Chapter 3. Uses of skills assessment and anticipation information in Australia

The use of SAA information spans multiple policy domains, including employment, education and training, and migration. This chapter provides an overview of how SAA information is used to inform policies in Australia, and highlights challenges hindering even further exploitation of such information for policy purposes.

    

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

Countries invest in SAA exercises in order to design policy that is informed by skill needs, and as a result, should lead to a better matching of skill demand and supply. As noted in Chapter 2, SAA exercises are a tool to improve the allocation of resources in Australia’s largely market-driven labour market.

The use of SAA information to mitigate skill imbalances spans multiple policy domains. SAA information can be used in employment policy to shape active labour market policies and to inform structural adjustment policy; in education and training, to help ensure that students’ and adults’ skill investments pay off and employers have access to a pipeline of relevant skills. Migration policy can also use SAA information to facilitate the entry of migrants who have skills that are in demand.

This chapter provides an overview of how SAA is used to inform policies in Australia, and also highlights challenges hindering better exploitation of such information for policy purposes.

3.1. Main Findings

  • In employment policy, the Job Seeker Classification Instrument (JSCI) is used to profile job seekers to determine the type of employment services they receive. But the JSCI does not currently make use of SAA information. Existing SAA information could be better used in profiling so that job seekers with skills in low demand receive more intensive employment services. Given practical considerations which make use of SAA in JSCI profiling difficult, it may fall to employment service providers to use SAA information to inform which type of services they provide to job seekers.

  • SAA information could also be used to inform the content of training offered to job seekers within employment services. However, Australia spends very little on training for the unemployed within employment services compared with other OECD countries. Furthermore, employment service providers face disincentives to offer training, including substantial “red tape.” To encourage employment service providers to offer training in high-demand areas, upfront costs to providers could be removed for assigning training in high-demand modules or qualifications. For a list of in-demand skills, the requirement to request approval for non-accredited training could also be removed.

  • But not all unemployed access subsidised or no cost training via the employment services system. State and territory education and training systems vary, but many offer higher subsidies for courses in higher demand, and these subsidies are available to both unemployed and employed workers.

  • Employer engagement in jobactive is currently low. Better communication between employers and employment service providers is needed to clarify skill needs. Employers (especially small and medium-sized enterprises) would benefit from assistance in measuring their skill needs and in communicating them.

  • Recent structural adjustment initiatives in Australia have been well founded on SAA information. Transition centres located within closing plants have provided career guidance and retraining opportunities that are targeted to occupations and sectors in demand. Some thought could be given to taking a similar approach with a wider range of displaced workers, or those at risk of displacement.

  • In education policy, SAA information is used to inform potential learners about the labour market via websites, to update and develop new qualifications, to decide which courses to fund, and to steer students towards skills and qualifications which have good labour market prospects in vocational education and training and adult training. SAA information is not used to inform provision and acquisition of education in the higher education sector.

  • SAA information is used to feed the development and review of VET qualifications, but care should be taken to put sufficient focus on transversal skills, as these are often overlooked in SAA exercises which focus more on occupations/qualifications in demand.

  • In migration policy, Australia uses results from SAA exercises to select migrants with skills, qualifications and work experience that are in high demand. As a result of this targeting, skilled migrants to Australia have very good labour market outcomes compared with migrants to other countries.

  • Recent reforms to the skilled occupation lists for migration constrain the number of occupations included on the lists and are more geared towards higher-skilled occupations in an effort to make the lists more closely aligned with labour market demand.

  • One limitation with the skilled occupation lists for migration is that they do not track demand for emerging occupations, like cyber security or artificial intelligence experts, which are not yet included on the ANZSCO classification. Since occupations which emerge due to technological progress may involve specialised skills, the ANZSCO classification should be updated to prevent worsening skill shortages. The new Global Talent Scheme, being piloted from 1 July 2018, should also help by providing access to Temporary Skill Shortage visas for people with highly specialist skill sets.

  • Good data on regional skill needs is sparse and therefore regional skill requirements are not well represented on skilled occupation lists, which hinders policy development (e.g. the selection of skilled migrants or the profiling of job seekers based on regional skill needs.)

3.2. Use of skill needs information in employment policy

The information from skill assessment and anticipation exercises can feed into the development of employment and activation policies. However, in Australia, SAA information is not generally used in this way and could be better exploited to improve the matching of supply and demand of skills. An exception is with the Skills and Training Initiative, where support for displaced workers in businesses affected by the closure of Australia’s car manufacturing industry has been centred on results from SAA exercises, and can be viewed as a best practice.

3.2.1. Profiling job seekers

The Job Seeker Classification Instrument (JSCI) is used to measure a job seeker’s relative disadvantage in gaining and maintaining employment to determine the type of employment services (e.g. job search assistance, training, etc.) that job seekers should receive. Such services are nearly entirely privatised in Australia (see Box 3.1). Job seekers are assessed using the JSCI when they first register for income support or job search assistance with DHS/Centrelink, and there are also processes in place to ensure that a job seeker’s JSCI record accurately reflects their current circumstances1. JSCI is used to allocate job seekers to one of the first two levels of employment assistance – Stream A or B as appropriate to their needs. It also identifies job seekers with complex or multiple barriers to employment who may require a more comprehensive assessment for serious non-vocational issues which could place them in Stream C, or other employment services such as disability employment services. In 2017, 41.7% of job seekers who registered were considered work ready and placed in Stream A, 41.5% were identified as having barriers to employment and placed in Stream B, and 16.5% were deemed to have serious non-vocational issues, e.g. physical or mental health issues, and were placed in Stream C.

The JSCI assessment involves two main steps: information collection using both an interview and existing data about the job seeker, and the calculation of the job seeker’s JSCI score using statistical techniques. During the interview, information is collected about 18 factors which are used to calculate the JSCI score. Four of these factors relate to work experience, education and skills. The remaining 14 factors capture personal characteristics like origin, age and gender, job seeker history, indigenous status, access to transport, criminal convictions, and living circumstances, among others. The higher a job seeker’s score, the higher their relative level of disadvantage in the labour market.

SAA information is not used to assign weights to factors in the JSCI assessment. Instead, the weights are derived using statistical techniques based on data which captures the characteristics of all individuals present in jobactive at a particular point in time. Lower levels of education are assigned a higher weighting, for instance, since this represents a higher level of disadvantage in the labour market. Job seekers are also asked whether they consider their qualifications to be “work related.” While this question is a simple way to assess the relevance of the qualification to the labour market, it is a highly subjective measure. Better use of SAA could be made in assigning weights to work experience, qualifications and even specific skills (see Box 3.2 for an example) based on their demand in the labour market. Job seekers with skills, qualifications or work experience in low demand (perhaps due to structural changes in the economy) could receive a higher JSCI score and therefore receive more intensive employment services.

However, there are practical considerations which may limit the feasibility of using existing SAA information to assign weights to factors in the JSCI assessment. One issue raised by stakeholders is whether, with only three possible employment streams (Streams A, B, and C), the additional information would produce enough difference in how job seekers are allocated to justify the additional trouble and cost. Also, weights for factors should ideally vary depending on regional labour market conditions, but as has been noted previously, such data is not readily available or reliable.

Box 3.1. Australia’s quasi-market system of employment services

A network of for-profit and not-for-profit service providers operates throughout Australia and is selected through competitive bids (the next bid is in 2020). Providers’ performance is assessed in part by a Star Rating system, which measures provider success in placing job seekers into jobs, taking into account differences in caseload and regional labour market characteristics. Providers are funded through a combination of per-client administration fees and outcome-based fees, which reward employment matches if a job seeker remains employed for four weeks, 12 weeks, and 26 weeks.

Since July 2015, this network of providers has been called jobactive. Previously, it was called Jobs Services Australia (2009-15), and before that, Job Network (1999-2009). The full privatisation of employment services took place in 1998 and was driven by multiple policy goals; among them, to provide greater support to disadvantaged job seekers; to structure fees to encourage sustainable employment outcomes; and to strengthen demand-side support through requirements to engage better with employers.

