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Skills for Inclusive and Sustainable Growth in Developing Asia-Pacific: An International Consultative Forum

Skills Development in Australia: enhancing an industry led, competency based system though an emphasis on workforce development and demand-based funding

Robin Shreeve CEO, Skills Australia 13 December 2011


Australias Skills Development System

Industry led Competency-based Co-funded by government, enterprises and individuals For both existing workers and jobseekers

What is Skills Australia?

Skills Australia will provide the Government with recommendations on current and future skills needs (and) inform Australias workforce development needs

Expert independent Board with expertise in industry, economics, education and academia; Provides independent advice to the government on current, emerging and future skills needs and workforce development needs Remit expanded in March 2009 to look at full scope of labour market and give advice on HE & VET 2011 Budget announcementsextended role as National Workforce and Productivity Agency. Responsible for National Workforce Development Fund- started early - 1 October 2011 Source:

Back row (L to R): Keith Spence, Ged Kearney, Dr Michael Keating AC, Prof. Gerald Burke. Front row: Heather Ridout, Philip Bullock (Chair), Marie Persson. New Interim agency members Peter Anderson ACCI Paul Howes AWU Dr John Edwards


1. Julia Gillard, Second Reading Speech Skills Australia Bill 2008 (14 Feb 2008)

Advice Skills Australia has provided to Government

Foundations for the Future June 2009 Australian Workforce Futures: a national workforce development strategy March 2010 Advice to Department of Immigration on Skilled Occupation List for General Skilled Migration program February 2011 Skills for prosperity: a road map for vocational education and training May 2011 Energy efficiency in commercial and residential buildings: Jobs and Skills Implications May 2011 2011 interim report on resources sector skill needs July 2011 2012 report on Defence Materiel Industries Scenario development - phase II of Australian Workforce Futures 44

Why all the fuss about skills?

Skill shortages - as the economy shifts to recovery and growth, concerns are raised again about constraints due to skills shortages Productivity - the positive growth in productivity earlier this decade has flattened, and turned negative Participation - Australia ranks only 10th out of 34 OECD countries on workforce participation Population - Ageing of the Baby Boomers, Migration and International trends Underemployment - there are 1.4 million Australians unemployed or underemployed Foundation Skills - currently 50% of the population has lower language, literacy and numeracy levels than they need for their jobs

VET Business Model

Skill Needs and Skill Gaps


and Competency Standards

Endorsement and Accreditation

Regulatio n

Australian Skills Quality Authority (ASQA)

The COAG 2020 targets

COAG has agreed to aspirational reform targets for VET for 2020 to: half the proportion of Australians without qualifications at Cert III level or above double the number of higher level (diploma and advanced diploma) qualification completions As at 2009, approximately 47.1% of 20-64 year old Australians were without Cert III or above levels Based on this, the 2020 target is to reduce the number of 20-64 year olds without Cert III or above to 23.6% In 2008, there were approximately 48,091 higher VET qualification completions in Australia Based on this, the target would be to double this to 96,182 by 2020

Source: National Agreement for Skills and Workforce Development: Performance Report for 2009, COAG 2010


Australia the challenge of prosperity

Glenn Stevens Governor of Reserve Bank of Australia

To put it in very simplified terms, five years ago, a ship load of Australian iron ore was worth about the same as about 2,200 flat screen television sets Today it is worth about 22,000 flat-screen TV sets partly due to TV prices falling but more due to the price of iron ore rising by a factor of six 88

Australia - Three Speed Economy Output by selected industry sector

Source: ABS cat. no. 5204.0 and Treasury. Dr Ken Henry, Post Budget address to the Australian Business Economists 18 May 2010


Possible Futures: workforce growth to 2025

Projected total employment growth rates 1
Number of people in Australian workforce in 2025 (based on three scenarios)
Open Doors: 15.3 mill

Low Trust Globalisatio 13.7 mill n: Flags: 12.5 mill


11.3 mill

Source: 1. Access Economics Pty Ltd for Skills Australia, Economic modelling of skills demand (Oct 2009)


Making Better Use of Existing Workforce Improving Participation

Per cent

Groups to target
Men of prime working age (25 to 64 years) ranked 21st in OECD Women (aged 25 to 34 years) - 10th lowest of OECD countries Older Australians (55 to 64) - below NZ, UK and the US
Source: OECD, Online OECD employment data base statistics for 2009, people aged 15 and over (accessed March 2011)


Qualifications and skill shortfall

However, skilled migration plays a significant role in supplementing the supply of qualifications, and if it remains at current levels, these deficits may be made up through Australias skilled migrant intake


