National Press Club Address: Toward a National Jobs and Skills Roadmap

On Wednesday 4 October, Professor Peter Dawkins presented at the National Press Club. Below you can find his address on the important topic of our newly released Jobs and Skills Report.

Let me begin by acknowledging the traditional owners of the land on which we meet today, the Ngunnawal people, and pay my respects to their elders, past, present, and emerging.

I also acknowledge this is a very important time for First Nations people as we move towards the Voice referendum.

At Jobs and Skills Australia (or JSA), we commit to hearing the voice of First Nations people about their aspirations for jobs and skills. We aspire to co-constructing a First Nations Peoples jobs and skills roadmap. This would be an important part of our ambition to develop a national jobs and skills roadmap for Australia as a whole.

Australia is experiencing widespread skill shortages, the like of which we have not seen since the 1960s. Looking forward over the next three decades the transition to net zero emissions will present further skills challenges, including for occupations already in significant shortage, such as electricians.

The demand for services across health, care and support, will continue to rise strongly.

At the same time digitalisation and artificial intelligence will change the way work is done in many of our industries and occupations.

Ten years ago, an international survey program found that three million adult Australians did not possess the levels of literacy and numeracy required to successfully participate in the labour market. How much that has changed, we don’t know. We intend to find out. If we are going to meet the skills challenges of the future, foundation skills including digital literacy are more important than ever.

Beyond this, all Australians will need to acquire and continually develop the necessary skills, which will increasingly be high level skills, if we are to achieve the economic and social aspirations of a prosperous and equitable nation.

In simple terms, how is our national skills system, vocational education and training, higher education and migration, going to provide the quantity and quality of electricians, engineers, nurses, childcare and aged-care workers that we need? And how do we ensure workers have rewarding careers and the lifelong learning to support that? And that our skilled workforce enables productivity and participation growth to support improved prosperity and equity?

Jobs and Skills Australia was established after the 2022 Jobs and Skills Summit. Our core role is to provide analysis and advice about Australia’s skills needs and the adequacy of the national skills system in meeting those needs.

We are supported by a tripartite consultative forum and work closely with all the states and territories and with ten Jobs and Skills Councils established this year, to do workforce planning for each of their industry sectors.

I was honoured to be asked by the Minister for Skills and Training, the Honourable Brendan O’Connor, to lead the establishment phase of JSA. Today, is a key milestone with the release of our 2023 Jobs and Skills Report, entitled Towards a National Jobs and Skills Roadmap

This is being released alongside two other major publications:

• the 2023 Skills Priority List and JSA’s first major capacity study on the workforce implications of the transition to net zero; and
• JSA’s first major capacity study on the workforce implications of the transition to net zero: The Clean Energy Generation

The main focus of my address today is work towards a National Jobs and Skills Roadmap. But in developing that roadmap, the Skills Priority List and the Clean Energy Report provide critically important data.

High-level objectives

In developing a National Jobs and Skills Roadmap, first, we have to set the high-level objectives of the roadmap.

Today’s report nominates three:

1. To minimise unemployment and underemployment.

As the Reserve Bank of Australia focusses on bringing down inflation, we need to focus on matching workforce skills with industry needs to enable the economy to achieve the lowest level of unemployment and underemployment possible consistent with stable inflation.

2. To increase productivity and labour force participation, and, in the process, support sustained real wage growth and sustainable GDP growth.

The quantity and quality of human capital investment is critical to increasing productivity, which in turn should raise real wages and enhance labour force participation.

3. To enhance equity and reduce disadvantage, by enhancing the ability of disadvantaged groups to obtain the skills and opportunities they need to be successful in securing good jobs.

Increasing equity can be achieved by enhancing the ability of disadvantaged groups to obtain the skills and opportunities they need to be successful in securing and retaining good jobs. First Nations people, young people from low socio-economic backgrounds, people with disabilities, the long-term unemployed and migrants are all groups that should be the focus of attention. As should gender equity.

The national skills system

The central focus of the roadmap will be how to enhance the national skills system to play its part in achieving these objectives.

Its three key pillars on which we are focussed are:

• Vocational education and training (VET)
• Higher education
• Migration

Each of these pillars will comprise one part of the national jobs and skills roadmap. But a joined-up approach to these three key pillars – or a joined-up roadmap - will be an overarching priority.

Skill shortages

Let me now turn to the challenges faced by the skills system the roadmap needs to address, starting with the extensive skill shortages documented in JSA’s 2023 skills priority list that we have released today.

332 occupations, or 36 per cent of occupations assessed by JSA were in shortage in 2023, up from 31 per cent in 2022 and 19 per cent in 2021.

Shortages were most common for Technicians and Trade Workers, like electricians and fitters, motor mechanics and carpenters.

