# Towards a National
 Jobs and Skills
 Roadmap

### Annual Jobs and Skills Report 2023

 Summary

October 2023


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### Acknowledgement of Country

Jobs and Skills Australia acknowledges the Traditional Owners
of Country throughout Australia and recognises the continuing
connection to lands, waters and communities. We pay our respect
to Aboriginal and Torres Strait Islander cultures, and to Elders past,
present and emerging.


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## Context

#### The role of Jobs and Skills Australia

Australia faces a skills challenge not seen since the 1960s. In response to this challenge, Jobs
and Skills Australia was established in November 2022 under interim legislation, superseded by
permanent legislation in August 2023. Its mission is to be a catalyst in activating the potential of
Australia’s human capital to meet the present and future skills needs.

Jobs and Skills Australia’s central role is to advise government and key partners in the national
skills system on Australia’s skills needs and the adequacy of the skills system in meeting those
needs. It has been supported by a tripartite Consultative Forum, to be replaced by a tripartite
advisory board under the permanent legislation and works closely with the 10 Jobs and Skills
Councils, and with the states and territories.

#### Strategic objectives across the labour market and the economy

In 2023, Australia is experiencing a tight labour market and extensive skill shortages, as well
as significant price inflation and continuing low productivity growth. Despite this tightness, the
labour market has been slow to lift wages growth, which have been stagnant for a decade.

As the Reserve Bank of Australia (RBA) focuses on bringing inflation into the 2 to 3% target
range, a focus on matching workforce skills with industry’s needs is required to enable the
economy to minimise the level of unemployment and underemployment that can be achieved
alongside stable inflation.

A focus on enhancing Australians’ skills also aims to support increased productivity, real wage
growth, increased labour force participation and sustainable economic growth.

A focus on enhancing opportunities for those who are disadvantaged in the labour market aims
to support more equitable outcomes in employment opportunities and rewards.

These are the high-level objectives that Jobs and Skills Australia is seeking to support:
minimising unemployment and underemployment; increasing productivity, real wages,
participation and sustainable economic growth; and increasing equity and reducing
disadvantage. Supporting these objectives will involve anticipating how jobs and skills need to
evolve to help the national skills system deliver the skills people will need for the objectives to
be achieved.

The Australian Government’s recently released Employment White Paper, Working Future,
outlines 5 objectives in its vision for the future of the Australian labour market, which we see as
highly congruent with the 3 objectives outlined above.


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#### Towards a national jobs and skills roadmap and a joined-up national skills system

Three key pillars of the national skills system are: vocational education and training (VET),
higher education, and migration (Figure 1). Jobs and Skills Australia focuses primarily on these
3 key pillars and how they work within the broader jobs and skills ecosystem which includes,
for example, the school system, informal on-the-job training, unaccredited and industry-based
training, and system settings, like employment services and wage setting and workplace
relations frameworks, and especially the way that wages adjust in the labour market.

Figure 1: The national skills system: conceptual view (illustrative)

Source: Jobs and Skills Australia


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To meet the current skills challenge and the skills needs of the future, Australia will need a
systematic approach to building foundation skills for all those entering the workforce, through
to the extensive knowledge and workforce skills that are required at the highest level. This will
require our education, training, and migration systems to effectively complement each other
and flexibly respond to skills and workforce needs. And we will need the whole population to be
supported by a lifelong learning system that enables them to continually develop their skills to
meet the needs of a dynamic economy and changing labour market.

An interconnected systems view of the national skills system to better address current and
future skills challenges is recognised by stakeholders as beneficial, while also acknowledging
that industry, jurisdictional and pillar-specific nuances will continue to be important.

In 2023, a number of important reform processes of systemic importance to the national skill
system have been progressed, with negotiations towards a new National Skills Agreement,
a review of higher education leading towards a new Universities Accord, and the Australian
Government’s Migration Strategy which will also lead to significant reforms. These reform
processes have identified the importance of synergy between each of these pillars of the
national skills system, and a role for Jobs and Skills Australia in supporting the implementation
and monitoring of policies in a way that seeks to ensure that they complement each other.

As these reform processes are charted out, Jobs and Skills Australia will develop a national jobs
and skills roadmap in partnership with Jobs and Skills Councils, states and territories, business
and unions, the education and training sector, and Australian Government agencies. Such a
roadmap starts with an analysis of jobs and skills pressures and drivers, which is a key feature
of this 2023 report. It would then map out the reforms required to deal with these pressures
and drivers. Then comes the policy implementation stage. Finally, the implementation of policies
will need to be monitored against the objectives they are seeking to achieve, with the feedback
leading to further refinement of the strategies adopted.