Demand 770,000Demand 533,000Supply

540,000 506,000

646,000Demand 524,000Supply

By 2015


BALANC BALANC -237,000 E E Demand 828,000Demand 659,000Supply

-122,000BALANCE -34,000 645,000Demand 620,000Supply -25,000BALANCE 500,000 556,000 +56,00 0

By 2025



Source: Access Economics Pty Ltd for Skills Australia, Economic modelling of skills demand (Oct 2009)


Qualifications and skills demand

From 2010-2025 Numbers to be trained at Cert III and higher due to 12 Demand for 12 million qualifications

Demand for nearly 7 million people with qualifications at Certificate III and above

Demand by 2015 for additional 2.3 million workers with qualifications at Certificate III and above but not all new jobs replacement and skills deepening

1. Access Economics Pty Ltd for Skills Australia, Economic modelling of skills demand (Oct 2009)

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What are Australian Workforce Futures key findings?

The current capacity of our tertiary education system will need to increase by 3% per annum, to deliver the qualifications and skills Australia needs Workforce participation needs to rise from 65% to 69% to provide the workers and skills we need plus improve social inclusion. Women (aged 25-34); men (aged 25-64); older Australians (55-64) Numeracy and literacy are a major barrier to increased participation and a national plan with targets and funding is needed Enterprises need to make better use of the skills of their employees Forecasting for all occupations is both impossible and impractical. Our focus should be on specialised 1414 occupations which we can and should plan for. The 80/20 rule applies

Australian VET is world class

A lot to be proud of:

Australia has a very well developed VET system, which enjoys a high degree of confidence..

Source: Learning for Jobs, Hoeckel, K. 2008


VET: a multi-faceted, inclusive, geographically diverse engine of this nation

Not just about trades and traineeships (approx 20%) Catering for all ages - 56% of VET students are 25+ Over 40% from areas of extreme or high socioeconomic disadvantage

40% of Year 11 & 12 doing some form of VET in Schools 5000 RTOs in almost every town and suburb Over one-third of all workers depend upon VET as their highest qualification


VET has some challenges

Our completion rates could be improved Quality has been inconsistent Vocational education in schools is of variable quality Funding is often tied to enrolments not outcome Industry at times feels the system is inflexible The system is complex


Skills for Prosperity sets out an integrated set of recommendations

A demand-based system of individual leaner and enterprise responsive funding as the best means of growing the system quickly and effectively. Users know better than central planners Co-funded by those who benefit the most with the greatest subsidy going to the most disadvantaged But dependent on:

Better regulation and quality assurance of providers able to receive public funds including, for example, external validation of RTO assessments More transparent information about individual provider performance. Research indicates greater contestability leads to greater responsiveness and efficiency but needs to be accompanied by better market information or providers will tend to compete solely on price. This will jeopardise the necessary improvements in quality


Major proposals in Skills for Prosperity

Entitlement system for individual students Demand based funding for enterprise training Commonwealth funding for degrees in specialised areas Co-funded by Government, Industry and Individuals (where appropriate) Funding clients rather than RTOs Stronger quality and regulation Mandatory external validation of a sample of RTOs assessments Higher delivery standards for Cert IV in Training and Education Outcomes based funding

Increased investment

It is important to use skills effectively

Skills Utilisation is how well employers harness and develop their workers abilities and talents to gain maximum value. Skills Australia, 2011 Skills utilisation is an important element of workforce development and is increasingly recognised by governments and policymakers as just as valuable to productivity as skills acquisition.


Critical success factors in better using employee skills


Questions? Thank you


VET in Australia did you know?

VET is largely funded by the Australian Government and state and territory governments. However, companies and individuals can contribute to the cost of training VET is provided by training organisations which register with the government to teach accredited courses and include government and private providers VET aims to provide people with the skills and knowledge they require to: Enter the workforce for the first time Re-enter the workforce after absences Train or re-strain for a new job Update their skills Move into further study in VET or university Government RTOs TAFE institutes; secondary schools and colleges; universities; agricultural and technical colleges 2323 Private RTOs enterprises training employees; Source: Did You Know? A guide to VET in Australia, NCVER

VET in Australia did you know?

Over 11% of Australias population aged between 15 64 years participate in government funded VET. About 30% of young people (aged 15 19 years) living in Australia undertaking some form of VET The typical student in Australia is more likely to be an adult, already employed and upgrading their job skills, rather than a school leaver Almost 80% of graduates are employed 6 months after completing their training, and almost 3/4 of graduates report that their training was highly or somewhat relevant to their current job VET qualifications are based on a set of competency standards, thus students can 2424 study for differing Know? A guide to VET in Australia, NCVER complete Source: Did You amounts of time to