The OECD has identified the quasi-market delivery system of employment services as contributing to progressively increasing the labour market participation rate in Australia and contributing to low rates of unemployment (OECD, 2012[1]; 2017[2]).

Under the current network of providers, jobactive, 60.6% of job seekers who exit the program are employed a month later. After 6 months, 29% are still employed (Table 3.1). International comparisons are difficult to make; however, the quasi-market arrangements in the United Kingdom’s Work Programme provide a reasonable comparison. The Work Programme, which ran from 2011 to 2017 and targeted the long-term unemployed, had 26-week employment outcomes for 37.8% of job seekers1. This is quite a bit higher than the comparison group in Australia (22.1%, see Table 3.1), though there are many differences in program design. An important difference is that the UK Work Programme offered outcome payments only after 26 weeks and thereafter continued to offer outcome payments to providers for one year, whereas the Australian system stops outcome payments at 26 weeks.

Table 3.1. Jobactive employment outcomes, by unemployment duration
Share of job seekers who left jobactive between July 2015 to October 2017.

 

Share employed after 4 weeks

Share employed after 12 weeks

Share employed after 26 weeks

Short-term unemployed

76.9

64.9

40.8

Long-term unemployed

51.0

40.5

22.1

All job seekers

60.6

49.6

29.0

Note: Short-term unemployed job seekers have been registered with employment services for less than 12 months, and long-term unemployed job seekers have been registered with employment services for 12 months or more. Source: Department of Jobs and Small Business data; OECD calculations.

Source: OECD (2012) Employment and Skills Strategies in Australia; data from Department of Jobs and Small Business. 1 Department for Work and Pensions, Work Programme Statistics – March 2018, Table 2.8.

1. Department for Work and Pensions, Work Programme Statistics – March 2018, Table 2.8.

Box 3.2. Skills profiling tools

There is growing interest among OECD countries in using skills profiling tools to improve skills matching. Skills profiling tools diagnose the strengths and weaknesses of an individual with respect to a set of skills. They have a range of applications, including use by employers to identify the training needs of their workforce, by educational institutions to diagnose the skills of incoming students, or by government organisations to assess the learning needs of unemployed individuals, those at risk of unemployment, or economically-disadvantaged groups.

Several countries have experimented with Education & Skills Online, an assessment tool designed to produce individual-level results that are linked to the OECD Survey of Adult Skills (PIAAC) measures of literacy, numeracy and problem-solving in technology-rich environments. For example, the public employment service in Italy is using Education & Skills Online to profile the skills of job seekers, and to point them to relevant training. In addition to measures of cognitive abilities (literacy, numeracy and problem-solving in technology-rich environments), the assessment also contains non-cognitive measures of skill use, career interest, health and well-being, and behavioural competencies, e.g. team work, leadership, etc.

3.2.2. Retraining or upskilling job seekers within employment services

Job seekers can access subsidised training in Australia through one of two ways: through state/territory-specific training programs, or through employment services. Subsidies for training offered by states and territories, which are available to both employed and unemployed workers, are targeted on qualifications deemed to be priority areas for the state or territory, and the criteria for placing qualifications on the priority list are often linked to measures of labour market demand. State and territory training programs for adults will be discussed in more detail in Section 3.3, while this section will focus on training provided within employment services.

Once a job seeker is assigned to Stream A, B, or C, they select or are assigned to an employment service provider. The provider meets with the job seeker to design a Job Plan which could include help in looking for a job, help overcoming a non-vocational issue where relevant, or an approved activity. Approved activities include Work for the Dole, an unpaid work placement to gain experience, confidence and to demonstrate skills to potential employers. Approved activities also include part-time work, part-time study in an eligible course, participation in accredited language, literacy and numeracy training, or volunteer work. A number of targeted employment services offer skills training based on assessed needs of particular cohorts of the labour market (e.g. the Youth Jobs PaTH provides employability skills to young people). Providers have considerable flexibility in tailoring services and each has their own approach to deciding which services to offer based on the JSCI assessment of the job seeker’s needs. Individuals participating in jobactive may also be eligible to access financial assistance for training through other federal or state government programs (see Table 3.5).

The government does not publish data on the content of training supported by jobactive, so it is not possible to assess how well it addresses the skill and training needs of employers in the labour market. All accredited training that is supported by jobactive is in vocational education and training, with just less than half of job seekers who receive accredited training undertaking Certificate 3 level courses (46.9%), and just less than half pursuing skills or units of competency at an unspecified level (46.5%)2.

But while it is not possible to assess how well the training offer aligns with employers’ needs, the general impression based on the OECD team’s meetings with employment service providers is that SAA information is not widely used by providers to assign job seekers to training programmes. This assessment is loosely supported by survey evidence which suggests that only 37% of jobactive participants are satisfied with the help they receive in gaining skills for work (Table 3.2).

Table 3.2. Job seeker satisfaction with the help they received to gain skills for work
Share of job seekers who received assistance between Jan 2016 and Dec 2016

 

Satisfied or Very Satisifed (%)

Neither Satisified or Dissatisfied (%)

Dissatisfied or Very Dissatisfied (%)

All participants

36.9

30.9

32.3

Stream A

31.7

31.9

36.5

Stream B

42.4

30.6

27.0

Stream C

46.9

27.2

25.9

Note: Outcomes were measured three months after December 2016.

Source: Employment Services Outcome Report, January 2016 to December 2016 – jobactive.

In some OECD countries, the PES uses SAA information to assign job seekers to training which is in high demand in the labour market. For instance, in Austria, most training for the unemployed is decided upon in agreement with the public employment service (PES), and always takes into account actual skills shortages in the labour market. Similarly, in Sweden, an employment officer assesses the applicant’s situation on the labour market, and takes into consideration his/her vocational area, experience and the current state of the labour market to decide whether a labour market training programme would be a good option for the applicant. In Korea, job seekers receive counselling about the labour market prior to being issued with a voucher for training, and in Estonia, vouchers can only be used on a list of training programmes in areas of labour market need (OECD, 2017[3]).

One challenge to aligning training programmes for the unemployed with demand is that spending on training for the unemployed, as well as the incidence of such training, is quite low in Australia. According to the internationally-harmonised data collected by the OECD, only 0.01% of GDP is allocated to skills training in Australia, which represents one of the lowest expenditures on training across OECD countries, even among countries with a similar or lower level of unemployment (e.g. Denmark, Austria, Switzerland, Germany, New Zealand and Norway, see Figure 3.1). Low spending on training reflects both a low share of unemployed persons participating in training programmes and a small amount spent on each participant – among the lowest in the OECD (OECD, 2016). According to the Department of Jobs and Small Business’ administrative records, only 12.3% of active jobactive participants had commenced any education or training activity as of October 2017 (Table 3.4). Job seekers in Streams B and C had a higher-than-average incidence of training (16.2% and 14.1%, respectively), though still low. With few job seekers receiving training and relatively little being spent on training, there is less scope for assigning job seekers to training programmes based on high demand.

Figure 3.1. Spending on training is low in Australia
Incidence of unemployment and expenditure on training programmes, Australia and selected OECD countries, 2015a, percentages
picture

Note: ALMPs: Active labour market programmes; GDP: Gross domestic product; HUR: Harmonised unemployment rate, percentage of the labour force. Data refer to fiscal years (FY) for Australia, Canada, Japan, New Zealand, the United Kingdom and the United States.

Source: OECD (2014), “Harmonised unemployment rates (HUR)” (indicator), http://dx.doi.org/10.1787/52570002-en for harmonised unemployment rates; and OECD/Eurostat Labour Market Programme Database, http://dx.doi.org/10.1787/data-00312-en for expenditure on ALMPs.

Note: GDP: Gross domestic product; HUR: Harmonised unemployment rate; percentage of the labour force. Data refer to fiscal years for Australia, Canada, Japan, New Zealand, the United Kingdom and the United States. Expenditure on state and territory programmes are not included.

a) Data refer to 2011 for the United Kingdom and 2014 for New Zealand for expenditure on ALMP.

