The value of completing a vocational education and training qualification

The aim of this report was to identify the benefits, in terms of wages, realised by completing a vocational education and training (VET) qualification. This was achieved by using wage data from the Student Outcomes Survey conducted by the National Centre for Vocational Education Research (NCVER). The report builds on the fact that many VET students do not complete full qualifications and come with varied education and employment backgrounds.

• The analysis finds that there is no universal benefit from completing a VET qualification in terms of returns in the form of higher wages; some groups benefit, but not all do so.
  • Those who already have low-level qualifications (certificate II or below) benefit from undertaking, and particularly completing, qualifications at around certificate III or IV or higher.
  • Those who already have higher-level qualifications (certificate IV or higher) get no wage benefit from undertaking or completing a further VET qualification at any level, relative to the control group of those undertaking only modules at the certificate I or II level (the closest we have to a ‘no training’ control group).

• By contrast, students perceive wage increases as a result of training, especially those who already have a higher-level qualification.

The aim of this report was to quantify the benefit, in terms of higher wages, of completing a vocational education and training (VET) qualification. Two factors influenced the direction of this research. First of all, VET is concerned primarily with improvements in skill levels (with a likely consequence of improved productivity and therefore increased wages). Secondly, it is certainly the case that many students do not complete qualifications; it is apparent that students take what they want from VET and do not necessarily desire a qualification.

The data examined for this study came from the Student Outcomes Survey and the national VET collection conducted annually by the National Centre for Vocational Education Research (NCVER).

Can we conclude from this research that, indeed, there is a return from completing a qualification and that we should be concerned about the high non-completion rate? There is no simple answer and we need to acknowledge, first, that VET is very varied and, second, there are positive wage returns from completing a VET qualification for some students, but not for others.

These findings stand in sharp contrast to the perceived wage benefits that graduates (and module completers to a lesser extent) report as a result of their training. This contrast is particularly sharp for those with higher-level (certificate IV or higher) previous qualifications.

Do these results have any policy implications? The first point is that we should be wary of using qualification completion rates as a performance indicator without taking into account the educational background of students.

The second point is that the differences in return prompt the question of whether it is worth considering student admission and funding arrangements. For example, the analysis indicates that low-level qualifications (certificates I and II) appear to have little return. If funding is constrained, are these qualifications as worthy as higher-level qualifications? Perhaps a rejoinder to this question is that the lower-level qualifications act as stepping stones to higher-level qualifications. ¹

People who already have a higher-level qualification (certificate IV or higher in this analysis) appear to get no wage benefit from further VET study on average. Should these individuals therefore be asked to pay more for their VET study? Averages, however, hide the huge variety in outcomes and for some of these individuals there may well be a return to completing a VET qualification, because their initial (high-level) qualification has turned out to be not particularly useful. Should such students be entitled to further government funding? Others will be undertaking specific VET modules mandated by their employer. Perhaps their employers should pay for this specific training.

¹ Stanwick (2005) looks at lower-level qualifications and paints a fairly modest picture of completion rates and progression to higher-level qualifications.