The head of Australia's building union says low levels of literacy among workers is a major safety hazard in a high-risk industry.

Figures from the Australian Bureau of Statistics (ABS) show almost half of working Australians do not meet basic literacy and numeracy standards.

The Australian Industry Group (Ai Group) and the Federal Government are now launching a new national literacy program to address the issue.

Chief executive Heather Ridout says improved literacy means a safer and more productive workforce.

"The oeCD has estimated that a 1 per cent increase in our literacy skills could lead to a 2.5 per cent increase in our labour productivity, which is really needed, and a 1.5 per cent increase in GDP," she said.

"As well, in industry we have major safety issues which will not be addressed unless people are literate."

The Ai Group's project, with the financial backing of the Federal Government, will work with 10 businesses across four states.

Each business will have more than 80 hours of literacy training.

Employment Participation Minister Mark Arbib thinks most people would be surprised by the literacy and numeracy findings.

"It is something that the Government is committed to improving," he said.

"That is one of the areas in employment but it is also one of the areas in schooling."

Australian Council of Trade Unions (ACTU) president Sharan Burrow welcomes the program and says improving workplace safety is paramount.

"Most professions rely on capacity to communicate, to make sure that work processes - particularly where there are dangerous goods or dangerous equipment - that those communication processes are absolutely clear

"But beyond safety, it is also an issue of opportunity, capacity to anticipate and productivity really for the employers themselves, so all round literacy is a key issue."

Ms Burrow says there have always been issues in the workforce with literacy and it is not surprising, considering Australia's demographics.

"We are a land of immigrants. Our workforce is made up of immigrants," she said.

"So as well as those people who struggle with literacy as Australian-born citizens, we have a responsibility to support migrant workers to get the literacy skills that are necessary ... to perform functional work, but also to provide them with an opportunity to up-skill, to take on career challenges and the like."

Ms Ridout says poor literacy levels is not just an issue for migrant workers.

"One of the bright points has been that the skilled immigration program has actually added to our literacy performance, so migrants are not the area that we have got to blame," she said.

"It is our own workforce and frankly we are going to do a major project, over the next 12 months or so with the support of the Government, to try to look at it from an employer in a workplace point of view and see what we can do from the grassroots in terms of lifting the literacy levels of the workforce."

The national secretary of the CFMEU's construction division, Dave Noonan, says the practical nature of the building industry could be one reason literacy issues are so prevalent.

"I think that it's notorious that some people do struggle and find it hard to get through," he said.

"The building industry is an industry that does attract people who are practical, who are "can do" people, and people that perhaps haven't found their strength inside a classroom.

"I think it has always been so that we've had people in the industry that didn't do well at school."

Mr Noonan says it is something that unions and business have to work together to address.

"The building and construction industry is an industry that turns over a lot of people, so we've had a very positive impact, where we have been able to, in working on this issue with our members.

:But it is very clear that there is always new people coming into the industry. There is always going to be an ongoing need for employers and unions and the community to work on this as a priority issue."