Source: OECD (2014), “Harmonised unemployment rates (HUR)” (indicator), http://dx.doi.org/10.1787/52570002-en for harmonised unemployment rates; and OECD/Eurostat Labour Market Programme Database, http://dx.doi.org/10.1787/data-00312-en for expenditure on training.

Another barrier that providers face in assigning job seekers to training programmes in general, and to training programmes that are in high demand in particular, is tightened restrictions on use of the Employment Fund. Skills training is predominantly financed through the Employment Fund, from which providers can seek reimbursement for eligible work-related expenditures, including training. Providers can use this money for three types of work-related training: accredited training (79% of total training spending), non-accredited training which is a direct requirement of the employer to prepare the job seeker for a specific job (3%), or non-accredited targeted pre-employment training, to address employability and foundational skills, like numeracy and literacy (18%).

A clampdown on publicly-funded training was carried out after criticism in the 2014 Forrest review about “training for training’s sake” in employment services3, with training offered by providers purportedly poorly aligned to employer needs (Forrest, 2014[4]). Providers must now obtain approval from the national Department of Jobs and Small Business for non-accredited training in order to be sure to receive reimbursement through the Employment Fund. Such restrictions are enforced by random audits, and by tying funding and business allocation to compliance. As a result, the policy around training has become highly compliance-driven. Several stakeholders argued that this focus on compliance has negatively influenced providers’ willingness to offer non-accredited training.

Providers face additional disincentives to provide training in high-demand areas based on SAA information. Under jobactive, there has been an increased focus on getting job seekers into a job as quickly as possible (OECD, 2017[2]). Linked to this, providers are now rewarded for finding job seekers short-term jobs of only four weeks (e.g. seasonal work), while under the previous model, Job Services Australia, outcome payments were only eligible at 12 and 26 weeks. By putting focus on getting job seekers into a job as quickly as possible, the “work first” design of the outcome-based fee structure reduces providers’ incentives to deliver longer-term training that addresses skill needs. Furthermore, to assess a provider’s Star Rating (and thus their funding for the following year), 12 months of performance data are taken into account. Employment service providers cannot therefore reap the rewards of longer-term skills training, even if doing so would result in better matches. International experience of training programs for the unemployed finds neutral or even negative employment effects in the short-term4, while positive employment effects are evident 2-3 years after completion of the program (Card, Kluve and Weber, 2015[5])5.

Together, these challenges contribute to explaining why providers may be reluctant to offer high-demand training to job seekers based on SAA information.

Some thought could be given to reducing “red tape” for skills training in high-demand areas. This approach encourages employment service providers to offer training, while also steering the training content towards high-demand skills based on SAA information. Though the system is very different to Australia’s, Finland is an example of a country that steers the delivery of training courses for the unemployed towards high-demand areas. Training courses for the unemployed are purchased through public procurement by regional centres of economic development, transport and environment. The choice of courses to purchase is based on estimated regional labour market needs obtained through the help of various short-, medium- and long-term skills anticipation tools (OECD, 2017[3]). In Australia, Jobs and Small Business could remove the upfront costs that providers pay when they assign job seekers to accredited training for skills in demand, rather than require that they apply for reimbursement. For a list of in-demand skills, the requirement to request approval for non-accredited training could also be removed.

The success of such policies, of course, hinges on having suitable data with a short-term outlook on skills or qualifications in demand. As outlined in the previous chapter, the Department of Jobs and Small Business’ skill shortage research produces a list of occupations in demand in the short-term at both the national and state level. However, the focus on occupations at ANZSCO skill levels 1-3, which require a minimum of two years of education or training mean that the results of this exercise may not be suitable for informing training programmes for the unemployed since the long-term unemployed who are often low-educated (and stand to benefit the most from training) may not have the pre-requisites to train for occupations which require a Certificate 3 or higher.

The state-specific SAA exercises used to identify VET qualifications in demand could potentially be used for the purpose of informing training of job seekers. Though methodologies vary by state, most assess immediate or short-term qualification needs, and are expressed as qualifications – which are more useful for informing training content than occupations.

3.2.3. Helping employers to clarify and communicate their skill needs

Close engagement with employers can sometimes act as a substitute for SAA information, provided that employers can communicate their skill needs well.

Currently, however, employer engagement in jobactive is low. According to the Survey of Employers’ Recruitment Experiences run by the Department of Jobs and Small Business, 79% of employers were satisfied by the assistance provided by a jobactive organisation in 20176. However, few employers recruit using jobactive. While 13% of all employers used recruitment agencies (including jobactive) when recruiting, only 5% used jobactive. Employers were twice as likely to use jobactive when recruiting for a lower-skilled vacancy compared with a higher-skilled vacancy, indicating employers’ perspectives on the ability of providers to supply suitable applicants.

Even so, employer engagement could be improved with better communication between employers and employment service providers. Such communication could be encouraged by supporting employers to better measure their skill needs, and to start thinking in terms of skills. For example, the Swedish PES is refining its digital matching tool to allow job seekers and employers to search for one another through a system of skill tags (OECD, 2016[6]). Job seekers can input specific skills they have acquired both formally and informally (e.g. on the job) into their profile. In turn, employers can search by skills, rather than be constrained to search by job title or qualifications; proxies that are unable to capture their specific skill needs. Similarly, the French PES has also moved away from matching based on qualifications towards matching by skills. To help employers identify skill requirements, a labour market reference framework was set up, and skill suggestions are given based on skill requirements in similar job postings. Employers can indicate which skills are essential and which would be desirable, and they are free to add any skills beyond the reference framework. In addition to basic and specific skills, employers can also add soft skills (qualités professionnelles).

3.2.4. Assisting workers in transition

The results of SAA exercises have been central to the design of structural adjustment programmes in Australia, particularly those programmes related to the declining automotive manufacturing sector. Australia’s response to the closure of the automotive manufacturing industry could be considered a best practice example of how a national effort of support which involves both government and car manufacturers can be effective in helping displaced workers to transition to jobs in demand following a significant adjustment event.

Australia does not have employment insurance, unlike most other OECD countries, and most people who lose their job are only eligible for limited income support due to stringent means testing rules (OECD, 2016[7]). Since access to more intensive employment services through jobactive is conditional on being on income support, this means that many displaced workers cannot count on assistance from jobactive to upskill and find a new job.

Workers who are displaced due to large-scale industry-specific closures (e.g. automotive manufacturing industry, mining, forestry) are an exception, as extra government support is often available to assist these workers to upskill or retrain as part of a structural adjustment initiative. For instance, the Skills and Training Initiative is part of the AUD 155 million Growth Fund which was co-financed by government and industry and designed to support businesses and regions affected by the closure of Australia’s car manufacturing industry. The Skills and Training Initiative took advantage of long lead times in advance of factory closures to prepare workers to transition to new jobs in high demand sectors and occupations, based on a review of industry demand in affected regions (Department of Industry, 2014[8]). These primarily included opportunities in advanced manufacturing, food and agriculture, health and biomedical, mining services, tourism and education. In advance of the Holden plant closure in Adelaide (South Australia) in 2017, Transition Centres were set up within the plant which offered informed career guidance, opportunities for retraining based on sectors and occupations in demand, as well as incentives for employers to assess their employees’ skills, and in some cases have them recognised as a qualification. About 84% of former Holden employees had reportedly found new employment or entered retirement at the time of the plant closure (Box 3.3).

The combination of an early response, informed career guidance, recognition of prior learning, and retraining based on occupations and sectors in demand has proven successful for industry-specific structural assistance programs in Australia. A recent analysis by the Productivity Commission raised concerns, however, that those benefiting from the assistance program may crowd out other job seekers in the region – an equity issue that is particularly valid in regions that already have a high rate of unemployment (Productivity Commission, 2017[9]). Consideration could be given to offering a similar combination of support to a wider range of workers in sectors at risk of decline, or who have skills that are in low demand. Assisting such workers to transition to occupations and sectors in high demand well before they lose their jobs could help to avoid the downgrade in the use of qualifications and skills which is currently observed among displaced workers in Australia (see Figure 3.2).

