What are the longer-term outcomes for individuals completing vocational education and training qualifications?

This study aims to assess the longer-term effect for individuals of completion of vocational education and training (VET) qualifications. Specifically, its purpose is to identify how VET graduates employment and education outcomes change over time after they complete their qualifications. Less is known about these longer-term outcomes than the short-term ones, since existing data provide considerable information about the immediate post-course activities of graduates.

Evidence on the post-course activities of the VET sector's graduates, such as their employment and further education participation rates, are used in this report as indicators of the VET sector's outcomes. Quite clearly, this focus on activities is limiting it excludes many other important, potential outcomes for individuals from participation in VET courses, as well as other economic, social and cultural outcomes for the community that go beyond those measured by the post-course activities of individuals. Nevertheless, the measures used are of considerable importance to its current and future students and to policymakers who provide public funds to the sector.

This study uses the 1993 Survey of training and education experience (1993 STE ) and the 1997 Survey of education and training experience (1997 SET ) collected by the Australian Bureau of Statistics (ABS) to identify the employment and education outcomes of individuals who undertook VET courses as they aged or gained more labour market experience. The two surveys provide two observations of the immediate experiences of recent graduates and of graduates from earlier years. At the same time, they provide two observations of individuals from the same cohorts at two different points in time. That is, the data allows the identification of the paths followed by different cohorts of graduates through time and their activities at any point in time. The fact that different individuals from a cohort are observed in the two surveys does not preclude estimation of these cohort effects, since the data are representative samples of the Australian workforce.

In this report, associate diploma graduates outcomes are compared with those of individuals who completed Year 12 but completed no further education qualification. The outcomes of skilled and basic vocational qualification graduates are compared with individuals who did not complete Year 12 and did not undertake any post-school qualifications. The key results of the analysis follow.

1. Completion of VET qualification improves the full-time employment outcomes of graduates compared to individuals who do not undertake post-school qualifications.

Completion of a VET qualification effectively provides a two-tiered benefit to individuals. It increases the likelihood that they will work full time. Then, among those working full time, it increases their wage, occupation and permanent employment outcomes.

The full-time employment outcomes achieved by individuals who complete a VET qualification are significantly higher than their relevant comparison groups immediately after the groups enter the labour market. The VET qualifications appear to smooth the transition to full-time employment for graduates. Over time, differences between the employment outcomes of VET graduates and the comparison groups narrow, as the outcomes of the comparison groups improve.

2. Male VET graduates appear to enjoy more substantial immediate benefits from completion of their qualifications than do female graduates, with differences in the impact of completion of a skilled vocational qualification lying at the heart of the divergence in outcomes. Further out from their courses, life-cycle factors also push male and female outcomes to diverge.

The presence of children in their household pushes female outcomes down by more than males, while being married pushes male outcomes up more than female ones.

3. The actual fields in which VET graduates complete their qualifications also have an impact on their outcomes, with some fields providing outcomes almost 20 percentage points lower than those of the business field.

These differences between fields exceed those between VET qualification levels.

4. People with a disability, people who live in non-metropolitan regions of Australia, and people from non-English-speaking backgrounds experience poorer full-time employment rates than other groups in Australia. However, there does not appear to be a VET-specific element to these outcomes.

That is, the outcomes from VET participation for these groups appear no worse than other groups once their pre-existing levels of disadvantage are taken into account. Older women may have poorer outcomes from VET than younger ones, though the opposite is true for male graduates. The small number of individuals who undertake their VET-level qualifications through Industry Skills, Skillshare or other government training centres (and tend to complete basic vocational qualifications) have worse employment outcomes than VET graduates from other providers.

5. Individuals who complete VET qualifications and work full time tend to enjoy higher wages, work in higher status occupations and have higher rates of permanent employment than members of their comparison groups.

However, the profiles of these outcomes and the time since individuals completed their studies differ between the outcomes. The wages of VET graduates and the comparison groups converge, while the occupational outcomes diverge and the difference in the proportion of permanent employees remains constant.

6. VET graduates appear less likely to be studying at any point in time or to have recently undertaken a training course than university graduates in the data sets used in this report.

Consequently, a lower proportion of them is estimated to have completed a follow-up qualification within 15 years of completing their initial qualification (20% of VET graduates compared to 40% of university graduates). Participation in education falls with the time since individuals completed their previous education, but completion of a training course rises, at least up to 15 to 20 years after individuals completed their formal education. About half of all VET graduates who are studying at any point in time study in a TAFE, with a similar proportion choosing to undertake their further studies in the same field as their earlier one.

Unresolved issues

One important finding of this report is that the unemployment rate at their time of entry to the labour market has a permanent negative effect on the full-time employment rates of male cohorts. Although it supports the findings of at least one other Australian study of labour market outcomes, further work on the issue is probably necessary to confirm it. If validated, the importance of governments pursuing policies and programs that facilitate labour market entry during economic downturns is clear.

Other results presented here point to further questions. For example, a key element of the difference in full-time employment outcomes between males and females was directly related to the value provided by the VET qualification to males compared with females. There were also considerable differences in longer-term employment outcomes between fields of study.

An important question is whether these differences in outcomes reflect differences in the learning experience provided by VET to males and females (or between courses in different fields), structural characteristics of the labour market, or the existence and operation of formal institutions that aid transitions to full-time employment. Identifying the contribution of these factors to these differences in employment outcomes would provide a better basis for improving employment outcomes for females and those from low-performing fields.

Finally, the evidence in the data used here suggests that participation by VET graduates in further education and training is lower than university graduates and possibly lower than Year 12 completers. This appears to be the case for both recent graduates (other than the most recent male university graduates in 1997) and those who completed their qualifications longer ago. If the results of this report are validated by further work to clarify some of the participation figures, the reasons behind these different participation patterns in further education and training need to be identified. An understanding of whether these differences are driven by differences in the way learning skills are developed between the sectors, in views on the importance of skills upgrading and lifelong learning between graduates of the sectors or in the economic forces that shape the jobs of the sectors graduates differentially would help identify an appropriate response. The first two factors are obviously more amenable to influence by the VET sector itself. If they are important in explaining the difference in participation in further education and training between the sectors, action within the VET sector can help expand its own market by developing the skills and shaping the attitudes to learning of its present student base.