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To achieve low unemployment, strong productivity and wages growth and increase inclusion in the labour market will require all elements of the national skills system to improve and work better together. A focus on matching workforce skills with industry’s needs will help retain low unemployment with stable inflation. Enhancing Australians’ skills is also an important productivity enhancing strategy both directly but also to help facilitate innovation, a key driver of long-term productivity growth, which in turn should support real wage growth. And the skill system is a key lever to bring disadvantaged groups into stable, rewarding and valuable work. Increased skills should also enhance labour force participation, another contributor to sustainable and inclusive growth.
Vocational education and training
Workers qualified through VET pathways play a key role in the Australian economy. Job roles requiring applied learning and practical skills continue to be in demand and in persistent shortage across Australia.
A key challenge of the VET sector is its status and perceptions relative to higher education. A House of Representatives Committee is undertaking an inquiry into the status and perceptions of VET. A priority for Australia in meeting its skills challenges of the future is to raise the status of skills relative to knowledge, and VET relative to higher education, through raising the value of the application of skills and knowledge, contextualised to the workplace. Quality improvement of the VET sector, a focus on excellence, the development of higher-level vocational qualifications, and reform of the school system to place greater value on vocational skills, and enabling pathways for lifelong learning, are amongst the elements of a reform agenda required to support the culture change needed.
The VET sector in general, and Technical and Further Education (TAFE) in particular, have been significantly challenged relative to the higher education sector in the attention paid to their resourcing in recent decades. The negotiation of a new National Skills Agreement aims to start a process of addressing that problem, to strengthen the sector and initiate a reform process, so that VET can progressively improve in its ability to meet Australia’s skills needs of the future.
The proposed National Skills Agreement would embed a new model of shared national stewardship of the VET sector to support a more collaborative and evidence-driven approach to delivering high quality, responsive and accessible education and training to boost productivity and support Australians to obtain the skills they need to participate and prosper in the modern economy.
Completion rates of VET courses is a concern that Skills and Workforce Ministers have identified as a problem to be addressed and a taskforce led by South Australia is currently analysing this issue.
A strong focus on developing required competencies is a strength of the VET sector, but sometimes these competencies are too detailed. This can stifle innovation and flexibility in training delivery and hinder the recognition of transferable skills and increase upskilling and reskilling costs. Other strengths include the direct relationship with industry in the development and delivery of training and the ability to rapidly upskill to meet changing skills needs in the workforce. At the same time, the time it takes to update VET courses to include new skills demanded by employers is a challenge identified by many stakeholders. An increased focus Towards a National Jobs and Skills Roadmap – Summary Jobs and Skills Australia | 18 on transferrable skills, resilience and adaptability are viewed by stakeholders as increasingly important in a rapidly changing labour market. Skills Ministers have established a tripartite process to implement reforms to VET qualifications to make them more fit for purpose.
Ten Jobs and Skills Councils with deep understanding of the VET sector and industry needs have been established to support the VET sector in meeting industries’ needs and providing industry with a stronger voice. Keen understanding of the cross-cutting pressures and challenges across their sectors, for example, on the need for digital skills, will be a strength of the new system.
Higher education
Australia’s higher education sector, in general, and its universities in particular, are highly ranked internationally. The sector has also achieved remarkable growth in the last 15 years, driven largely by the now lapsed ‘demand-driven system’, resulting in a substantial increase occurring in the share of the labour force with higher education degrees, especially bachelor degrees. The employment projections suggest that this growth will need to continue.
One problem to be solved is that the current construct of higher education poses a challenge to providers in terms of balancing their research and knowledge accumulation role with teaching and preparing students with the skills and knowledge they will need in the workplace.
There is a current review of higher education in place, to establish a Universities Accord. The Review Panel is considering current and future skills needs, learning and teaching, access and opportunity, research, innovation, international education, funding and regulatory settings, employment conditions and strengthening engagement between the higher education and vocational education and training sectors.
There is a very strong focus on the need for the higher education sector to play an important role in meeting Australia’ s skills needs. The Interim Report identifies Jobs and Skills Australia’s analysis as an important source of intelligence on current and future demands for skilled graduates.
Most young Australians undertake some form of tertiary education following school, with higher education currently being the most popular pathway. This is likely to continue although there are pleasingly some signs of VET recovering from its decline in popularity.
