The impact of disadvantage on VET completion and employment gaps

Educational attainment tends to be lower and labour market outcomes poorer among disadvantaged individuals. Here ‘disadvantage’ refers to those who have any form of disability, Indigenous Australians, those who live in low socioeconomic status (SES) areas and those with limited English language skills. The vocational education and training (VET) sector provides an entry point into post-compulsory education for disadvantaged individuals, and in doing so gives them the opportunity to develop skills and knowledge of immediate usability in the labour market.

But do disadvantaged students gain the same benefit from participating in vocational education and training as their non-disadvantaged peers? More specifically, how do their qualification completion rates and post-VET labour market experiences compare? Previous research, including recent work undertaken by the National Centre for Vocational Education Research (NCVER; Griffin 2014), suggests that individuals from some disadvantaged backgrounds tend to have poorer outcomes in both respects. 

Taking advantage of the National VET Provider Collection and the Student Outcomes Survey, this work builds on previous research by investigating the impact of belonging to one or more of these disadvantaged groups on VET completion and on subsequent employment outcomes. The authors find that sizeable gaps in both completion and employment rates (post-VET completion) exist between the disadvantaged individuals and their non-disadvantaged peers.

Key messages

• Learners from disadvantaged backgrounds who enrol in VET are less likely to complete by comparison with their non-disadvantaged peers. The completion gap is as much as ten percentage points for Indigenous students and those experiencing multiple disadvantage, and as low as two percentage points for those with limited English language skills.
• Most of these completion gaps can be explained by differences in individual characteristics beyond the disadvantage (for example, age, gender) and course characteristics (for example, field of education, course duration).
• For some disadvantaged learners, completion gaps do not necessarily directly accord with employment gaps; for example, individuals with limited English skills have the greatest difficulties in finding a job, with the gap for non-disadvantaged peers estimated to be around 36 percentage points.
• Employment status before starting the VET course, not actually completing the course, is a key factor in determining employment outcomes post-VET. Therefore, policies or measures aimed at closing the completion gap may not, in themselves, be effective in closing employment gaps.

Dr Craig Fowler
Managing Director, NCVER

Vocational education and training (VET) provides individuals with skills and knowledge of immediate usability in the labour market. This function of VET may be more important for particular groups of students such as Indigenous students or those with a disability; that is, students whose education and labour market opportunities might otherwise be more limited.

But do such disadvantaged students benefit from participating in vocational education and training to the same degree as their non-disadvantaged peers? More specifically, how do their qualification completion rates and post-VET labour market experiences compare? The existing evidence suggests that students from some disadvantaged backgrounds tend to have poorer outcomes in both respects. 

In this report we examine the issue of VET completion gaps and the subsequent gaps in labour market outcomes for students from four (not mutually exclusive) disadvantaged groups, namely:

• students who report having any form of disability
• Indigenous students
• students who live in low socioeconomic status (SES) areas¹
• students with limited English language skills.

This report specifically addresses the following four research questions. The main findings for each question are given under each question.

• Is there a VET completion gap for students from these disadvantaged groups?

On average, we estimate a lower completion rate, of six percentage points, among those from a disadvantaged group compared with that of those who are not from a disadvantaged group (completion gap). Indigenous students and individuals who have multiple disadvantages are those who experience the largest gaps in completion, with differences in completion rates close to ten percentage points. For individuals with low English language proficiency we find only a very small course completion gap, of fewer than two percentage points. Completion gaps for the other two groups — students with a disability and students living in low SES areas — fall in between these two extremes.

• How much of this gap can be explained by differences in the students’ other characteristics² available in the data between the particular disadvantaged group and other students?

Of the average six-percentage-point completion gap, around four percentage points (or 63%) can be explained by differences in other characteristics available in the data (National VET Provider Collection), leaving around two percentage points ‘unexplained’ by the data. In other words, were students from these disadvantaged groups to have the same observable characteristics and to enrol in the same courses as their non-disadvantaged peers, they would still experience a two-percentage-point completion gap, on average.

• Are there any post-study employment gaps for individuals from these disadvantaged groups by comparison with non-disadvantaged individuals?  

Students from the disadvantaged groups also had a lower chance of post-study employment by comparison with their more advantaged peers (employment gap). Graduates with low levels of proficiency in English have the greatest difficulty in terms of employment opportunities: their chances of finding a job after VET are 45 percentage points lower than native English speaker graduates. In contrast, the gap is relatively small (around ten percentage points) for Indigenous graduates and for VET students who live in low SES areas, independent of their VET completion state.

• How much of these employment gaps are explained by the measured gaps in completion?

On average across the four groups, the completion gaps play only a very small role in explaining the gaps in employment (with the partial exception of Indigenous students). Most important in explaining the employment gaps are the other student characteristics available in the data (Student Outcomes Survey), which, on average, explain around 65% of the employment gaps between students from the four disadvantaged groups and their non-disadvantaged peers. Among the student characteristics, differences in employment rates prior to the VET study explain around a third of the employment gap. The remaining gap (35%) is due to factors not included in the model or to ‘unexplained’ characteristics, which may be related to the specific disadvantages themselves. For Indigenous students, the differences in course and individual characteristics available in the data explain more than 95% of the overall employment gap.

We also decompose the post-study employment gap associated with being disadvantaged for individuals who were unemployed before entering study. On average, the differences in student and course characteristics available in the data are estimated to explain only 26% of the employment gap. Once again, Indigenous students are the exception to this pattern, where the differences in observable characteristics are estimated to explain all of the gap (and more).

Policy implications

Because the differences in student and course characteristics available in the data explain much of the completion and post-study employment gaps, policy interventions that target these differences may be effective in closing post-study employment gaps. In particular, measures targeted at supporting the course choices of people from disadvantaged backgrounds, such as career counselling and the provision of labour market information, may help to close the gap in post-study employment.

Importantly, the small contribution of completion gaps in explaining employment gaps means that measures aimed at improving course retention will not in themselves help to close employment gaps. The partial exception to this is Indigenous students — closing the completion gap for this group could plausibly narrow, although nowhere near eliminate, the employment gap.

¹ Low SES is defined as living in an area that is in the lowest quintile (20%) on the ABS Index of Relative Social Disadvantage in the 2011 Census (ABS 2013).

² These include a range of socio-demographic and course characteristics measured at the time of enrolment and which can be used to control for differences between individual students; for example, sex, age, reason for undertaking a VET course, qualification level, field of education, labour force status before undertaking the course. The full range of individual and course characteristics used to control for differences between students is detailed below.