Understanding vocational education and training, productivity and workforce participation: An issues paper

This paper arises from the first year of a three-year program of research looking at the role of vocational education and training (VET) in improving productivity and workforce participation among the lower skilled. Two industries—meat processing and early childhood education and care—are being used to understand the issues.

The paper develops a framework for use in the field work to be conducted in the next phase of the program. It argues that four domains shape workforce development:

• the core services and/or products of interest

• the context of deployment and development of labour

• the flows/pools of potential workers and learners

• the formal system of vocational education and training.

Understanding each of these domains will lead to a better comprehension of the relationship between employers, workers, potential workers and VET.

In addition, the paper reports the results of some preliminary interviews to identify challenges in workforce development in the two industries being studied. It finds the following.

• In the child care industry, labour shortages and skills shortages are the main issues impinging on workforce development. These are driven by low wages, low existing qualification levels and the negative perception of the industry as a prospective career. The mixed purpose of the child care industry (care versus education) is also identified as a major issue.

• In the meat processing industry, the main challenges in workforce development are production volatility (mostly caused by seasonal factors), diverse customer preferences, and high labour turnover. The growing influence of intermediaries (for example, migration agents, employment brokers and trainers) is also an issue for workforce development.

Tom Karmel
Managing Director, NCVER

How, if at all, can VET make a difference in improving productivity and workforce participation?

This working paper reports on key findings arising from the first year of a three-year project examining this question. The research involves scrutiny of relevant literature and statistics and a detailed analysis of two industry case studies (early childhood education and meat processing), which were selected specifically to enhance understanding of the relationships between productivity, workforce participation and vocational education and training (VET) as they are played out in real workplace settings.

The key findings arising from the first year’s research identify that a comprehensive answer to the research question can only come after consideration of four distinct domains of social and economic practice.

The first domain concerns the service and product of interest. While ‘industry’ is often presented as an uncontentious concept, powerful economic and political forces profoundly shape the nature of what economists label ‘output’. Our analysis of early childhood education and care, for example, reveals that the core service is highly contested. On the one hand, there is long day care, which is concerned with keeping children safe while parents work. On the other, there are preschools and kindergartens primarily concerned with the development of children. What type of early childhood education and care service prevails will ultimately be determined politically, as the government plays the dominant role as funder and regulator. This threshold issue will profoundly shape skill needs. In meat processing, consumer trends and tastes are a driving force. While there is some contestation in this area, the direction in the medium term is fairly well established. In this sector, the industry challenge is to anticipate when and how this will and should change, and the degree of acceleration associated with this change.

The second domain concerns the context in which skills are used. These provide the immediate setting which either nurtures or neutralises the orderly development of skills. This paper notes a distinction between factors external and internal to the organisation, which will be developed more fully in the next phase of research. Factors which are external include funding flows, ownership arrangements, the degree of political leverage held by professional groups (if present) and the nature of consumer demand (uniform or splintered). Organisationally, ‘internal’ factors that affect the development of skills include employment structures, job design and employee receptiveness to training. In both industries most of these variables are currently working to undermine orderly approaches to workforce development. Funding arrangements leave limited scope for little more than very basic on-the-job training in early childhood education and care. In meat processing, pressures associated with cash flow, fragmented ownership and the casualisation of work similarly limit the capacity of anything other than the most rudimentary forms of workforce development.

The source of labour supply is the concern of the third domain. Issues in this domain are commonly defined on the basis of the core labour force categories; for example, employed or unemployed. When considering the role VET does and could play in boosting workforce participation, these categories are of limited use. The more finely grained systems of categories generated by social and health-based researchers are more powerful, although controversial. For example, when considering women ‘not in the labour force’, understanding the adequacy and affordability of local early childhood education and care is important. And when considering single mothers on pensions, it is important appreciate the very high incidence of substance abuse, anxiety or depressive disorder (45.3%) among beneficiaries compared with only 18% amongst those receiving no income support. Mobilising such groups will require that any VET interventions work in concert with initiatives designed to address the non-skills based issues.

The provision of formal training services is the concern of the fourth domain. A great deal of the public debate on VET is taken up with public and private providers of off-the-job training or with increasing the number of people involved in work-based training positions (for example, traineeships and apprenticeships). This way of framing the issue overlooks other important models of training services. In making sense of VET arrangements particular attention needs to be devoted to understanding how training services models differ on the basis of: ownership (that is, public, private or network), site of service delivery (on the job, off the job or combination of the two) and the ethos pervading the service (that is, education of citizens, training for industry or acculturating worker citizens).

A summary of the trends and likely future path of work and skill in the two industries is provided. From these, two scenarios are identified, each fairly similar in form. The first scenario would see a continuing of current trends. This is characterised by skill deterioration as the legacies of earlier workforce development regimes are steadily exhausted and not replenished. The other possible scenario would involve overcoming fragmentation in service/products and the provision of more supportive settings for skill development and use. If the first scenario prevails, VET could play an important accommodating role in adjusting to production/service provision based on lower skill levels. If the second scenario prevails, VET could play a critical role in equipping intermediate-level positions with the necessary higher-order, more rounded skills.

The paper finishes by outlining the key elements of our research plan for the second stage. Insights into issues concerning productivity will be generated through a series of strategically selected workplace case studies and associated life histories. This will be followed in the third stage by an examination of workforce participation and will be accomplished through interviews with key informants in two local labour markets who can provide detailed insights on pathways and blockages currently experienced by those not in the labour force, and employers seeking to facilitate these pathways.