Several recent measures take steps to widen access to such employment services for workers in transition. The Career Transition Assistance program, which will be trialled in five employment regions as of July 2018 then rolled out nationwide in July 2019, will give mature job seekers a skills assessment which will inform the development of a personalised Career Pathway Plan that provides participants with information on retraining opportunities in line with their local labour market needs. In addition, between 1 July 2018 and 30 June 2020, retrenched workers in certain regions affected by structural change will be assisted in transitioning to new jobs with access to career advice, training and recognition of prior learning, skill assessment, and access to training in basic skills, digital skills and online job search assistance.

Figure 3.2. Displaced workers use less mathematics, verbal and cognitive skills in new jobs
Year-to-year change in skill use for re-employed workers (units of a standard deviation)
picture

Note: Skill requirements are measured by indices with mean zero and unit standard deviation.

Source: OECD (2016), “Back to work: Improving the re-employment prospects of displaced workers.” (Figure 1.18)

Box 3.3. Skills and Training Initiative – Holden case study

The Skills and Training Initiative is part of the Growth Fund, which is a AUD 155 million fund to support businesses and regions affected by the closure of Australia’s car manufacturing industry. The Growth Fund is co-financed by government and industry: the Australian government contributed AUD 101 million, the Victorian and South Australian governments each contributed AUD 12 million, and two car manufacturers (Holden and Toyota) each contributed AUD 15 million.

In the case of Holden, the company learned from the experiences of similar auto closures (e.g. Mitsubishi, Ford, Toyota). By the time the plant closed in October 2017, 84% of former Holden employees had reportedly found new employment or entered retirement. Some best practices from Holden’s closure include:

  • Early notice. Learning from the Mitsubishi closure which occurred with little lead time, Holden gave employees and government notice that the auto plant was going to close 4 years in advance of its shutdown, allowing employees time to accept the new reality and make plans for a career shift.

  • Transition Center. Holden set up an onsite Transition Center to offer workers access to career counsellors, skill assessment, recognition of prior learning and training, particularly in digital skills. Counsellors helped workers to take stock of their skills and provided guidance on career options based on sectors in high demand. The Transition Center will remain open for workers and those in the supply chain for at least a year following the shutdown.

  • Involvement with other employers. Holden invited employers to the factory to see the type of work that employees were doing and the skills that they possessed, in order to facilitate re-employment.

  • Consider the supply chain. The Transition Center was made available to workers in Holden’s supply chain, who were themselves affected by the Holden closure. The Australian Government also guaranteed that all people identified to be in the Holden supply chain would receive “Stream B” employment services.

  • Tracking outcomes. The government is following the employment outcomes of former Holden workers.

Source: 16 October, 2017. Griffiths, “Last week of Holden: How Holden preparing itself, and its workers, for the future.” The Advertiser. ; https://www.business.gov.au/Assistance/Growth-Fund.

3.2.5. Recommendations

 . Existing SAA information could be better used in profiling so that job seekers with skills in low demand receive more intensive employment services. Reflect on where in the process this could be best operationalised – whether at the statistical profiling stage, or by the employment providers.

 . Disseminate list of qualifications in high demand (state-level) to employment service providers on a regular basis.

  • For accredited training in high demand in the labour market, consider reducing the disincentives that employment service providers face in offering training to job seekers, e.g. remove upfront costs rather than require that they apply for reimbursement. Consider also removing the requirement to ask the Department of Jobs and Small Business’ approval of non-accredited training for a list of in-demand skills.

 . Encourage better communication between employers and employment service providers in order to improve understanding about skill needs. Provide support to employers (especially SMEs) to better measure their skill needs and to communicate them well.

 . To assist evaluation, employment service providers should be required to keep precise records of training content (i.e. name of VET qualification, skill set, or unit of competency) assigned and carried out.

 . Consider expanding employment support for displaced workers (and those at risk of displacement) following the successful example of the Skills and Training Initiative, which put a strong focus on career guidance and retraining based on sectors and occupations in demand.

3.3. Use of skill needs information in education and training policy

The results from skill assessment and anticipation exercises also feed into education policy. This can ensure that individuals do not just develop more or higher skills, but that they develop the right skills that respond to labour market needs, which is critical to ensuring that Australia reaps the benefits of a highly-skilled workforce. Unless employers recognise and value the skills being developed, investing in the acquisition of skills will not achieve desired effects of productivity, innovation and growth for the Australian economy, and strong employment outcomes and job satisfaction for individuals.

In Australia, SAA information is used to update and develop new qualifications, to decide which courses to fund, and to steer students towards skills and qualifications which have good labour market prospects. It is also used to provide potential learners (both young people and adults) with access to high-quality information about the labour market via user-friendly websites. The way SAA information is used in Australia is shaped by Australia’s federated system. Schools and vocational education and training (VET) are administered by the states and territories, with funding contributions from the national government, while higher education is funded and administered by the national government.

3.3.1. Providing information to students, families and workers about the labour market

Most OECD countries have developed career websites to disseminate SAA information to young people and adults (OECD, 2017[10]). In Australia, DET supports several websites that provide useful information about careers and education pathways, and their employment outcomes. For higher education, the Quality Indicators for Learning and Teaching (QILT) website enables comparisons of the quality of higher education institutions in terms of graduate satisfaction and employment outcomes by broad study area. For vocational education, the website, MySkills, sets the bar high. MySkills is a national directory of vocational education and training providers and courses. Users can search VET qualifications by industry, and are presented with digestible summaries of average course fees, course length, subsidy information, and average employment outcomes by VET qualification. Rare among vocational education websites, MySkills also allows users to compare training providers on the basis of location, course fees, and course duration. Employment outcomes by VET qualification are expected to become available at the provider level as well.

As described in Section 2.5 the Department of Jobs and Small Business also disseminates labour market information about occupations through their Job Outlook and Labour Market Information Portal. Several states also have their own career websites which exploit state-level analyses of the skill demand and supply dynamics in their own state.

The Job Jumpstart website, an initiative of Jobs and Small Business, is a careers website where young people can go to access links to relevant information (e.g. Job Outlook and the Labour Market Information Portal), as well as helpful quizzes and tips on topics like how to impress employers, how to transition from study to work, and how to tailor applications to a specific job and employer. Centralizing existing labour market information and SAA data into a single online platform helps to overcome the observed “information overload” problem, where young people demonstrate lack of knowledge about their career options despite having access to relevant information (Behavioural Insights Team, 2016[11]).

New Zealand’s careers website provides an excellent example of a careers website that centralises a wide variety of labour market information, and allows users to search by skills, occupation, qualification, or field of study. New Zealand’s Skills Builder tool, on the same website, assists users in building an inventory of their skill set, and then presents them with a list of occupations which would be a good fit (see Box 3.4). Users can also search by the occupation they are interested in, and learn which skills and training they would need, as well as other useful information like pay and employment prospects. With its focus on skills, this type of tool is particularly useful in the context of facilitating career transitions for older workers, where they may not have formal qualifications and prefer to search by skills.7

Box 3.4. New Zealand’s Career Guidance Website

New Zealand’s careers website allows users to learn about education and career pathways by searching by degree type and level, skills and occupation. With the Subject Matcher tool, users can find out which occupations they are qualified for when they input their degree and the courses they have taken. Likewise, users can search by occupations that interest them to learn which additional degrees and courses they would need in order to work in those occupations, and the average employment and salary for workers in that occupation.

The Skill Builder is another highly useful tool included on New Zealand’s careers website for adults considering a career transition. The tool assists users in building an inventory of their own skills, based on the positions they have held in the formal and informal labour market. For instance, entering “Mining Engineer” as a previous occupation will automatically build a list of skills, among them: to design industrial equipment, prepare detailed work plans, and advise others on health and safety issues. One can add or subtract skills from this automatic list until one feels that is accurately represents one’s skillset. The tool then identifies a set of alternative occupations based on one’s skillset. See below some sample job suggestions for former mining engineers based on their skills. Skill Builder also informs users about the additional qualifications or courses needed to work in a given occupation.

Figure 3.3. Snapshot of the top results from a Skill Builder search: Mining Engineers
picture

Source: https://www.careers.govt.nz/tools/skills-builder/.

