Linking qualifications and the labour market through capabilities and vocational streams

By Leesa Wheelahan, John Buchanan, Serena Yu Research summary 15 June 2015 ISBN 978 1 925173 15 4


This report synthesises the findings from the three-year program of research - Vocations: the link between post-compulsory education and the labour market. The authors explore how building better links between education and work can help provide a more coherent approach to vocational development. They propose the use of vocational streams and productive capabilities in the education system and labour market to achieve this. The authors also highlight a number of short-, medium- and long-term policy objectives.

A recording of the webinar Vocational streams: linking qualifications and the labour market held on 23 September 2015 is available for viewing from our Webinar series page


About the research

Qualifications are used differently across occupations. In some they are used to signal that a graduate has the skills required for a regulated occupation and in others they may be used more generally to screen applicants for jobs. However, there are many graduates who do not end up in the intended occupation of their qualification. This research is concerned with improving the links between qualifications and jobs and with opening up career options. It proposes the use of vocational streams and productive capabilities, which focus on the broad-ranging knowledge, skills and attributes that individuals need for a number of occupations within an industry.

This is the final report in the three-year program of research Vocations: the link between post-compulsory education and the labour market, which investigated the educational and occupational paths people take and how their study relates to their work. This report synthesises the findings of the three different strands: pathways from VET in Schools; pathways within and between vocational education and training (VET) and higher education; and pathways in the labour market.

Key messages

  • The researchers conclude that building better links between education and work will help to provide a more coherent approach to vocational development and in order to do this qualifications and employment need to be reformed together.
  • The following policy objectives have been identified through the research:
    • Refocus VET in Schools as a pathway to post-school VET or to apprenticeships in skilled occupations rather than a pathway to a job.
    • Differentiate the approach to tertiary education pathways based on the three purposes of qualifications: labour market entry or progression; access to higher-level studies; and widening participation for disadvantaged students. Qualifications will vary in their emphasis on these three purposes and in the way they are implemented.
    • Revise qualifications so that vocational streams are used as a structuring principle and use productive capabilities as the basis for curriculum.
    • Task communities of trust, consisting of social partners with a common objective, with identifying particular vocational streams and their underpinning capabilities.
    • Restructure industry advisory bodies to include representatives from both higher education- and VET-trained occupations to help with building trust when planning workforce development strategies.


Dr Craig Fowler
Managing Director, NCVER

Executive summary

Australians are more educated than ever before, despite reports of skill shortages occurring with monotonous regularity. The mismatches between the skills held, required and used is particularly acute for vocational education and training (VET) graduates. In 2013 only a third were in jobs directly associated with their qualification. As Tom Karmel and colleagues (Karmel, Mlotkowski & Awodeyi 2008) have provocatively asked: just how vocational is VET?

It has long been recognised that the connections between qualifications and work are complex. Jobs created in the future will be different from those of the past. It is this reality that has long informed interest in generalist qualifications such as the arts, business and science in the higher education sector. In vocational education and training it informs the endless interest in ‘generic’ or ‘employability’ skills.

Is the answer to Australia’s skills paradox more ‘generalist’ degrees and more ‘generic’ or ‘employable skills’ in VET qualifications? How realistic is this solution? Take ‘problem- solving’ skills for example. Such skills are not acquired or applied in the abstract. Handling an infant’s tantrum is very different from extinguishing a fire on an oil rig. The irony is that seemingly ‘general skills’ often require understanding the specific context for each situation — not so much the specific requirements of a particular job but rather a range of identifiable practices or other contexts relevant to the domain.

The key idea explored in this report is that there is, potentially, another level or dimension of skill that currently receives no policy support — something between the ‘generalist’ qualifications of secondary and higher education and the job-specific competencies currently delivered by the VET system. Specifically, we have tested whether a notion of intermediate specialisation, what we call ‘vocations’ and ‘vocational streams’ can provide a more useful reference point for understanding and shaping the evolution of qualifications and skills in the future.

