Making the grade? Globalisation and the training market in Australia - Volumes 1 and 2

Aim of study

Current conventional wisdom holds that the forces of globalisation are profoundly reshaping the nature of economic life in general and working life in particular. It is often asserted that institutional arrangements which may have worked in a previous age are no longer workable today. Furthermore, it is generally assumed that change, in particular the greater reliance now placed on market mechanisms, is required to meet the new challenges. The primary objective of this project has been to assess the validity of these assumptions, especially as they concern the field of vocational education and training (VET). Two questions in particular have been addressed:

• How does the industry training market actually operate in contemporary Australia?

• How well does the training market meet the needs of employers grappling with the challenges of globalisation?

Structure of report

The report is divided into two volumes. Volume one is a 'synthesis' report where the findings are integrated and the key implications of the research are examined. Details of the findings resulting from the regional industry case studies of the training market in action are reported in the appendix to volume 1. Statistical material and the findings of other desk-based research have been consolidated in a series of technical notes in volume 2.

Methodology

The approach adopted to address these questions has been highly empirical. Instead of examining 'globalisation' at large, it focusses very precisely on how the processes of closer international economic integration have worked themselves out in two industries: one 'traditional ' and one 'new' metal and engineering and information technology, respectively. Each was selected because they are commonly recognised as playing a major, if not the leading role in different stages of economic development.

In order to focus the study even more precisely, these industries were examined in two specific localities: South West Sydney and the Hunter, in the case of metal and engineering; South West Sydney and the Central Coast of New South Wales, for information technology. This research design made possible close examination of how the forces of 'training demand' and 'training supply' are operating to meet the needs of employers; that is, those with the greatest responsibility for meeting the challenges of increased international economic integration.

The strategy of undertaking a study of these industries and their training markets at the aggregate, national level was rejected in favour of an approach that combines analyses of the performance of the training markets in a number of specific labour market settings, with consideration of developments at the national level. This strategy offered a number of advantages including:

• the on-the-ground impact of training policy reforms can be more easily assessed

• the differences in demographic, economic and infrastructure conditions becomes integral to the analysis

• the examples of successful (and less successful) adaptations to globalisation can be described

The analysis is not purely data driven. The categories of analysis used in the research have been derived from a critical assessment of the literature on globalisation, especially as it concerns work and VET issues. A comprehensive analysis of the literature is provided in volume 1.

Key findings

Current contexts and challenges

An examination of the operation of training markets in each of these industries necessarily requires an understanding of the labour market in each. Consequently, key characteristics of both industries, and the challenges they currently face is described.

Australian metals and engineering firms have become increasingly exposed to the forces of globalisation. A new and intensely competitive environment constitutes the major challenge facing Australian metals and engineering firms. Training policy therefore must be understood in the context of this more competitive environment.

The information technology (IT) industry is expanding rapidly and IT workers are dispersed throughout all industries. Defining the training needs for such a diverse group of workers in an environment where technology changes rapidly has been a significant challenge for industry groups and training bodies.

While both the metals and engineering and IT industries confront key challenges which are related to, or derive from globalisation, the precise character of those challenges differs in each case. As a result, and because of the obvious differences in the training traditions, employment demands and organisational and management styles of the two industries, the particular training and skills development problems encountered in each industry differ. Nevertheless, the character and nature of many of the most significant problems are the same for both industries.

Training and skills problems in the metals and engineering industry

• increasing competitive pressure exacerbating employers' traditional failure to make an adequate commitment to training investment and skills development

• employers' lack of knowledge of:
  • the opportunities presented by competency-based training and assessment reforms
  • the means by which competency-based training and assessment can be introduced in the workplace
  • the flexibility of the new training packages
  • the means by which group training companies, networks and co-operative schemes can be used to assist in supporting training

• employers' tendency to attempt to recruit already skilled workers, or buy in skills from labour hire firms, rather than take on apprentices and trainees, or train and develop the skills of existing or new employees

• the prospect of existing skills shortages and skill gaps becoming much worse as the combined effects of declining apprenticeship numbers, less formal structured training and the outsourcing of many skilled functions impact on the labour market

• difficulties attracting high-quality school leavers to undertake apprenticeships

• the range and relevance of available courses, modules, programs and training in various competencies so broad as to be impractical for implementation

• technical and further education's (TAFE) lack of resources and capacity to provide adequate numbers of field officers or industry liaison officers to communicate with industry, thereby preventing the provision of an effective training brokerage service to employers

Training and skills problems in information technology

• employers' failure to make an adequate commitment to training investment and skills development