3.3.2. Career guidance in schools

For youth transitioning from school to further education, training or work, in-school career guidance can be influential. For this reason, it is important that career guidance counsellors regularly update their knowledge of the labour market by consulting SAA information. However, this was identified as an area for development during consultations with Australian stakeholders.

Reports from school graduates on their experience with career guidance confirm this weakness area. According to a survey of school completers in Victoria, for instance, less than 33% indicated that they received very useful career advice in 2014, down from 44.4% in 2010. Furthermore, high-school students in New South Wales reported that information about university courses was given higher priority than VET among the careers advice and guidance they received in school (Table 3.3), despite VET graduates having similar employment outcomes as graduates from bachelors programs, on average.

Table 3.3. Career guidance in schools focuses on university courses
Student reports of career advice and guidance activities received when at school

Career Activity/Guidance Received

Yes

No

Don’t know/refused

Show you how to develop a plan about your future study and work, including planning which school courses would help you reach your goals

70.6%

28.9%

0.5%

Provide information about different jobs

80.4%

19.1%

0.4%

Find out what kinds of jobs are suitable for you

57.1%

42.4%

0.4%

Encourage you to consider jobs traditionally done by men (e.g. electrician, builder, engineer)? (Asked only of female participants)

40.6%

58.7%

0.7%

Provide information about different university courses

85.6%

14.2%

0.2%

Provide information about different VET or TAFE courses

81.9%

17.7%

0.3%

Note: Based on a survey of a sample of Year 10, 11, and 12 students in New South Wales.

Source: Calvitto et al. (2013). “Expectations and Destinations of NSW Senior Secondary Students: Volume 1: Research Report.”

Without ongoing engagement with industry and employers, career guidance counsellors can quickly become misinformed about the skills required in the labour market. Australia could follow the practice of other countries, like Sweden, which have instituted regular labour market information training sessions for teachers and career counsellors. In Sweden, these training sessions are organised in close collaboration with the public employment service and representatives from firms. During these two-day sessions, the PES provides information on its SAA activities (e.g. forecasts and current assessment of skill needs) and makes suggestions about how to disseminate labour market and SAA information to students and teachers (OECD, 2016[6]). As the Australian Government is currently developing a National Career Education Strategy, with input from a wide range of school, industry, careers industry, parent and youth stakeholders, it could consider such practices in its strategy.

3.3.3. Allocating national funding and deciding which qualifications to fund

The Australian government has recently negotiated a new national funding partnership between states/territories for the Skilling Australians Fund which will provide estimated funding of AUD 1.5 billion from 2017-18 to 2020-21. The Fund will support growth in the numbers of apprentices and trainees across a range of agreed priority areas, including occupations in demand. Employers who sponsor overseas workers through the temporary or permanent employer-sponsored migration programmes will be required to pay the Skilling Australians Fund levy.

International experience suggests that this type of fund is successful at addressing skill imbalances to the extent that the distribution of training funds prioritises regions or occupations which draw the most skilled migrants (OECD, forthcoming[12]). Supporting occupations and regions where skilled migrants are sponsored is certainly a factor in deciding which proposals to fund under the Skilling Australians Fund, but other broader criteria are considered as well. To receive funding, states and territories must match national funding, and submit proposals that align with criteria agreed between the Australian and state and territory governments. These criteria include: supporting apprenticeships and traineeships for occupations in demand or occupations with a reliance on skilled migration; trade apprenticeships; in sectors or industries with projected growth; or which target rural and regional areas and industries and communities experiencing structural adjustment.

3.3.4. Deciding which qualifications to fund

SAA information can also be used to inform policy which steers individuals towards skills and qualifications with good labour market prospects, and provides incentives to employers and education institutions to offer education and training which is in demand.

But there are challenges to the use of SAA information in steering provision and acquisition of education and training. As discussed in Chapter 2, existing SAA exercises in Australia do not have a long forward-looking time horizon, or else are carried out on an ad hoc basis. Several stakeholders expressed reservations about the practice of subsidizing courses or qualifications which may be currently in demand, but which may no longer be relevant to the labour market at the time of graduation. The reliability of forward-looking exercises also seems to be a factor limiting wider use of SAA in education policy. Furthermore, with a third of adults working in a field of study other than the one in which they specialised, some stakeholders expressed doubts that supporting a given qualification or course would help to reduce shortages in a given occupation.

In Australia, SAA information is used in both tertiary education and in adult training to inform which qualifications receive subsidies.

Tertiary education

From 2012 to 2017, Australia’s higher education system was “demand-driven,” the result of reforms which gradually relaxed “caps” on student numbers (OECD, 2017[3]). Funding for bachelor-level higher education was driven by student enrolments and provision of courses was not linked to labour market demand or SAA information. This funding system led to significant increases in enrolments and cost to taxpayers. In December 2017, the Australian government announced that it was freezing funding for bachelor-level enrolments at 2017 levels for 2018 and 2019. From 2020 onwards, increases in funding will be based on performance and limited to growth in the national population. While the government is consulting on the exact metrics for measuring performance, it has expressed interest in ensuring that institutions deliver those courses that are in demand in the labour market. This would be consistent with a number of other countries that base an element of the funding formula on the employment outcomes of graduates through performance-based funding. In Korea, for example, the government provides special funding to the 50 universities with the best performance in terms of: i) graduate employment rates; ii) the proportion of teachers with industry experience; and iii) the proportion of students who took part in internships or fieldwork. Estonia also uses a funding model for higher education which allocates up to 20% of funds based on performance, and one of the six indicators is the labour market outcomes of graduates (OECD, 2017[3]).

Compared to higher education, there seems to be more appetite for basing funding decisions on SAA information in vocational education and training (VET). With shorter course durations in VET than in higher education, as well as a stronger emphasis on preparation for employment, the scope for steering provision and acquisition of training based on SAA information is viewed as stronger.

Each state and territory subsidises a list of VET qualifications, and SAA information is used by state and territory training authorities to determine which VET qualifications to subsidise and by how much (Bent (2018[13]); see Chapter 2 for details on the different methodologies used). Eligibility for subsidies generally depends on whether the field of study is in high demand. Subsidies are allocated directly to education institutions and go to lowering the cost of VET qualifications for students.

The national government also uses the state and territory subsidy lists as part of its determination of the VET Student Loans Eligible Course List and Loan Caps methodology under the VET Student Loans (VSL) programme. The VSL programme offers income-contingent loans, up to a capped amount. But unlike the former VET FEE-HELP programme8, which the VSL programme replaces, the loans are limited to students pursuing certain VET qualifications (diploma level and above) determined by the Australian government. The current methodology for setting the VSL eligible course list and loan caps looks at those courses which have a high national priority, meet industry needs, contribute to addressing skill shortages and align with strong employment outcomes.9 Courses are approved if they are current (that is, not superseded by a new course) and on at least two state and territory subsidy lists, or are a STEM course or tied to licensing requirements for a particular occupation. The equivalent national student loans programme in higher education, Higher Education Loan Programme, is not restricted to courses linked to an occupation in shortage.

Some incentives are targeted specifically at apprentices pursuing trades that are in shortage, and at their employers. Trade Support Loans are designed to assist apprentices with everyday costs while they complete their apprenticeship and eligibility is based on a priority list which identifies occupations and qualifications in high demand (see Table 3.4 for a summary of lists used to govern national-level financial incentives for VET). This list includes Certificate 3 or 4 qualifications leading to certain priority trade occupations that appear on the National Skill Needs List, as well as a number of agriculture and horticulture qualifications at the Certificate Levels 2, 3 and 4. Financial incentives are also available to employers who hire apprentices in trades that are considered to be experiencing a national skills shortage based on the National Skills Needs List. The National Skills Needs List identifies traditional trades that are seen as experiencing a national skills shortage. The occupations on the list are determined by the Department of Education and Training, considering analysis provided by the (former) Department of Employment.

Table 3.4. National lists used to govern financial incentives for VET

National Skill Needs List

Trade Support Loan Priority List

Eligible courses for VET Student Loans

Governing body

DET

DET

DET

Purpose

Determines eligibility for employer apprenticeship incentives and personal benefits for apprentices

Identifies occupations and qualifications that are eligible for Trade Support Loans.

