tasks off your existing team, rather than being treated as a replacement for the headcount you still need. This works best as a targeted fix once the workforce plan above has told you where the actual capacity gap sits.

In the media

Some of this thinking has played out in public commentary from Optimal Resourcing's director, Jude Mahony:

• The West Australian: an opinion piece arguing that solving the labour crisis needs a retention focus alongside recruitment, not recruitment alone. Read it here

• SmartCompany: an opinion piece making the case that offshoring can help solve Australia's skills crisis, provided it's planned and managed properly. Read it here

• Sky News Australia: a television interview on offshore outsourcing as one response to the skills shortage. Watch it here

• Dynamic Business: expert commentary on practical ways to reduce supply chain risk, workforce included. Read it here

Want the full picture?

For the fuller story on offshoring done well versus offshoring done badly, see Jude Mahony's book, Offshoring or Not-sure-ing.

Talk to us

If any of this sounds like your organisation right now, the starting point is usually a short conversation, not a long engagement. Book a free Expert Resourcing Consultation and we'll help you work out where the actual gap is before recommending anything.