Australian small and medium businesses are absorbing a six-figure revenue hit as hiring friction leaves capable workers sidelined and long-term vacancies unfilled.

New Employment Hero data points to a ‘lost jobs economy’ in which employees actively avoid job hunting despite being open to the idea of a new role, while businesses endure stunted growth because they can’t fill vacant positions.

“We have employers desperately searching for staff and millions of Australians open to moving, but because the two sides aren’t connecting, both businesses and workers are missing out,” says David Holland, Managing Director, Talent at Employment Hero.

The research has prompted calls to reimagine the recruitment process and close the gap between job opportunity and candidate action.

Workers Want To Move But The Effort Is Not Worth It

The concept of job hugging involves workers prioritising security over ambition and clinging to existing roles, but this new data identifies other reasons employees are staying put.

67 per cent say they would be willing to consider a new role aligned with their skill set and pay expectations, yet only 6 per cent are actively applying for work. While they would pursue an opportunity that landed in their lap, they are reluctant to engage in a proactive search. 55 per cent admit they remain in their current job because finding a new one feels too difficult, time-consuming or uncertain. “The old expression ‘finding a job has become a job’ has never been truer,” Holland says. “The sheer friction of traditional job hunting keeps them on the fence.”

This friction stems from features of legacy recruitment processes, searching jobs boards, preparing and submitting applications, and rounds of interviews, that no longer feels fit for purpose. “AI is creating an arms race where we’re empowering the hirers with tools to review candidates using AI. But, increasingly, candidates are now starting to really leverage AI so employers aren’t able to rely on the traditional CV as a strong indicator of that candidate’s real experience and capabilities,” he says.

Another barrier is that people feel they don’t know where to look. 52 per cent believe suitable roles exist but they are hidden, hard to find, or they never hear about them. This is in keeping with traditional estimates among recruiters that 70 to 80 per cent of roles never make it to jobs boards.

Vacant Roles In SMEs Come With A Huge Financial Penalty

The passive approach to job hunting by candidates is having tangible impacts on small and medium businesses. 48 per cent of employers believe the talent they need to fill vacant roles exists within the marketplace but prospective employees simply aren’t applying to traditional advertisements.

As a result, key roles are remaining unfilled for an average of 5.8 months. This burdens remaining staff and may force owners to spend more time working in the business than on it. “When vacant roles sit open for months, it ceases to be just a hiring problem. It becomes a broader national productivity problem,” Holland explains. “It means existing staff burn out carrying extra work, growth plans get put on hold and local businesses lose real revenue.”

That revenue loss is estimated at a substantial $160,000 per business, with 78 per cent of employers confirming unfilled positions have impacted their bottom line. 16 per cent have taken a hit of more than $250,000 in the past year. For sales and revenue-generating roles, the financial impost may be even harder to bear.

The Legacy Hiring Model Is Contributing To The Problem

Bridging the gap between vacancies and talent will require more than bolting on AI to streamline existing recruitment processes, argues Holland. He believes the technology is better used as a matchmaker. “We need to make connecting employers and workers far easier,” he says.

He advocates for AI tools that can engage with candidates to seek information beyond a one-page CV, while comparing skills and experience to open roles. This allows an SME owner, who is often working without HR support, to pursue a shorter list of vetted names rather than sifting through hundreds of AI-enhanced applications.

The push towards algorithmic matchmaking is gathering pace globally. The World Economic Forum recognises the potential of data-driven, skills-based hiring frameworks, citing examples in Singapore and Nigeria. The OECD says AI should make job matching more efficient, if conducted transparently.

Holland believes the benefits of removing hiring friction cannot be overstated. “The future of recruitment relies on taking the effort out of the process, matching passive talent with open roles seamlessly so businesses can fill vacancies faster and workers can discover their next move without the hassle.”