Shortages were also pronounced, and grew the most, for Professionals, particularly Health Professionals like nurses and GPs, but also ICT professional groups and various types of engineers, especially civil engineers, mining engineers, mechanical engineers and engineering managers.

Shortages grew among Community and Personal Service Workers, like health and welfare support workers, aged and disabled carers and child carers.

Skill shortages have also been more pronounced in regional areas. Recruitment difficulty in regional areas remain particularly acute for occupations like GPs, engineers and nurses, and childcare workers, with many so-called ‘child-care deserts’ in regional Australia. If we are going to attract enough professionals to regional areas, child-care support for working parents and carers will be a key factor.

Gender imbalance

Having heard that list of skills shortages it should not surprise you that gender imbalance is a feature of many of them.

Male dominated occupations such as in the categories of engineers, technicians and trades workers, and machine operators and drivers; and female dominated occupations such as in the nursing and early childhood education and care sectors, stand out.

Strategies to improve gender balance in these occupations have significant potential to address skill shortages, as well as promote gender equity in the labour market.

Mitigating skill shortages

What else do we need to do to mitigate these skill shortages?

First, conventional economics suggests that increasing wages is one lever employers can pull to attract more workers away from other jobs or into the labour market.

JSA’s survey of employers who have recently advertised found very few employers change remuneration in response to failing to fill vacancies. In the last year around 1 in one hundred employers adjusted wages to attract skilled workers when they failed to fill a vacancy.

Wages are stickier than most prices, for various objective reasons, and economic research suggests that over long periods occupational wage differentials do gradually shift.

But the fact there are extensive persistent skill shortages in our labour market suggests upward wage adjustments could be used more.

Skill shortage types

To help understand the different causes of skill shortages and the potential solutions in addition to wage rises, JSA has adapted a typology of four skill shortage types based upon a framework developed by Professor Sue Richardson.

First there are training gap shortages defined by there being few qualified applicants per vacancy. This is of two types, one where the time taken to train is longer than the other.

Examples of shorter-lag training gap shortages are Retail Managers and Painters.

Examples of longer-Lag training gap shortages are: Early Childhood Teachers, Occupational Therapists, Physiotherapists, as well as Registered Nurses and Electricians.

Where the skills shortage is the result of their being few qualified applicants, there is a strong a priori case for increasing the supply of qualified people, either by a larger intake of students or higher completion rates.

For longer-lag training shortages a short-term response could be to up-skill people with some of the relevant skills, attracting back people who have left the occupation, or skilled migration.

The third category is called the ‘suitability gap’ category. Here, there are above average qualified applicants per vacancy but too few suitable applicants. JSA’s survey of hiring employers reveals that qualified but unsuccessful applicants are often deemed to have too little work experience and employability skills.

The suitability gap shortages are mostly professional occupations requiring bachelor’s degrees including various types of engineers, especially civil, mining, and mechanical engineers and engineering managers.

This finding reveals that simply increasing the throughput of graduates is not a solution. Increased work-integrated learning, cadetships, higher apprenticeships or degree apprenticeships look like very promising avenues to pursue in these areas.

The fourth category is the retention gap category, where there is high churn in the occupation with too many employees leaving their jobs. Examples of occupations in this category are child carers, aged and disabled carers, chefs, and interestingly human resource professionals.

For the retention gap category, again, simply increasing the throughput of training completions, or boosting migration, is unlikely to be a long-term solution. Steps to boost attraction and increase retention, like improving job design, working conditions, remuneration and career paths are important. In aged-care a first step has been taken to improve the remuneration of aged care workers. Now the migration lever has been pulled, and hopefully the training throughput can also deliver a greater number of qualified workers. A multi-pronged approach has been necessary.

In the year ahead JSA will be undertaking a major workforce capacity study on the early childhood education and care sector, a critical sector for the future of our children, and the participation of parents and carers. Without enough childcare workers, childcare deserts could persist. A multi-pronged approach will also likely be needed for the childcare sector too.

Skills needs of the future

I’ve talked about the skills needs of today, but what of Australia’s skills needs for the future.

JSA projections show around 2 million more people will be employed in the Australian economy in 2033 than presently.

All industries are expected to grow, with the greatest growth expected in the Health Care and Social Assistance, Professional, Scientific and Technical Services, and Education and Training industries.

The occupation groups projected to experience the strongest employment growth are Professionals, Managers and Community and Personal Service Workers. For example, the care and support workforce is expected to grow by almost 145,000 workers between now and 2033.

What this means for our VET and higher education systems is they will be needed more than ever to train our workforce. Over the next 10 years, more than 9 out of 10 new jobs will require post-secondary qualifications. Around half will require a bachelor’s degree or higher and around 44% will require a VET qualification.

