Creating vocational streams: what will it take?

This report is part of a wider three-year program of research, Vocations: the link between post-compulsory education and the labour market, which is investigating the educational and occupational paths that people take, and how their study relates to their work. In particular, this strand has been investigating the application of vocational streams in the labour market, which they argue can play a role in increasing workforce capacity and in addressing skill shortages. Previous research from the program has identified a vocational stream as a set of occupations linked by work-related capabilities within a broad field of practice. It has also identified two preconditions for a vocational stream: links in underpinning skills and knowledge; and the potential for commitment and cooperation across stakeholders on resolving issues.

As part of the third year of the program, the author interviewed a variety of industry stakeholders, with the aim of finding out how relationships between the social partners could facilitate vocational streams. This research is focused on the agriculture, financial services, healthcare and community services and engineering sectors.

Key messages

• While there is currently the potential for the creation of vocational streams in the four industry areas, they are not flourishing. Further enhancing the viability of vocational streams requires coordination from the social partners and further work on how to support vocational streams. In order to facilitate vocational streams in each of these industry areas, stakeholders should focus their attention on:
  • In engineering there is a need to improve employers’ understanding of mid-level skills.
  • While agriculture has a strong potential for regional vocational streams, employers have a low appreciation of how highly capable individuals are developed and retained.
  • In community services and healthcare there is an imperative to improve the scope for collaboration in areas of client and patient need.
  • Financial services has dynamic vocational streams but there is the potential for further gains from improved information sharing.

Dr Craig Fowler
Managing Director, NCVER

This report sets out the findings of the final year from Strand 3 of the three-year project entitled Vocations: the link between post-compulsory education and the labour market. The project investigated the potential to improve pathways and flows within and between education and work. It consisted of three strands: Strand 1 researched education and work outcomes from VET in Schools; Strand 2 researched the role of educational institutions in fostering educational and occupational pathways; and Strand 3 researched how to improve occupational pathways within the labour market.

Strand 3’s research program has investigated how the structures of the labour market and its actors support or inhibit the development of vocational streams across four industry sectors: financial services; agriculture; community services and healthcare; and engineering. A vocational stream was defined as a set of occupations linked by the knowledge, skills and attributes required to work within a broad field of practice in which educational and broad occupational progression are combined. The analysis was embedded within a capabilities approach to work, an approach which focuses on the individual and the social and economic resources they require to flourish within their domain of practice.

We hypothesised that a strong vocational stream would be characterised by strong occupational mobility, linking educational and labour market progression in a virtually linear fashion. It would be valuable not only for supporting adaptable individuals facing uncertain labour market conditions, but also for employers seeking greater workforce capacity. The key findings in the project’s first year, however, indicated that the Australian labour market is substantially segmented by occupation (Yu, Bretherton & Schutz 2012).

Given this segmentation, the research process in 2012 sought to identify where vocational streams existed, and how they were supported (Yu, Bretherton & Buchanan 2013). The key findings from this second stage of research posited that the conditions necessary for nurturing a vocational stream in any sector are:

• Commonalities in capabilities: the recognition of overlaps and links between the knowledge, skills and attributes underpinning related occupations
• Stakeholder readiness: the potential for stakeholder collaboration and cooperation (including commitment and allocation of resources) on workforce issues, across a broad range of institutions, which included employee, employer, government, educational and community groups.

We regard these as enabling conditions for developing a vocational stream: there are no prima facie assumptions that a vocational stream can emerge and flourish. Both identifiable occupational links (both horizontal and vertical) and committed stakeholders are required to provide the social infrastructure that supports individuals to move along these occupational paths. Differences across these two dimensions characterised the four case study sectors. In this third and final phase of research, we investigated how, given each sector’s historical position on the two enabling conditions, a stronger vocational stream within the sector might prevail.

Findings

The key results for the four case study sectors are set out below.

Engineering – a prevailing need to improve employers’ understanding of mid-level skills

In seeking to identify a viable engineering vocational stream, the research focused on the usefulness of mid-level skills in fostering links within disciplines between engineering trades workers, engineering associates, engineering technologists, and professional engineers.

The research found amongst employers very limited demand for, and poor understanding of, mid-level engineering qualifications and the capabilities of their graduates. Much of the work relevant to mid-level engineering associates had also been outsourced to countries such as India and the Philippines. As a consequence of these clear career outcomes, students tended to choose education and training programs concentrated in the trades or in professional engineering. Therefore, the prospects for an engineering vocational stream were regarded as weak. While much attention has been given to the educational pathways available to students, there can be no improvement to the engineering skills distribution (currently top-heavy with professional engineers) without a commensurate improvement in the way employers understand and value mid-level engineering occupations.