• employers' lack of knowledge of:
  • the amount and type of training they require
  • the opportunities presented by competency-based training and assessment reforms
  • the means by which competency-based training and assessment can be introduced in the workplace
  • the flexibility of the new training packages
  • the means by which group training companies, networks and co-operative schemes can be used to assist in supporting training

• employers' tendency to attempt to recruit already skilled workers, or hire consultants or contract workers with the particular skills, rather than take on trainees, or train and develop the skills of existing or new employees

• general and specific skill shortages in medium and high level IT

• private, vendor-provided or certified training comparatively expensive, product-specific and relatively technical

• TAFE-provided courses do not enjoy strong industry support or widespread recognition among employers of medium and high end IT skills

• a general lack of co-ordination between training providers and employers

Analysis of the fieldwork data and the conclusions drawn from discussions and interviews with respondents from both industries strongly suggest that the emerging training markets in both industries are not responding to these challenges.

The development of a training market is meant to increase the choice, relevance and cost-effectiveness of training. In both industries there is evidence that this is not occurring.

In relation to the metals and engineering training market, despite the flexible content of courses under the new packaging arrangements, the capacity of employers, trainees and apprentices to access workplace-relevant courses is constrained. This is attributable to several factors, including the limitations of TAFE colleges (class sizes and teacher availability), the inability of private providers (for reasons of cost, complexity etc.) to respond, and finally to a perception within the industry that behind the marketisation push lies a determination by government to withdraw from the public funding of VET.

Within the IT industry the existence of public and private providers purports to provide enhanced training choice. However, concerns over the cost, breadth and portability of private vendor-provided and licensed training have been expressed. On the other hand, TAFE is having difficulty gaining industry acceptance, and reservations remain over the practical competency of many university graduates.

These findings raise serious questions about the appropriateness of current policy settings. Training reforms need to extend beyond the facilitation of industry training markets. In particular, future reform needs to build on previous initiatives to establish new mediating structures that enhance co-ordination between all the elements of these industries' skill formation systems. Trying to make the industry training markets 'work better ' will not address the key challenges identified above.

Implementation of competencies, New Apprenticeships and the training packages

Competency-based training and assessment, as well as flexibility, a key characteristic of the new packaging arrangements for training, offer the promise of significant improvements to the delivery and use of VET in Australia. However, the research for this project has indicated that the promise of these reforms has not been realised. The failure of the industry training market approach to reform (at least in the two industries examined) in meeting the challenges of globalisation remains the major problem. However, a series of problems associated with the implementation of competency-based training, New Apprenticeships and the training packages have also been identified.

Problems with competency-based training, New Apprenticeships and the training packages in metals and engineering

• the full implementation of competency-based training and assessment too difficult for most workplaces

• workplaces generally poorly prepared to accommodate the workplace focus, which is an integral feature of the new training package

• employers and some training providers suspect that training under the new packages will not be comprehensive or coherent

• the potential of the New Apprenticeship scheme to remove resources from the training of existing employees

• the competency-based system has established a full range of qualifications but there remains limited demand for lower-level training

Problems with competency-based training, New Apprenticeships and the training packages in information technology

• employers and private providers sceptical of the applicability of competencies in IT training

• many units of competency contained in the IT and administration training packages seen by employers and some training providers as too vague

• competency-based training and assessment often used for reasons other than improving training quality or delivery

• New Apprenticeships sometimes seen and treated as employer subsidies rather than as commitments to training

• IT training packages may not articulate satisfactorily with vendor-provided and licensed training

• possibility of employers and trainees undertaking training programs fully utilising the flexibility of packaging arrangements being frustrated by the absence of satisfactory institutions to assist in the design of those programs

Conclusions

The report identified a series of challenges associated with globalisation and a series of problems associated with the implementation of some of the most significant elements of recent training policy reform.

While the challenges of globalisation and those of training reform implementation are very different (both impacting in different ways in each industry), the analysis of the issues and the fieldwork research signal the need for better co-ordination structures across both industry training markets.

The conclusion of this report is that the problem is not simply one of inadequate or deficient implementation. Rather the challenge is much deeper: it concerns system design. Many of the reforms surrounding the push to an 'industry training market' assume that price is capable of providing an adequate and efficient co-ordinating mechanism. This study reveals that too much is expected of this mechanism. While it can play a role, it needs to be supported by a range of more dynamic and effective mechanisms. Successful mechanisms tend to be regional and industry specific. They enjoy the active participation of firms often in a network or co-operative arrangement. They allow training needs and burdens to be shared. These mechanisms deserve close scrutiny and active government support.

Furthermore, reforms to vocational education need to be located within the context of a wider framework of business development geared to achieving success in a globalising economy. Unless training reform pays closer attention to the business realities of success it is likely to hinder rather than help Australian firms meet the competitive challenges of our times.