The clean energy workforce

Let me now turn to the clean energy workforce, the subject of our major report The Clean Energy Generation.

Reaching the Australian Government’s net zero emissions target by 2050 will require a workforce transformation that is substantial but not unprecedented. Like the post-war industrial transformation and the digital transformation of the late twentieth century, a new generation of workers will be required, both from existing energy sectors and through new pathways into clean energy.

There are many occupations that form part of the clean energy workforce. The most critical are found within trades, technical occupations and engineering professionals, where training times and licensing and accreditation requirements impose justified barriers to entry. We identify 38 occupations critical to the various segments of this workforce.

Our report includes preliminary modelling for three possible future scenarios. The central scenario suggests that the clean energy supply workforce comprising 38 occupations will need to grow by about 60 per cent, by 2050.

Occupations with the highest growth rates between now and 2030 include Telecommunications Trade Workers, Electronic Trades Workers, Electrical Engineering Draftspersons and Technicians, Structural Steel Construction Workers, Construction Managers, Plumbers and Electricians.

In relation to electricians our preliminary modelling suggests we will need approximately 32,000 more Electricians by as soon as 2030 in the central scenario.

Growth in these occupations will be concentrated in regional Australia, presenting a great opportunity, as clean energy will continue to provide well paid employment that might otherwise be lost as global demand for fossil fuels decreases. However, the concentration of growth in trades and technical employment in regional Australia will require an even more substantial uplift in education and training to ensure that job opportunities can be accessed by local workers.

Expansion of existing broad-based qualifications, clean energy top-ups plus some new qualifications will be required.

Frameworks for deeper collaboration between VET, higher education and industry and new models for course delivery to better align graduates with emerging needs are required. As are clear pathways for students to navigate and access a more cohesive and connected tertiary education system, with consistent approaches to occupational licensing.

Major attention will need to be given to the student pipeline, especially in apprenticeships; doubling down on efforts to get women into trades; and supporting more First Nations people into education and training; and possibly opening up apprenticeships to international students.

Expanding placement opportunities for apprenticeships and strengthening the VET workforce to train these workers will be essential.

Migration will also have to play its role in positioning Australia as a destination of choice to attract and retain workers in critical roles, complementing the domestic workforce.

An emerging roadmap for the national skills system

So, all in all, the national skills system faces some big challenges. Extensive skill shortages, the challenge of transition to a clean energy economy and the need to boost productivity are three critical challenges, among many others.

Jobs and Skills Australia seeks to support the system in meeting these challenges by charting a joined-up roadmap for its component parts, especially vocational education and training, higher education and migration.

These three pillars have all be under review this year in different ways, and an emerging reform agenda will help populate this roadmap.

The VET sector

One part of that roadmap will be for our VET sector which plays a critical role in training important technical and trades workers and workers into the health and care sectors.

A national skills agreement is under negotiation to expand and enhance the sector. Reform of VET qualifications is underway to make them more responsive and valuable to workers and industry. Development of the training workforce is another priority, as is the establishment of TAFE Centres of Excellence, in areas of national priority including clean energy, an idea recently highlighted in the Employment White Paper.

The status of VET needs a big boost in Australia as does the status of skills relative to knowledge in our tertiary education system as a whole.

The higher education sector

Which takes us to the second part of the roadmap - our higher education sector which is currently being reviewed by the Universities Accord Panel. Their interim report has identified an increased focus on skills as a key part of the Accord and stronger connections with the VET sector.

The higher education sector is highly rated internationally but needs to be significantly strengthened to meet the big challenges ahead.

There is substantial pipeline growth in the proportion of the working age population with higher education qualifications due to the now lapsed demand driven system. Our employment projections suggest that growth needs to continue.

As important, however, is ensuring graduates of the higher education system gain work experience as an integral part of their skill development and possess the professional and employability skills employers are looking for. Stronger connections with industry and the VET sector are needed to ensure this.

Enhanced work-integrated learning work placements, cadetships, higher apprenticeships and degree apprenticeships are a promising part of the solution, to the work experience and employability skills that employers value.

The Accord Interim Report also floated the idea of national skills passport built on a national skills taxonomy as a way of supporting a more joined-up national skills system, an idea also highlighted in the Employment White Paper.

The migration system

A third part of the roadmap will be for skilled migration. The migration system is equally challenged. A recent review chaired by Martin Parkinson, concluded that the system is overly complex, and fails to attract the most highly skilled migrants and enable business to efficiently access workers. It also pointed to the risk of an emerging permanently temporary underclass of migrants.

