The dynamics of qualifications: implications for VET

Description

Changes in the qualification profiles of workers is one indicator of changes in the supply and demand for education and training. VET qualifications are now more frequently held in many occupations which previously required no post-school qualification and many that previously required VET now require higher education. The study also shows a general mismatch between the skill level (and relevance) of the highest qualifications held by workers and the level of skill for the job, with many more workers holding qualifications that exceed the skill requirements for their occupation. The emerging need for flexible reskilling and upskilling based on skill sets or micro-credentials may drive future demand for VET; the sector is already well placed to provide this efficient and cost-effective training.

Summary

About the research

Changes in the qualification profiles of workers is one indicator of changes in the supply and demand for education and training. Using Australian Census data on highest qualification held (which may understate the incidence of VET qualifications if they were obtained after completing higher education) this project analyses how tertiary qualification profiles in occupations changed between 2006 and 2016. Data from the 2015 Survey of Qualifications and Work, conducted by the Australian Bureau of Statistics (ABS), are also used to examine how well qualifications match workers’ occupations.

A specific focus of this analysis is on changes in the proportions of workers with vocational education and training (VET) qualifications.

The analysis finds that, over the last decade, the overall workforce has become more educated: the proportion of workers holding VET or higher education qualifications has increased, while the numbers and proportion of workers without post-school qualifications has correspondingly decreased.

The study also revealed a general mismatch in terms of the skill level (and relevance) of the highest qualifications held by workers and the level of skill required for the job, with many more workers holding qualifications that ‘exceed’ the skill requirements for their occupation. While this may indicate underutilisation of skills and therefore sub-optimal returns on public and private investment in education and training, the study does not consider the broader social and economic benefits of having a more highly educated and skilled workforce.

As the study noted, changes in the mix of VET and higher education qualified workers in the workforce can be influenced by changes to industry regulatory requirements, credentialism and supply-side factors rather than occupational demand per se. In particular, supply-side influences such as higher education funding policies, combined with young people preferencing higher education over VET, are key factors in the changing distribution of the qualification profiles within the workforce.

Key messages

• The supply of qualified workers rose sharply between 2006 and 2016, with around two-thirds of all workers in 2016 holding a post-school qualification compared with just over half (55.5%) in 2006.
• The largest increase in post-school qualifications was for higher education qualifications (33.5%), followed by diplomas (19.6%) and VET certificates (5.3%).
• Younger workers are more likely than older workers to have higher education qualifications, while older workers are more likely to have VET qualifications.
• All major occupational groups experienced a rise in the proportion of higher education-qualified workers.
• Occupations with the largest shifts out of VET qualifications were ambulance officers and paramedics, dental hygienists, technicians and therapists, and medical imaging professionals, with the share of VET-qualified workers in those occupations declining over the 10 years.
• VET is playing an increasingly important role in providing formal skills development for several occupations that have historically been dominated by workers without post-school qualifications, such as truck drivers, storepersons, kitchenhands and labourers.
• In the largest 20 occupations, a key driver of the growth in the supply and demand for higher education qualifications has been the ongoing professionalisation of occupations such as primary school teachers, registered nurses and accountants.
• Workers holding a VET certificate reported the closest match between the qualification undertaken and relevance to their job (90.3%).
• Technical and trades workers with VET certificates and professional workers with diplomas were more likely than other occupational groups to be working in the same field of study as their highest qualification level (82.4% and 72.6% respectively).

Executive summary

Changes in the qualification profiles of workers are one indicator of changes in the supply and demand for education and training, with associated implications for education and training provision and fulfilment of industry needs. Changes in the mix of workers with vocational education and training (VET) and higher education qualifications may also reflect changes in the labour market, as well as regulatory requirements, credentialism and supply-side factors, rather than occupational demand per se.

This project analyses how tertiary qualification profiles in occupations changed between 2006 and 2016. We use 2006 and 2016 census data for occupations at the 4-digit ANZSCO level and employed persons’ highest level of non-school qualification. A fundamental limitation of census data is that some workers may hold both a VET qualification and a higher education qualification, but only the latter is recorded, even if it is not the most recent qualification. Data from the 2015 Australian Bureau of Statistics (ABS) Survey of Qualifications and Work (SQW) are used to determine how well workers’ qualifications match their occupations. Further supplementary analyses draw on the 2018 ABS Labour Force Survey and unpublished data from the 2018 NCVER National VET Provider Collection.

The dynamics of qualifications by occupation

In terms of absolute numbers of people employed, the census data showed that the most substantial growth in employment over the period was for community and personal service workers (44.3%) and professionals (31.3%), with all other major occupational groups experiencing growth of between 6% and 16%. This change in employment has affected the overall composition of the workforce, such that the overall proportion of community and personal service workers in the workforce has increased by 22.9%, with professionals rising by 11.8%. The proportion of all other occupational groups has decreased accordingly.

Over the 10 years from 2006 to 2016, there was a definite shift in the distribution of highest qualifications held by workers overall, as well as within major occupational groupings. Workers holding higher education qualifications accounted for the largest increase over the period, in both proportional (33.5%) and absolute terms (1.2 million). The proportion of the total workforce with VET qualifications (as their highest level of credential) increased by 9.5%, with the number of workers holding a diploma-level qualification increasing by 19.6% and those with a certificate-level qualification increasing by 5.3%.

