A new report suggests Australia is facing a massive shortage of digital skills in the workplace.

The study by the Australian Industry Group says 75 per cent of employers report skill shortages, and 99 per cent are impacted by low levels of literacy and numeracy.

At the same time, digital technologies are increasingly disrupting workplace environments.

“It is clear we need new approaches to education, training and re-skilling to maximise the benefits of the digital economy. This is particularly important as employers reshape workforce capabilities and seek higher level skills, advanced technical and soft skills, digital literacy and changed management know-how,” AI Group chief Innes Willox said.

“Our survey has found major skills demand issues facing employers. It provides an important gauge of employer sentiment around skill needs, education and training at a critical time for industry transformation.

“Without conducive policy settings and closer collaboration between industry and education sectors to drive education and training that adapts quickly to the needs of the digital economy, Australia's business sector will suffer competitively into the future,” Mr Willox said.

The survey highlighted the following pressures on employers:

Skills shortages - 75 per cent of respondents reported skills shortages, a jump from 49 per cent in the previous survey conducted in 2016. Shortages are most often in the technician and trades worker category, with difficulties recruiting for STEM skills, and new shortages for roles in business automation, Big Data and artificial intelligence solutions

Literacy and Numeracy - 99 per cent of employers (up from 96 per cent in 2016) are affected in some way by low levels of literacy and numeracy in their workforce. This is disturbing at a time when the workforce increasingly requires foundation skills that include not only literacy and numeracy but digital literacy and advanced soft skills.

Leadership and Management - employers are prioritising technology capability improvements for managers, 62 per cent of whom believe a lack of leadership and management skills is having a high impact on the business (up from 56 per cent in 2016). This reflects the major changes needed in the way work is done and managed as entire business processes and organisational cultures are upended in the digital economy.

The full report is accessible in PDF form, here.