This is a difficult topic to study. We have done so by adopting a two-stage process. First, we have explored how different types of higher education and VET qualifications are currently connected to each other and to work. This process highlighted that many of the assumptions about pathways within education and between education and work are formal in the extreme and often bear little relation to reality. This disconnect arises from policy frameworks that do not engage well with labour market realities. Given that the problem is systemic and not administrative in nature, we explored whether better connections could be achieved if a modern notion of vocation was used as a reference point for shaping the evolution of jobs and qualifications. This constituted the second stage of our project and involved a close analysis of the problems and possibilities in agriculture; community services and health care; the electrical trades and engineering; and financial services. In particular, we explored how, if at all, broader notions such as ‘rural operations’, ‘care work’, ‘engineering work’ and ‘finance work’ could, potentially, underpin the development of individuals, equipping them with deeper capabilities for adapting more rapidly to changing circumstance than is currently the case.

Guiding concepts

The following conceptual framework guided the analysis for this project.


Qualifications serve three broad purposes (Gallacher, Ingram & Reeve 2012):

  • to provide entry to or progression in the labour market
  • to move to higher-level studies within education
  • to contribute to social inclusion and social mobility in society.

Qualifications are fundamental for, but not synonymous with, workforce development. Workforce development strategies emerge from the division of labour, the deployment of skills, and opportunities to develop new knowledge and skills (Brockmann, Clarke & Winch 2011). Qualifications are embedded in different types of ‘transition systems’ — tracked or untracked — that mediate the strength or weakness of institutional links between education and the labour market (Raffe 2008).

Skills ecosystems

Skills ecosystems refer to the interdependencies of institutions and enterprises within industries or regions that generate knowledge and skill requirements for work and demand for labour. They account for the differences between regions and industries in nations in the way skill is developed and deployed (Buchanan et al. 2001).

The capabilities approach, vocations and vocational streams

Capabilities shape the way individuals live their lives and exercise choice and autonomy (Nussbaum 2000; Sen 1993). In this project the focus is on the development of individuals’ work-related capabilities. Similar to ‘generic skills’, these are not developed in the abstract; rather, they are developed in ways that help individuals to become productive in particular contexts. How education and work function to build (or limit) individuals’ productive capabilities is the core concern of this project. Given the problems noted above, this project explored whether the notions of ‘vocation’ and ‘vocational streams’ could provide a more effective basis for potentially structuring the development of human capability in education and in the labour market. A vocation is a domain of practice performed by humans as productive beings at work. It encompasses the knowledge, skills and attributes they are required to use at work. A vocation emerges from fields of practice that share commonalities in knowledge and skills (for example, the commonalities between aged care and disability care are part of the broader vocation of ‘care work’). Vocational streams refer to the structure of occupations and the way they are linked. Consisting of linked occupations that share common practices, knowledge, skills and attributes, they allow individuals to move vertically by specialising within a broad field of practice, or laterally, into related occupations. Qualifications that prepare people for the labour market using vocations and vocational streams equip individuals for broad rather than narrow fields of practice.

The guiding conceptual thread of this study is that qualifications are only one aspect of workforce development; workforce development also includes broader strategies that develop capabilities and involve the deployment of skills in the workplace, career pathways and the organisation of work.


Overall findings

The labour market profoundly structures individuals’ educational trajectories, including their transitions from VET in Schools and flows within, and outcomes from, tertiary education. The connections are, however, complex and often non-linear. Current VET qualifications are based on competency-based training, which assumes a direct link between qualifications and jobs: individuals are trained for specific workplace tasks, and VET qualifications codify this, with Karmel, Mlotkowski and Awodeyi (2008) having established that the reality is very different. Assuming a direct linear connection exacerbates skills mismatches because narrowly focused qualifications and training are the result. This project found that vocational streams could, potentially, provide a better frame of reference for shaping the evolution of qualifications and jobs. The development of such streams would provide graduates, especially VET graduates, with more transferable skills, giving them the capacity to better adapt to changing labour market circumstances. This in turn would ease the difficulty faced by organisations when sourcing the labour they need as business circumstances change.

