Issues affecting skill demand and supply in Australia's education and training sector - Report

Executive summary

The requirements for skills in Australia are changing rapidly, reflecting the economic and social impact of developments in Australia's economy and those of the rest of the world.

In recent years the demand for skills has been influenced by the growth in part-time and casual employment, indicating the increasing importance of the service sector. The pool of part-time and casual employment has been expanded by increasing numbers of high school and tertiary students working part time while studying. Labour market changes have been accompanied by increased demand for higher level skills. At the same time, the actual number of people employed in lower skilled occupations has increased, although aggregate hours worked by lower skilled workers has declined.

Advances in information and communication technologies (ICT) have meant a change in workplace practices with most workers now requiring basic computing skills. In addition, employers expect all workers to demonstrate proficiency in both occupation-specific and generic skills. There is also the expectation that the employee will take on more of the responsibility for upgrading their skills. There is also an increased demand for high-level cognitive skills.

In line with most Organisation for Economic Co-operation and Development (OECD) countries, the Australian workforce is ageing. The ageing of the workforce has implications for the provision of education and training and the relative demand for entry-level training compared to the demand for education and training related to upskilling and retraining.

The demand for education and training is influenced by the changing industrial and occupational employment profile of the economy and the ageing of the workforce, including the lifetime career changes made by individuals as they age. About two out of every five school students over 15 years of age are employed, with employment predominantly in service sector industries such as retail trade and accommodation, cafes and restaurants. As they age, people will tend to move into other occupations with a diversity of training needs.

The likelihood of employment, job security and earnings all vary with the level of educational attainment. Completing senior secondary school or acquiring a basic vocational qualification is no longer adequate education and training for lifetime employment.

With post-compulsory education now an important requirement for gaining entry to the workforce, it is of no surprise to see school retention rates at high levels, with marked increases from those in previous decades.

Despite this, growth in post-compulsory education and training in Australia in recent times has been mixed. Strong growth in vocational education has resulted in participation levels rising steadily in recent years, from 8% in 1994 to more than 11% by 2000.

Following strong growth in the early-to-mid-1990s, growth in higher education has slowed, causing participation levels to stabilise at just over 4% since 1997. It should be noted that, without recent surges in apprenticeship and traineeship numbers, growth in general vocational education participation would have been much less.

Against this background, overall numbers of vocational education and training (VET) students would need to grow from 1.74 million in 2000 to an estimated 2.18 million by 2020 to maintain the current level of participation (11.4%). At the same time, the number of higher education students would need to reach 871 000 (from 695 000) to maintain a participation rate of 4.6%. Future growth in post-compulsory education and training will become increasingly reliant on older people commencing or returning to some form of education and training.

In terms of outcomes, completion of post-compulsory education and training generally appears to deliver good employment outcomes. Within higher education, over 80% of graduates available for full-time employment found employment within five months of completing their course. This compares with around 73% for VET in general, and about 93% for those people who fully complete their apprenticeship or traineeship. However, no analysis has been possible to ascertain what skill attainment on its own may deliver in terms of employment outcomes, when compared with those without qualifications or without the necessary competencies.

In international terms, overall participation of 15 to 19-year-old Australians in all forms of education is 80.3%, just above the OECD average of 76.9%. This puts Australia's ranking at 13 out of the 29 OECD countries.

Australia has world-leading levels of participation amongst people aged between 30 and 50 years of age. Australia ranks equal second among the 29 OECD countries in participation of 30 to 39-year-olds, and first for those aged 40 years and over. In both cases, participation greatly exceeds the OECD averages. These rates of participation, however, include students studying part time, and it should be noted that Australia has a higher incidence of part-time students than most countries, particularly amongst older persons.

While Australia appears to have relatively high levels of participation, especially amongst older people, this has not translated into comparatively high levels of overall educational attainment. Although Australia has a high rate of university attainment by international standards, its performance in secondary education attainment is mixed. As a result, overall educational attainment in Australia is lower than the OECD average.