Agriculture – strong potential for regional vocational streams, but low employer appreciation of how highly capable individuals are developed and retained

In the context of vast environmental and technological change, a number of projects that embrace a regional vocational stream have been rolled out (for example, the Narrabri Make-It-Work model). The success of such projects has depended on identifying the skills needs of the region and systematically deploying individuals into employment and training across regional industries. The enabling conditions of the vocational stream are evident: community groups (particularly the local council), industry experts and educational institutions identify common cross-industry capabilities (for example, machinery operation in agriculture and mining) and commit to providing educational progression (for example, via a Certificate III in Rural Operations) as well as brokering occupational mobility.

Such models show what is possible, but not necessarily likely. While building a regional vocational stream holds great potential, at each site there are significant threshold questions about getting local stakeholders (particularly employers) to accept, promote and commit resources to a capabilities approach to regional careers.

Community services and healthcare – imperative to improve scope for collaboration in areas of client and patient need

There are clearly recognised occupational links in areas such as care work, nursing, and allied health. These links have been identified in projects which focus on expanding the scope of practice of some workers; use an assistant workforce to support more highly qualified staff; and promote the use of generalist workers who possess knowledge across more specialised domains. Yet in this sector, concerns over skills dilution, quality of care and client outcomes, and occupational boundaries and regulation make the adoption of a vocational stream approach more difficult. Changes in the models of care (for example, developed by the NSW Agency of Clinical Innovation) that leverage these links must take account of, and evaluate the impact on, all staff, client outcomes and cost-effectiveness. Importantly, stakeholder collaboration from the outset (between government, occupational, executive, community services, educational and client groups) is critical to the success of the development and roll-out of new models of care. In health, reform is most likely to succeed if guided by the principle ‘patient-centred, clinician-led’, with an explicit rejection of the objective of promoting skill dilution in the name of cost control.

Financial services – dynamic vocational streams, with potential further gains from improved information sharing

The financial services sector exemplified a number of active vocational streams, with several areas identified as viable in this regard, including financial advice, accounting, and asset management. These vocational streams were characterised by strong levels of horizontal and vertical mobility, both within and between firms. The sector is dominated by large employers, who showed strong commitment to career planning, with investment in formal and informal education and training, and progress reviews used to set medium-term career objectives.

Despite no explicit forms of stakeholder cooperation, we argue that, given strong interfirm mobility and weak links between qualifications and career progression, a tacit model of capability development exists. Given the implicit trust that exists between employers, it seems likely that improved information-sharing arrangements (indeed between competitors) might further enhance and coordinate workforce capability.

Vocational labour markets – a new public good?

The findings from this research suggest that coherent external labour markets could be built on the notion of vocational streams. We call this concept a ‘vocational labour market’, which is defined as the labour market for a set of related occupations that share a common set of underpinning knowledge and practices. Our research suggests that such a vocational labour market is most likely to succeed within a geographically localised region or across large organisations within an industry. Importantly, the social actors within such a vocational labour market have a critical role in articulating common goals in workforce capabilities.

A vocational labour market differs from both a traditional internal labour market and an occupational labour market, but possesses traits from both.

The stability of traditional internal labour markets and occupational labour market structures is of declining relevance to Australian workers, most of whom work outside these traditional modes (Grimshaw et al. 2001). Yet, like a traditional internal labour market, a vocational labour market could foster a modern notion of employment security and career progression — not with one employer on a predictable job ladder, but across a range of related occupations, allowing individuals to move horizontally across their field of practice, or vertically into higher levels of technical/supervisory competence. Similar to a traditional occupational labour market, there is an understanding of the core skills and knowledge required to flourish within the field of practice; however, unlike a traditional occupational labour market, it is not necessary for the boundaries around the vocational stream to be anchored in narrowly defined qualifications validated by groups of highly specialised peers.

There is no guarantee that nascent vocational labour markets will flourish in the future. Challenges and risks arise in defining a vocational stream, and particularly for both employers and individuals in relation to who is responsible for adequate skill formation and training quality across a range of related occupations. Investment in these workforce capabilities is likely to be sub-optimal, as neither employers nor employees can be guaranteed a return on their investment. As with traditional occupational labour markets, an argument must be made for strong institutional intervention — either in the form of effective collaboration (and investment of resources) amongst stakeholders, including employer and employee groups, and/or with the investment of public funds to support the development of vocational capabilities.