And this inability to follow basic instructions and warnings has led to a safety and productivity nightmare.
Most of these workers are in labour-intensive and low-level service jobs.
Among the terms that are too difficult for some workers are "hearing protection" and "personal protective equipment is required", revealed a report by Skills Australia for the Rudd Government.
The words that many do not understand include- immediately, authorised, procedure, deliberate, isolation, mandatory, recommended, experience, required and optional.
In an interview with Herald Sun, Australian Industry Group chief executive Heather Ridout said that 46 per cent of workers had substandard literacy skills and 53 per cent had numeracy below the expected benchmark.
"It's really worrying when people can't read or write," News.com.au quoted Ridout as saying.
"It contributes to workplace safety problems. You've got to have a lot of pictures to promote safety and it contributes to inefficient practices and mistakes. That means time is wasted and work has to be repeated," she added.
Ridout said some workers could not read and understand standard operating procedures, which led to incorrect use of machinery.
They could not read drawings and were drilling the wrong-sized holes or cutting steel incorrectly.
She has urged the Government to introduce a national adult literacy and numeracy scheme in next month's Budget to provide resources and teaching support.
Other terms that were too difficult for some workers included sheeted material, company policies, gross misconduct and disciplinary action.
"We can't lift skills if some workers don't have the basic skills to build on. All these people should be given a chance to participate but if they can't read and write and add up, it's oing to be very tough for them," she said. (ANI)