Determines eligibility for VET Student Loans.

Unit

Occupation

Occupation/qualification

Qualification

Coverage

Occupations requiring Australian Apprenticeship and undertaking a Certificate 3 or 4 qualification

Includes Certificate 3 or 4 level qualifications for occupations on the NSNL, in addition to a set of agriculture and horticulture qualifications from Certificate 2 to 4.

Diploma and above VET qualifications

SAA exercise or methodology

DET request labour market analysis from Department of Jobs and Small Business to guide the composition of the list.

DET request labour market analysis from Department of Jobs and Small Business to guide the composition of the list..

State-specific SAA analysis. Courses are eligible if they are current (not superseded) and on at least two state and territory subsidy lists, STEM-related or lead to a licensed occupation.

Adult training

In Australia, each state and territory offers its own set of partial or full subsidies for adult training activities (Table 3.5). These are generally open to both employed and unemployed workers10 and eligibility requirements limit the subsidies to Australian citizens, permanent residents or eligible visa holders. Training must be delivered by approved providers, and individuals must reside in the state or territory in question, be out of school (except for school-based apprenticeships and traineeships), and some states restrict how many qualifications can be subsidised at the same level for the same student.

Most states and territories offer targeted subsidised training in qualifications deemed to be priority areas for the state or territory. Criteria for placing qualifications on the priority list vary by state, but many are linked to measures of labour market demand. In Queensland, for example, courses are assessed for their public value, taking into account a number of factors including: the alignment with government priority industries, industry growth prospects, and the strength of the employment outcome from the qualification. The list is routinely updated. Similarly, the New South Wales Skills List which informs government subsidies under the NSW Smart and Skilled programme is developed through extensive industry and community consultation and labour market research (OECD, 2017[3]).

Table 3.5. State-subsidised training activities

 

Name of Programme

Eligible training for subsidy

New South Wales

Smart and Skilled

Up to Certificate 3; higher lever courses in priority areas

Queensland

Certificate 3 Guarantee

Up to Certificate 3 in priority areas; foundational skills

Higher Level Skills

Certificate 4 in priority areas

Fee-free Training for Year 12 Graduates

Apprenticeships, traineeships and training in priority skill areas for those who graduated from Year 12 within the last 12 months.

Victoria

Victorian Training Guarantee

Victorian Certificate of Education, Victoria Certificate of Applied Learning, apprenticeship, Foundational Skills course, upskilling to a higher vocational qualification

Skills First

Vocational training to address state’s skill shortages

Australian Capital Territory

Skilled Capital

Training in priority qualifications, as well as Certificate 2 pathway qualifications that may lead to further training at a higher level

South Australia

WorkReady

Foundation skills, training in priority courses, up to five bridging units at every qualification level (if needed)

Western Australia

Jobs and Skills

Foundation skills, priority qualifications and general industry training, including all apprenticeships and traineeships

Tasmania

Rapid Response Skills Initiative

Two levels of funding:

1. Up to AUD 1 500 for people who don’t have a job offer; can be eligible for a further AUD 1 500 if they get a job offer

2. Up to AUD 3 000 for people with a job offer or working who have been told by their employer that they require specific training to start or keep the job

Skills for Work

Training in targeted areas

Northern Territory

Northern Territory Training Entitlement

Certificate 3 qualifications and above, foundation skills or lower level qualifications needed to complete Certificate 3 or above

Source: Upskilled (2017), “Guide to Financially Assisted Training in Australia, Upskilled”; OECD (2012), “Employment and Skills Strategies in Australia.”

3.3.5. Updating and designing new qualifications

The review and development of VET training packages draws upon results from skill assessment and anticipation exercises and aims to ensure that training packages reflect industry-relevant skills. Under the new operating framework introduced in 2016, IRCs are required to gather intelligence for their industry sectors (with the support of their SSOs), in order to inform the advice they provide to the AISC about training package development and review. Each IRC develops a four-year work plan which includes industry analysis of new and emerging skills and training needs for the industry, as well as a proposed plan for reviewing and developing relevant training packages. This work plan is then submitted to the AISC which then develops a national schedule for training packages to be reviewed or developed. In deciding which training packages should be prioritised, the AISC considers a range of factors including strategic industry and government priorities, economic impact, and current levels of VET activity (AISC, 2016[14]).

Australia’s industry-led system of developing and updating VET training packages has clear advantages, most notably by giving industry a formal, expanded role in policy direction and decision-making for the VET sector. However, one risk with this model is that training packages put too much focus on job-specific skills, and overlook the important role of transversal or foundation skills, like literacy, numeracy and digital skills (see Box 2.9). SAA exercises also tend to focus on specific occupations or qualifications which are in demand, and often overlook the importance of foundational or transversal skills. For instance, a review of the digital skills content of 11 training packages revealed that while they contained significant digital training content, a large number of the units of competence which contained digital training content were elective rather than core to the qualifications of the respective occupations (Loveder, 2017[15]). An NCVER report finds that even though employability skills are embedded in VET training packages, they do so in an occupation-specific way, which limits their transferable potential (Snell, Gekara and Gatt, 2016[16]). The report concludes that the current design of VET training packages may not be facilitating transferability to its full potential in ways that develop generic competencies that can be used across any occupation.

A key challenge in making VET responsive to the labour market is ensuring a good balance between job-specific and common, cross-cutting skill needs in training packages, as such transversal skills promote a more resilient labour market. With this in mind, the AISC has established a series of cross-sector projects to address common skill needs across training packages, to minimise duplication of units within training packages, to consolidate existing units and to remove units that are no longer being used.

Whereas the updating and design of new qualifications in the VET sector is strongly linked to the skill needs of employers through the work of the IRCs, a parallel process is not yet in place for higher education. Considering that participation in higher education is rising and involves substantial financial and time investments from both government and individuals, there could be merit to establishing a similar type of coordination process for higher education. Better linking the design and updating of qualifications in higher education to skill needs could help to reverse the softening of labour market outcomes that has been observed for higher education graduates in recent years.

3.3.6. Recommendations

  • Centralise existing labour market and SAA information and data into a single online platform to facilitate career decisions.

  • Offer regular labour market information training sessions for teachers and career counsellors.

  • As recommended in OECD (2018), ensure there continues to be a clear link between allocation of funds from the new Skilling Australians Fund and the geographic areas and sectors facing limited supply of skills.

  • VET training and adult learning curricula should have sufficient focus on development of transversal skills, which are often overlooked in SAA exercises that focus on occupations/qualifications in demand, as well as in employer-led approaches to training package development.

  • The work of the Industry Reference Committees helps to ensure a strong link between the skill needs of employers and the content of VET qualifications. Explore the possibility of introducing a similar coordination process for higher education, to improve the employability of higher education graduates.

  • To provide a sense of how well current SAA information is reaching end users, pursue evaluation efforts to assess the quality and quantity of SAA information that is provided to students, workers, and job seekers. This would provide a basis to inform possible shifts in policy approaches to career guidance and SAA information dissemination.

3.4. Use of skill needs information in migration policy

Australia is one of a handful of countries (including Belgium, Canada, Denmark, Ireland, France, New Zealand, Sweden and the United Kingdom) that use results from skill assessment and anticipation exercises to inform migration policy (OECD, 2016[17]). Australia relies upon significant flows of skilled workers from other countries to supplement its labour and skill requirements. In doing so, it uses SAA information to select migrants with skills, qualifications and experience which are needed by employers based on skilled occupation lists.

3.4.1. Selection of migrants

In Australia, skills assessment and anticipation information is used to select migrants who have skills that meet Australian standards in an occupation on one of the skilled occupation lists for migration. As a result of this highly selective approach, migrants to Australia integrate well into the labour market. In 2016, the unemployment rate of the foreign-born population was 6%, negligibly higher than the unemployment rate of the native-born population at 5.8%. In most other OECD countries, this gap is much wider (Figure 3.4).

Figure 3.4. Unemployment rate by place of birth, 2016
picture

Note: Rates as defined by the International Labour Organisation. For instance, the native-born unemployment rate is calculated as the share of unemployed native-born persons aged 15-64 in the native-born labour force of that same age.