The Australian Government has accepted the thrust of this review in its Migration Strategy Outline, released in April. Included in this Outline was a proposal to establish a formal role for JSA in defining Australia’s skills needs using evidence, including advice from tripartite mechanisms, for identifying labour market pressures and how migration can complement the domestic skills system in addressing these pressures.

A joined-up national skills system

Indeed, an overarching imperative for the National Jobs and Skills Roadmap will be to join up the roadmaps for VET, higher education and migration. They need to work effectively together.

A more joined-up tertiary education system will help students navigate the system more easily and gain the range of specific vocational skills, generic skills and knowledge that they need to succeed in the labour market. Greater collaboration between VET and higher education providers to ensure that a blend of skills is obtained to the benefit of students and industry alike, can yield important economic and social benefits.

For example, stronger pathways for enrolled nurses to become registered nurses can help with the retention of enrolled nurses in the system and help grow the supply of nurses, strengthen their career pathways, their productivity and their earnings.

The ability of professional engineers to undertake more vocational education and training could increase their employability, and the enhanced ability of electricians to pathway from Certificate III to Diplomas and Degrees could increase their career prospects and earnings potential, helping to attract more people to be electricians, ameliorate the critical shortage, grow productivity and support the clean energy transformation.

Turning to the third pillar of the national skills system, migration, the migration system that complements rather than competes with the tertiary education system is also required. The domestic skills system will need to be supplemented by migration to meet the challenges ahead and our advice on skilled migration will focus on its complementarity with education and training.

Indeed, there are some cases where migration and education need to collaborate. An example that I mentioned earlier is that we could explore the ability of the migration system to allow student visas for people wishing to do an electrical apprenticeship in Australia. Currently, the limit on work hours for student visas prevents this. The current shortage of electricians and projected growth of demand for electricians, suggest that welcoming prospective electricians from overseas to do electrical apprenticeships could be a better use of student visas for our VET system than some of the courses international VET students currently undertake, like VET courses in leadership and management.

Working towards the National Jobs and Skills Roadmap

From today, JSA will start working towards the National Jobs and Skills Roadmap.

We have defined some high-level objectives of the roadmap.

We have outlined some of the key challenges that the roadmap needs to confront.

We have identified that VET, higher education and migration will each have a part of the roadmap that is being shaped by current reform agendas.

And that a key defining feature of the roadmap is to chart a joined-up approach between these three pillars.

Our report today identifies 14 potential roadmap opportunities for JSA to work on with key partners and stakeholders.

Let me highlight six of them:

1. Support the reform of the VET, higher education and migration systems by providing advice and analysis and monitoring achievement of progress against their objectives. This should be done in a way that highlights the synergies between the 3 reform processes.
2. Identifying Australia’s top 20 persistent skill shortages and charting a joined-up approach to solving them, including the respective roles of a range of different levers such as:

• increasing the throughput of qualified workers by increasing intake and/or completion rates of relevant training and education pathways
• enhancing the attributes of graduates of VET and higher education by improving their employability skills and creating greater work experience opportunities
• working with employers and unions and governments to enhance job opportunities through better working conditions, including strategies to tackle gender imbalance in key skill shortage occupations
• supplementing the Australian workforce through well-targeted migration.

3. Collaboratively shaping a national skills taxonomy in partnership between business, unions, higher education and VET, to underpin a more joined-up tertiary education system.
4. Support the new Net Zero Agency and key partners in the national skill system in developing a jobs and skills roadmap for the clean energy transformation.
5. Developing a jobs and skills roadmap for regional Australia.
6. Co-creating a First Nations Jobs and Skills Roadmap with First Nations people and with key partners in the national skills system.

It is an ambitious agenda, but one that we hope will foster a virtuous cycle. A cycle where investments in enhancing skills across the economy can provide a fiscal dividend through increased productivity and participation, which helps pay back the cost of the up-front investment.

For example, progressing the clean energy economy transformation, through major physical and human capital investment in clean energy generation and transmission and high productivity clean energy manufacturing, can stimulate economic growth and produce a fiscal dividend. This could help pay for the investment in the early childhood education and care workforce, further enhance our future human capital, and increase the labour supply of parents and carers to enable our skill needs of the future to be met.

I started today by asking how is our national skills system, vocational education and training, higher education and migration, going to provide the quantity and quality of electricians, engineers, nurses, childcare and aged-care workers that we need? And how do we ensure workers have rewarding careers and the lifelong learning to support that? And that our skilled workforce enables productivity and participation growth supporting improved prosperity and equity?

Our 2023 National Jobs and Skills Report elaborates on these and other challenges to the national skills system and the emerging reform agenda to deal with them and the critical importance of a joined-up approach between its key pillars. A joined-up National Jobs and Skills Roadmap, supported by the tripartite partners in our jobs and skills system, has a very important role to play for the future of Australia.