Higher education provides the attainment and transfer of knowledge, generally providing a broader knowledge base than required to succeed in a particular occupation. However, there is evidence that many qualified graduates find it difficult to get a foothold in the labour market because of a lack of work experience and practical employability skills. This is one of the key issues identified in the Accord Panel’s Interim Report. Stronger collaboration between universities and industry is warranted.
Further, the Interim Report concludes that to successfully tackle our big national priorities, our higher education sector needs to become much, much stronger. It identifies 10 possible system shifts over the next decade. The first listed shift that it envisages is a more integrated tertiary system, with a commitment to access for everyone and achieving significant growth in pursuit of national skills and equity targets. Other shifts identified include for example: the transformation of teaching and learning, with an ambitious commitment to student experience and the use of technology; reskilling and lifelong learning provided though more modular, stackable qualifications, including microcredentials, with full scaffolding of pathways; population parity in participation by 2035; and First Nations at the heart of higher education.
A more joined-up tertiary education system
The Accord Panel’s Interim Report cites a focus on skills and on stronger connections with VET as key priorities. Indeed, there has been a growing interest in the case for greater complementarity between the VET and higher education sectors over a number of years. A key aim would be to enhance the ability of students to navigate the tertiary education system to obtain the knowledge, skills and capabilities they need to successfully participate in the labour market. It should also help industry to work more effectively with both sectors to obtain the skills it needs, and encourage education and training providers from both sectors, and industry, to collaborate on designing fit for purpose education and training programs, drawing on the strengths of both sectors.
The Interim Report and the Employment White Paper both see this as an important priority. The Interim Report argues that Australia’s skills needs will only be met if the higher education sector and an expanded VET sector, with TAFE at its core, work together within a more integrated system to deliver flexible, transferrable skills people want and need. The Interim Report also argues the case for working towards parity of esteem between VET and higher education.
Policy considerations in the Accord Review include, for example: the creation of a universal learning entitlement; new types of qualification closer aligning VET and higher education starting in areas of national priority – like clean energy, the care economy and defence; and expanding commonwealth supported higher education places at some Australian Qualifications Framework (AQF) levels to the TAFE sector.
The Interim Report also suggests that the reform of the AQF proposed by the Noonan Review could be a critical element of new joined-up tertiary system and that an Australian Skills Taxonomy relevant to both VET and higher education would offer common language between sectors that would assist with the co-design of fit for purpose qualifications. A national skills passport using a common skills language could also be explored as a way of increasing the transparency of the skills people possess and increasing the efficiency of the market for skills.
It also indicates that the Review is giving further consideration to the benefits of establishing a Tertiary Education Commission, whose initial focus would be to oversee the higher education funding model, but over time in partnership with the states and territories could encompass the whole tertiary system to pursue greater opportunities for alignment and collaboration between the VET and higher education sectors.
Migration systems reform
The Australian Government Review of the Migration System released in April 2023, concluded that the migration system is not fit for purpose.
The Review considered that Australia needs a new data-driven approach to identifying skills needs, with Jobs and Skills Australia playing an important role as the trusted source of evidence, research and analysis on the labour market and workforce skills and training needs.
It also pointed to the need for a tripartite approach, involving perspectives from industry, unions and government in determining the role of migration in meeting labour market gaps and delivering fair and efficient outcomes.
The Australian Government’s subsequent Migration Strategy will set out a wide range of reforms so that skilled migration can more effectively address labour shortages and boost productivity. The Government is progressing this as a priority and has indicated that it will build in a greater role for Jobs and Skills Australia.
A joined-up national skills system
There is significant policy work underway across the national skills system and each element has called for a more joined-up, whole-of-system approach to meet Australia’s current and future skills needs.
This will require our higher education, VET and migration systems to effectively complement each other and flexibly respond to skills and workforce needs. And we will need the whole population to be supported by a lifelong learning system that enables them to continually develop their skills to meet the needs of a dynamic economy and changing labour market.
The potential benefits of a joined-up national skills system are immense. A more joined-up system has the potential to contribute to minimising unemployment, increasing productivity, economic growth, participation and real wages, and increasing equity and reducing disadvantage. The challenge is to clearly articulate the essential components of the joined-up national skills system, how they differ from the current approach within systems, and how to progress towards a joined-up system.
There is much potential in these reforms in delivering the skills Australia needs now and into the future. All of these reforms have signalled the importance of each of these pillars of the system working together and a role for Jobs and Skills Australia to bring together practitioners, academics, business, unions, policy makers, service providers and data holders together to set out a roadmap to achieving this goal.