Source: OECD International Migration Statistics

Prior to the reforms announced in April 2017, the skilled occupation lists were the Skilled Occupation List (SOL) and the Consolidated Sponsored Occupation List (CSOL). DET was responsible for compiling the SOL, and the (former) Department of Immigration and Border Protection updated the CSOL (see Chapter 2 for details on the methodology used to review these lists).

In addition, each state/territory maintains an occupation list called the State Migration Plan (SMP). General applicants for state/territory nomination are, in theory, required to have a nominated occupation on the SMP. In practice however, states/territories can nominate any applicant with a point score above the threshold and a nominated occupation on the national list, regardless of whether or not their occupation is on the SMP. In most states/territories, SMPs appear to be used as a guide to inform migrants about which occupations are most in demand in each state/territory rather than to strictly screen applicants (OECD, forthcoming[12]). To construct their SMP, many states/territories exploit the same analysis as to assess qualifications eligible for VET subsidies (Bent, 2018[13]). These lists have significant overlap with the national skilled occupation lists for migration (OECD, forthcoming[12]).

Under reforms to the migration programme announced in April 2017, the SOL and CSOL have been replaced by the Medium and Long Term Strategic Skills List (MLTSSL) and the Short Term Skilled Occupation List (STSOL), respectively (see Chapter 2 for details on the proposed methodology for reviewing these lists). A Regional Occupation List (ROL) has also been introduced which identifies occupations that are in specific need in regional Australia. Details about the data sources and methodology that have been used to construct this list are not yet available. As discussed in Chapter 2, from 1 July 2017 Jobs and Small Business became responsible for providing advice to the Australian government on updates to all of these lists. Table 3.6 compares the relevant skilled occupation lists for the main skilled visas before and after the reforms.

Table 3.6. Relevant skilled occupation list*, by skilled visa

Skilled Visa Subclass 

Prior to reform

Current

Permanent

 

 

Employer-sponsored

Employer Nomination Scheme (186)

CSOL

MLTSSL

Regional Skill Migration Scheme (187)

CSOL

MLTSSL and ROL

Points-tested

Skilled Independent (189)

SOL

MLTSSL

State and Territory Nominated (190)

CSOL

MLTSSL and STSOL

Skilled Regional (489)

State/territory government nomination

CSOL

MLTSSL, STSOL and ROL

Family nomination

SOL

MLTSSL

Temporary

Temporary Work Skilled (457)

CSOL

MLTSSL and STSOL

Temporary Skill Shortage Visa (482)

Short-term stream

N/A

STSOL

Medium-term stream

N/A

MLTSSL and ROL

Note: (*) Note that the number of occupations available on each list differs by visa subclass and stream.

Fewer occupations are included on the new skilled occupation lists than the old lists, and the skill composition is more concentrated on high-skilled occupations. The new occupation lists are more responsive to changing labour market conditions, while the former CSOL was simply a list of ANZSCO Skill Level 1-3 occupations (with a small number of omissions where Australian citizenship is a requirement for employment, and the addition of a small number of Skill Level 4 occupations). According to an official update from Department of Home Affairs (DIBP, 2017[18]), an initial review in April 2017 led to a contraction of the lists used for temporary and permanent employer-sponsored skilled migration visas from 651 to 435 occupations, with 216 occupations removed, and access to 24 occupations restricted to regional Australia – mainly in occupations related to farming and agriculture. Occupations were removed to ensure the lists remained focussed and responsive to genuine skill needs and regional variations across Australia (DIBP, 2017[19]). A review in March 2018 made additional updates to the occupation lists. A comparison (Table 3.7) indicates that together the new lists are focused on ANZSCO Skill Level 1-311, as before, with slightly more concentration in the highest skill level than previously (64% of occupations are now in Skill Level 1, compared to 58% previously). The downturn in the resource sector has contributed to there being fewer Skill Level 3 occupations on the lists.

Table 3.7. Skill Level Comparison of old (SOL and CSOL) and revised (MLTSSL, STSOL, ROL) skilled occupation lists for migration

ANZSCO Skill level

SOL

CSOL

Combined

MLTSSL

STSOL

ROL

Combined

1

132

248

380

159

140

26

325

2

9

95

104

8

46

17

71

3

42

123

165

41

56

16

113

4

0

2

2

0

0

0

0

5

0

0

0

0

0

0

0

Total

183

468

651

208

242

59

509

Note: the MLTSSL, STSOL and ROL are mutually-exclusive lists. New lists as revised in March 2018.

Source: Department of Home Affairs.

Employers wishing to sponsor migrants to work in their businesses are now more constrained by these lists than they were previously, since there are now fewer occupations on the lists. Under the reforms, employers can only nominate migrants for the Temporary Skill Shortage visa who have at least two years of work experience in one of the occupations listed on the MLTSSL or the STSOL. Some exemptions are possible: employers can still recruit overseas workers to skilled occupations which are not on these lists if they meet the genuine or specialist needs of Australian companies, as defined by industry Labour Agreements and company-specific Labour Agreements.

Jobs and Small Business published a proposed methodology for updates to the STSOL and MTSSOL and invited stakeholders to comment (see Chapter 2.2.1 for details on the proposed methodology). Two of the most common concerns were that: i) the proposed methodology is not sufficiently transparent, and ii) the proposed methodology risks excluding applicants in high-demand but emerging occupations, which are not represented in the ANZSCO classification.12

Regarding the first concern about transparency, the Department of Jobs and Small Business’ proposed methodology for reviewing the STSOL and MTSSL includes a comprehensive list of data sources but neglects to include details about which indicators will be used. For instance, “vacancies by occupation and skill level” is listed as a source of data, but the methodology is silent about how this data will be used to construct an indicator of skill shortage (e.g. measure, threshold values). Furthermore, data sources will be classified as primary or secondary factors, based on their robustness and reliability, with more weight given to primary factors. Beyond this, however, little clarification is offered regarding how the indicators will be weighted and aggregated. Jobs and Small Business intends to continue to refine its methodology as additional datasets become available.

Similar to Australia, the Migration Advisory Committee (MAC) in the United Kingdom combines labour market analysis with stakeholder consultation in constructing its skilled occupation lists for migration. In doing so, it is fully transparent about how it measures occupational shortages based on its top-down labour market analysis (Box 3.5). But it allows judgement to enter into the calculation through the bottom-up part of its methodology, as occupations are only included on the shortage occupation list if sectoral and occupational data sources, as well as consultations with stakeholders, confirm that they are indeed in shortage.

Box 3.5. Constructing the UK’s Shortage Occupation List

The Migration Advisory Committee (MAC) is a non-governmental public body commissioned by the UK Government to develop and periodically review the high-skill shortage occupation list that governs Tier 2 (i.e. skilled workers with a job offer) immigration decisions for non-EU work migrants. The MAC uses both a “top-down” and “bottom-up” method to produce a list of occupations deemed to be facing skill shortages. Top-down evidence comes from an examination of national-level data sources, while bottom-up evidence stems from an examination of individual occupations and job titles and is informed by engagement with stakeholders. Occupations are included on the shortage list if they pass set thresholds for the majority of top-down quantitative indicators (Table 3.8), and if bottom-up evidence confirms that they should be included on the list. Consultation with stakeholders can result in the addition or removal of occupations to or from the list.

Table 3.8. Migration Advisory Committee’s twelve indicators of occupational shortage

 

Indicator

Data source

Employer-based indicators

Skill shortage vacancies as a percentage of employment by occupation

ESS

Price-based indicators

Per cent change in median real pay (1 year)

ASHE

Per cent change in median real pay (3 years)

ASHE

Relative premium to a skilled occupation, holding age and region constant

LFS

Volume-based indicators

Change in claimant count by occupation (%)

NOMIS

Change in employment (%)

LFS

Change in median hours for full-time employees (%)

ASHE

Change in proportion of workers in occupations for less than one year (i.e. new hires)

LFS

Indicators of imbalance

Ratio of vacancy postings to unemployment in the occupation

Burning Glass and NOMIS

Note: ASHE: Annual Survey of Hours and Earnings, ESS: UK Employer Skills Survey, LFS: Labour Force Survey, NOMIS: Office Labour Market Statistics. The LFS provides monthly labour market information about employment and unemployment by occupation, while the ASHE provides annual wage data and hours worked by occupation.