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## Megatrends are shaping the economy and the workforce

#### Digital transformation

Digitalisation, automation, and emergence of artificial intelligence is a key megatrend that
opens up significant productivity enhancing opportunities, and brings with it a critical skills
agenda. Some jobs will be lost, and many others will change in nature. The whole workforce
needs to be digitally literate. On top of that, higher level digital skills are in increasing demand.
The power of artificial intelligence, as well as the associated risks, has come under particular
scrutiny as its capability and applications unfold.

If Australia is going to take advantage of this trend a focus on the economy-wide implications
is a key issue for Jobs and Skills Australia to analyse and advise on and work with the Jobs
and Skills Councils, especially the Future Skills Organisation, as well as other key partners.
Significant skill gaps exist in this area and the implications, for example, for our education and
training pipeline and for lifelong learning, can only be expected to increase over time.

Technology and associated digital skills are a key enabler in meeting the opportunities of
this megatrend.

#### Clean energy and the net zero transformation

The clean energy transformation is another megatrend that has been a major focus of Jobs and
Skills Australia’s work in 2023. The transition opens up significant opportunities for Australia
with its abundant renewable energy resources and a significant construction effort required
in the near-term. It also brings with it many challenges to confront, particularly for people and
communities affected by the transition away from fossil fuels. The development of the skills
required for successful transition is a key enabler within a broader transition policy framework.
Stakeholders have consistently emphasised Australia will need to lift the pipeline of VET-trained
workers, including in regional areas, to meet the needs of the clean energy transition.

#### The growth of the care and support economy

The growth of the care and support economy associated with an ageing and increasingly
diverse population, a transition from informal to formal care, and increased citizens’
expectations of government, is another important megatrend. This area is already experiencing
skills shortages with employment in the care and support economy projected to grow strongly
in future.

The health care sector is subject to similar pressures and growth expectations, with the nursing
occupations experiencing significant skill shortages and projected strong growth in demand.


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## Current skills shortages

#### Skills shortages remain elevated

Analysis of current skills shortages shows that 36% of occupations assessed were in national
shortage (332 out of 916) in 2023, 5 percentage points higher than the 2022 Skills Priority List
(SPL).

Shortages were most common for Technicians and Trades Workers, with 50% of occupations
in the category assessed as being in national shortage, broadly consistent with findings of
previous SPLs. For example, all occupations in the Construction Trades Workers and Food
Trades Workers groups were found to be in national shortage.

Shortages were also pronounced for the Professionals group, particularly Health Professionals.
About 48% of the occupations within the Professionals group occupations were in shortage in
2023. A common thread among shortages in these occupations is that they require a high level
of skills and knowledge, qualifications and experience.

Shortages grew amongst Community and Personal Service Workers (to 24% of occupations
in 2023). As with the Health Professionals category, shortages for Community and Personal
Service Workers in the health, care and support sectors are considerable.

#### New shortages have emerged in 2023 but many are persistent

Comparisons with the 2022 SPL highlight that there were 66 (or 7%) occupations newly in
shortage in 2023, concentrated among high-skilled professional occupations – such as Sales
and Marketing Manager, Taxation Accountant, Biomedical Engineer and Solicitor. The main
drivers included a decrease in fill rates for these occupations and employers receiving fewer
suitable and qualified applicants per vacancy.

There were also 266 occupations (or 29%) that were in shortage in both years. Among
these, 47% were professional occupations mostly related to health, engineering, information
communication technology (ICT) and science. Another 33% were occupations within various
technician and trade roles.

Three consecutive years of the SPL enables us to make an assessment of the persistence of
skills shortages. The overwhelming conclusion from this assessment is how persistent many
skill shortages are. In general, the labour market has not adjusted quickly, for example, through
real wage increases, to clear these skilled shortages. The standout problem is the persistence
of shortages among Technicians and Trade Workers, though there are also persistent shortages
in Community and Personal Service Workers, a range of Professionals occupations, and
Machine Operators and Drivers (Table 1).


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Table 1: Persistent shortage since 2021 in ANZSCO major occupation groups

**Major** **Occupations in** **Percentage of**
**group** **Description** **persistent shortage** **major group**

1 Managers 3 3%

2 Professionals 55 17%

3 Technicians and Trades Workers 67 33%

4 Community and Personal Service Workers 5 6%

7 Machinery Operators and Drivers 8 10%


Source: Jobs and Skills Australia.
Note: the number of occupations assessed has changed for each SPL. This reflects both changes in the Australian
and New Zealand Standard Classification of Occupations (ANZSCO) framework and the inclusion of skills shortage
assessments for ‘not elsewhere classified’ (nec) occupations in both the 2022 and 2023 SPL assessments.