VET in Schools

Currently VET in Schools does not provide students with good-quality transitions to the labour market, post-school VET or higher education. This occurs because the low level of VET in Schools qualifications (that is, certificates I and II) are of limited worth both in the labour market and for progression to higher-level studies. The research into pathways from VET in Schools proposes changes to ensure its primary purpose is linking students to a post-school VET pathway or to skilled apprenticeships. In addition, it is proposed that vocational education be more firmly embedded in the school curriculum more generally and incorporate meaningful workplace learning opportunities for all students.

VET-to-higher education pathways 

The actual educational trajectories of students are very different from those mapped out in formal VET-to-higher education pathways policies. While all qualifications serve three purposes (as outlined above), how they do so varies according to the labour market context. Four broad qualification types were identified. They vary in how the qualifications are linked to each other and to the labour market.

  • Type 1 qualifications have strong links between qualifications within the same field of education but weak links to occupations that are mostly unregulated; these are exemplified by business studies.
  • Type 2 qualifications have strong links between qualifications within the same field of education, strong links to occupations and strong occupational pathways; these are exemplified by nursing.
  • Type 3 qualifications have weak links between qualifications within the same field of education, strong links to occupations but weak occupational pathways; these are exemplified by the electrical trades and electrical engineering.
  • Type 4 qualifications have weak links between qualifications within the same field of education and weak links to occupations; these are exemplified by the pure disciplines or the liberal arts and sciences.

This suggests that a more differentiated approach to developing pathways is needed: each type of qualification would emphasise their three purposes in different ways, depending on their relationship to the labour market and whether the qualifications were used as a signal or screen in that field.

Pathways in the labour market

The empirical work on how people move between jobs found little correspondence between the career paths mapped out in instruments such as modern awards, and the actual career trajectories of individuals. Instead, it found deep segmentation in flows of labour, which differed in form between the four sectors studied: agriculture, care work, engineering and finance. The research found that the potential for notions of ‘vocation’ and ‘vocational streams’ to provide better guidance for the development of human capability varied greatly between the four sectors. It identified that two conditions are needed if vocational streams are to help overcome the deep segmentation in these sectors. First, there need to be commonalities in the practices, knowledge, skills and personal attributes shared by practitioners across related occupations. Second, the social partners (employers, unions, professional, occupational and accrediting bodies, educational institutions and government) need to be prepared to collaborate on the development of pathways between such related occupations.

The extent to which these conditions exist varies between industries. The researchers paid particular attention to the fact that structured internal and occupational labour markets are not as prevalent as they once were. They proposed ‘vocational labour markets’ as a potential solution to problems in career structures in external labour markets. A vocational labour market is defined as the demand for and supply of related occupations, those that share common underpinning knowledge, skills and practices. The researchers argued that, since vocational labour markets would result in the provision of higher levels of transferable skills than would otherwise be the case, they have the characteristic of a public good. However, without government support — regulatory as well as financial — individuals and employers are unlikely to invest in the development and maintenance of such arrangements.

Implications for policy

The recommendations in this report have short-, medium- and long-term objectives for policy. This strategic approach allows progress to be made while at the same time providing a framework for marshalling social consensus among the social partners, along with the resources needed to sustain deeper changes over time. The short-term recommendations are (a) to build sustainable models of VET in Schools; and (b) to develop a more differentiated approach to the creation of educational pathways within and between VET and higher education, the aim being to reflect the way qualifications and pathways are used in the labour market. The medium-term objective is to renovate VET qualifications to produce ‘adaptive capacities’ for work. The longer-term objective is to improve the relationship between education and work by supporting the development of what we call vocational pathways (or streams) using the notion of ‘vocational development’. Change at this level will, necessarily, take considerable time. Reform within particular domains can, however, commence sooner, especially where the communities of trust necessary for successful reform already exist. 


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