Source: Migration Advisory Committee (2017), “Assessing labour market shortages: A methodology update”, Migration Advisory Committee, London.

A second concern voiced by stakeholders is that the proposed methodology is anchored to the ANZSCO occupation classification, which does not yet include emerging occupations like cyber security or artificial intelligence experts. Occupations which emerge with technological progress may require specialised skills which contribute to skill shortages. Neglecting to consider such occupations in reviewing skilled occupation lists could prevent the flow of specialised skills into Australia, negatively affecting productivity.

The new Global Talent Scheme, being piloted from 1 July 2018, should help by providing access to Temporary Skill Shortage visas for people with highly specialist skill sets for emerging occupations which cannot be adequately defined by ANZSCO. As part of the program, technology-based and STEM-related start-up businesses will be able to sponsor experienced people with specialised technology skills.

Consultation with industry and employer groups at the state and regional level will continue to be vital to constructing skilled occupation lists for migration which represent the real needs of employers across Australia. In addition to formal consultation with industry and employer groups, the use of big data could also be explored to track demand for emerging occupations, although caveats associated with the use of big data should be kept in mind (see discussion in Chapter 2). The UK’s MAC has begun to use online vacancy data on an experimental basis as a substitute for a discontinued occupational vacancy data set (MAC, 2017[20]). As they note in their methodological report, MAC plans to use this data to “provide extra contextual data on the demand for an occupation and how it varies across the UK, across job titles within the occupation, and whether there are any specific skills that are particularly in demand within the occupation.”

3.4.2. Recommendation

  • Publish clear details about how the occupation lists for skilled migration will be reviewed and updated, including specific measures, thresholds, and possibly weights.

References

[14] AISC (2016), Industry Reference Committees: Operating Framework for the Development of Training Packages.

[11] Behavioural Insights Team (2016), Moments of Choice, http://38r8om2xjhhl25mw24492dir.wpengine.netdna-cdn.com/wp-content/uploads/2016/08/Moments-of-Choice-report.pdf (accessed on 04 December 2017).

[13] Bent, P. (2018), Scoping of Labour Force Modelling and its application to VET subsidisation (unpublished), Department of Education and Training.

[5] Card, D., J. Kluve and A. Weber (2015), What Works? A Meta Analysis of Recent Active Labor Market Program Evaluations, Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor.

[8] Department of Industry (2014), Growing Opportunities: South Australian and Victorian Comparative Advantages, Australian Government.

[19] DIBP (2017), 457 reforms and occupation list changes: questions and answers, Australian Government, Department of Immigration and Border Protection, https://www.homeaffairs.gov.au/WorkinginAustralia/Documents/457-reforms-qanda.pdf.

[18] DIBP (2017), Fact sheet two: Reforms to Australia's permanent skilled migration program, https://www.homeaffairs.gov.au/WorkinginAustralia/Documents/reforms-australia-permanent-employer-sponsored-migration-programme.pdf.

[4] Forrest, A. (2014), Indigenous Jobs and Training Review, Australian Government, Department of the Prime Minister and Cabinet, https://www.pmc.gov.au/indigenous-affairs/employment/indigenous-jobs-and-training-review (accessed on 11 December 2017).

[15] Loveder, P. (2017), “Australian apprenticeships: trends, challenges and future opportunities for dealing with Industry 4.0”.

[20] MAC (2017), Assessing labour market shortages: A methodology update, Migration Advisory Committee, London.

[2] OECD (2017), Connecting People with Jobs: Key Issues for Raising Labour Market Participation in Australia, Connecting People with Jobs, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264269637-en.

[3] OECD (2017), Financial Incentives for Steering Education and Training, Organisation for Economic Co-operation and Development, Paris, https://www.oecd.org/publications/financial-incentives-for-steering-education-and-training-acquisition-9789264272415-en.htm.

[10] OECD (2017), Getting Skills Right: Good Practice in Adapting to Changing Skill Needs: A Perspective on France, Italy, Spain, South Africa and the United Kingdom, Getting Skills Right, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264277892-en.

[7] OECD (2016), Back to Work: Australia: Improving the Re-employment Prospects of Displaced Workers, Back to Work, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264253476-en.

[17] OECD (2016), Getting Skills Right: Assessing and Anticipating Changing Skill Needs, OECD Publishing, Paris, https://doi.org/10.1787/9789264252073-en.

[6] OECD (2016), Getting Skills Right: Sweden, Getting Skills Right, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264265479-en.

[1] OECD (2012), Activating Jobseekers: How Australia Does It, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264185920-en.

[12] OECD (forthcoming), Recruiting Immigrant Workers: Australia 2018, OECD Publishing, Paris.

[9] Productivity Commission (2017), Transitioning Regional Economies, Productivity Commission.

[16] Snell, D., V. Gekara and K. Gatt (2016), Cross-occupational skill transferability: challenges and opportunities in a changing economy, National Centre for Vocational Education and Research, Adelaide.

Notes

← 1. Employment service providers may also conduct the initial JSCI if the job seeker is a direct registrant volunteer. If a job seeker’s personal circumstances change, a JSCI Change of Circumstances Reassessment (CoCR) is required. Their JSCI can also be updated as a result of an automatic update using data sourced from the job seeker’s income support application process.

← 2. Department of Jobs and Small Business, Employment Fund Accredited Training expenditure by stream, 1 July 2015 to 31 October 2017.

← 3. While the review focused on employment services for indigenous people, it led to changes in the employment services system as a whole.

← 4. Negative short-term impacts can generally be attributed to “lock-in effects,” whereby participants withdraw from the labour market temporarily while training.

← 5. The OECD has previously recommended paying for employment outcomes beyond 26 weeks in order to reward the delivery of pre-placement training and better matches more generally (e.g. (OECD, 2014)). The United Kingdom has experimented with longer-term outcome payments in the payment model of the UK Work Programme, which offers contracted out employment services for the long-term unemployed. Outcome payments for providers are still available for 1.25 up to 2.25 years after the initial placement for providers who achieve employment retention.

← 6. Department of Jobs and Small Business, Survey of Employers’ Recruitment Experiences, 2017.

← 7. Budget 2018 announced plans to launch a Skills Transferability Tool on Job Outlook in July 2019. The tool will identify a user’s skill profile based on their previous experience, education and lifestyle, and then identify occupations with matching skill requirements. It will also inform users about the gap between the skills they currently have and those required to perform a given occupation, and offer information on how to develop those skills. The tool is intended to support those who are looking for a job or transitioning from one occupation to another.

← 8. The VSL programme came into effect from 1 January 2017, replacing the VET FEE-HELP scheme.

← 9. The Australian Government reviewed the methodology of the VSL approved course list and loan caps in 2017. The review involved an extensive consultation process including with state and territory governments. The review concluded that there was insufficient evidence to warrant significant change to the methodology and the loan cap amounts at this early stage of the program. As VSL matures and more data becomes available the department will develop more in-depth labour market analyses of the program. For more information about the review see Department of Education and Training (2017) Review of the VET Student Loans Approved Course List and Loan Caps Methodology https://www.education.gov.au/vet-student-loans/VSLmethodology, 11 December.

← 10. About 22.5% of government-funded students are unemployed (NCVER, Internal data cube, National VET Provider Collection, 2016).

← 11. In ANZSCO, occupations are grouped into skill levels (ranging from 1 to 5) based on the required education and training as well as required previous experience. Skill Level 1 is commensurate with a bachelor degree or higher, or at least five years of relevant experience. In Skill Level 5, occupations have a level of skill commensurate with either compulsory secondary education, NZ Register Level 1 qualification, AQF Certificate 1, or a short period of on-the-job training.

← 12. Department of Jobs and Small Business, Skilled Migration List Review: Methodology Consultation (October 2017); review of online submissions conducted by the OECD on March 2, 2018.