Within each major occupational group, the proportion of workers holding higher education qualifications increased, while the number of workers who had no post-school qualifications decreased. Also, the proportion of workers with VET diploma qualifications increased in all major occupational groups, except professionals.

The largest increases in the proportion of workers holding a certificate-level qualification were for those in the lower-skilled occupational groups of machinery operators and drivers, and labourers, where the large majority of these workers do not hold a post-school qualification. For these two categories, however, the greatest increase by far in the number and proportion of workers with a post-school qualification was for both higher education and diploma qualifications.

How well do qualifications match occupations?

The 2015 ABS Survey of Qualifications and Work shows that the closest match between qualification held and the level of qualification considered ‘most relevant to their current job’ is for workers holding VET certificates (90.3%), followed by workers with higher education qualifications (78.6%) and those with diplomas (60.8%).

None of the workers surveyed indicated that the most relevant qualification for their job was higher than the one they held.

The Survey of Qualifications and Work also indicates that workers with a VET qualification in the technicians and trades category are most likely to be working in the same field as their field of study, relative to all other qualification levels and occupations. The three categories of machinery operators, labourers, and sales workers are the least likely to work in the same field.

VET certificate holders were much more likely than diploma and higher education graduates to report that the main reason for working outside their field of qualification was that staying in their field of qualification would have meant a pay cut. On the other hand, a lack of available positions was the main reason reported by nearly half (48.8%) of higher education graduates, but by only 17.1% of diploma holders and 34.1% of certificate holders.

Government-funded VET qualification completions were investigated in the occupations with the largest absolute growth in the number of employed as captured by the census. Completions in VET qualifications for some occupations traditionally associated with VET showed a direct positive relationship with growth for some occupations but not others. Some occupations with a negative relationship between the number of VET completions and absolute growth have experienced regulatory changes to minimum qualification standards, for example, child carers and nurses, while in others, higher education has become more prevalent in general.

Most of the individuals who completed VET programs relevant to the occupations with the largest absolute growth had no post-school qualifications before undertaking their programs. Individuals training for lower-skilled occupations were generally younger than those training for professional and management occupations, although there were some differences in age profiles by gender.

The dynamics of qualifications within occupations

The study analysed the qualification profiles of the largest 20 occupations by overall employment size. Most of these occupations would generally require a VET qualification rather than a higher education qualification. While they account for about 30% of all employed people, these occupations are not necessarily experiencing the most change in their proportions of workers holding VET qualifications.

Of the 20 largest occupations, all had an increase in the proportion of workers holding higher education qualifications and a decline in the proportion of workers with no post-school qualification. Some of these occupations had a decline in the proportion of workers with VET qualifications (often from a low base), which can be attributed to changes to the minimum education requirements for that occupation. Examples of occupations now generally requiring higher education include registered nurses, primary and secondary school teachers and accountants.

Amongst the 20 largest occupations in 2016, not only did all of these occupations have increases in the proportion of workers with higher education qualifications, but in some cases (for example, child carers and waiters) the proportion of workers with higher education qualifications grew more rapidly than the proportion with a VET qualification as their highest level of education. Some care needs to be taken with interpretation, as some of the workers with higher education qualifications may also have gained a VET qualification.

An analysis of government-funded VET completions between 2007 and 2016 showed that the proportion of all VET graduates also holding a higher education qualification remained stable from 2007, albeit with an upswing after 2015. Within VET childcare qualifications, however, the proportion of graduates also holding a higher education qualification doubled over the period, to represent 9.0% of all VET childcare graduates in 2016. This pattern illustrates the impact of ‘regulatory’ drivers on supply and demand (in this case, as a result of new accreditation requirements for childcare centres to employ staff with relevant VET qualifications).

Age and gender differences

The dynamics of the distribution of VET qualifications are more pronounced for younger workers than older workers. There were also much larger increases in the proportion of younger workers with higher education qualifications in all occupations compared with older workers. Even in occupations dominated by one gender, the distribution of qualifications in each gender is usually similar.

Implications for VET training

The findings show that VET is being ‘crowded out’ by higher education, a development that may signal overqualification: in a tight labour market, overqualification may reflect credentialism and qualification inflation. Data from the Survey of Qualifications and Work suggest that these phenomena occur more frequently in some fields than others but appear to be least prevalent in non-professional fields.

While census data show that the greatest rise in VET qualifications is at diploma level, more recent enrolment data (2015—18) indicate marked declines in diplomas and certificate IV qualifications. Note that apparent demand for diploma enrolment trends is significantly distorted by the changes to student loans during this period, meaning that the underlying demand pattern may not be known for some years. Nonetheless, the recent trend highlights potential longer-term implications for the relevance and utility of higher-level VET credentials in the workforce.

The patterns of change suggest that future demand for VET will be underpinned by certificate-level VET for school students, entry-level roles, trades and non-professional occupations in high-employment growth sectors such as the human services. Further, while census data demonstrate that younger workers are more likely to hold higher education qualifications, previous research has suggested that they may require additional VET qualifications to compensate for their lack of experience.

While this study analysed full qualifications only, future demand for VET may also be driven by the emerging need for the workforce of the future to reskill and upskill, by undertaking training based on skill sets or micro-credentials rather than completing full qualifications.