#### Occupations that have a strong gender imbalance were more likely to be in shortage

Jobs and Skills Australia’s analysis reveals that gender imbalance is a feature of many skill
shortage areas. Occupations that have a highly gender skewed workforce are significantly more
likely to be experiencing shortages than occupations where the gender balance is more even.
Male dominated occupations (in the occupation groups of Machinery Operators and Drivers,
Labourers, and Technicians and Trades Workers) and female dominated occupations (in the
Community and Personal Service Workers occupation group), stand out.

#### Skills shortages were more pronounced in regional areas

In recent times, skill shortages have been particularly acute in regional areas, especially for the
highly skilled. The share of employers reporting location as a reason for recruitment difficulties
increased with remoteness. In Very Remote areas, more than 80% of employers believed the
reason they did not receive many applicants was because of the job location and over 40% of
employers had a suitable applicant not take a job offer because of the location. In the Northern
Territory, 55% of employers who had few applicants and 25% of employers with an unfilled
vacancy listed location as the reason. In Western Australia, these figures were 36% and 20%,
respectively.


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#### Wage growth to address shortages has not responded as expected

For all skills shortages, conventional economics suggest that increasing wages is one lever that
employers can pull to attract more workers. How successful that will be depends on the ‘elasticity
of supply of labour’ which is contingent partly on how many people have the skills required.

The existence of extensive persistent skill shortages in our labour market implies that it is one
in which wage adjustments of this kind are not solving the problem. This could be that for some
reason, wage adjustments are not being used as much as they could be, or that there are wider
issues at play.

Recent analysis by both Jobs and Skills Australia and the Reserve Bank of Australia
highlights that wage adjustments are rarely used by employers as a short-term response to
skills shortages.

Jobs and Skills Australia’s Survey of Employers who have Recently Advertised (SERA) found
that over the 3 years from 2021 to 2023, few employers changed remuneration in response
to skill shortages. In the 2023 SPL period, around 1% of employers adjusted remuneration to
attract skilled workers to fill vacancies. While this is surprisingly low, it was up significantly on
the 2022 result when 0.4% of employers adjusted remuneration for this purpose.

The results are consistent with research undertaken by the Reserve Bank of Australia, which
show limited evidence that firms raise wages in response to firm-wide or job-level skill
shortages, at least in the short-term (Leal, 2019).

Further analysis of wage growth over a longer time horizon may shed light on whether wage
adjustments are being used as much as they could be, particularly for occupations that have
been in persistent shortage.

#### Not all skills shortages are the same

Jobs and Skills Australia has adopted a typology of skills shortages based on an insightful
conceptual framework developed by Professor Sue Richardson. This provides a simplified
approach to a complex set of labour market dynamics, and a helpful starting point for analysing
both the causes and the potential solutions to the shortages (Table 2).

It needs to be noted that not all shortage occupations fit neatly in one category or another, and
for some occupations assigned to one category, they may have some issues in common with
occupations in other categories.

Longer training gap

Longer training gap shortages are defined by there being few qualified applicants per vacancy
and a long training pathway – a bachelor degree, Certificate IV, diploma or apprenticeship is
required by successful applicants.

This suggests that there is a need to increase the number of available skilled workers but with
significant time lags involved in the training process.

In this category there may be a strong case for increasing the supply or throughput of qualified
people either by a larger intake of students or higher completion rates. However, there would
be a significant time-lag in creating this throughput. In the short-term, this could be addressed
by upskilling people with some of the relevant skills, attracting back people who have left the
occupation through improved remuneration and/or working conditions, or migration options.

Examples of occupations in this category are: Early Childhood (Pre-primary School) Teachers,
Occupational Therapists, Physiotherapists, Registered Nurses, and Electricians.


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Shorter training gap

Shorter training gap shortages arise when there are few applicants per vacancy and a
Certificate I to III or less is required.

A priori, this suggests that there is a need to increase the number of available skilled workers,
with shorter time lags involved in the training process.

This is a category where there may also be a strong case for increasing the throughput of
qualified people either by a larger intake or higher completion rates. The time lag would be
shorter than for longer training gap shortages, which means it would be fixed quicker if the
throughput could be increased. If not, the alternative strategies of upskilling people with some
of the relevant skills, attracting back people who left the occupation, or for some occupations
migration options may also need to be explored.

Examples of occupations in this category are Retail Managers.

Suitability gap

The suitability gap category is those occupations where there are enough qualified applicants
but too many are not hired because they are not regarded as suitable.

Suitability gap shortages are defined by many qualified applicants per vacancy but few suitable
applicants per qualified applicant, which results in many of these vacancies remaining unfilled.
Reasons often cited for this suitability gap are lack of employability skills and lack of work
experience. Another factor which may be in play is unconscious bias of employers.

This is a category where simply increasing the throughput of qualified people is a questionable
strategy. A priori, it appears that the challenge is to enhance the attributes of qualified
applicants through investing in their employability skills and their work experience.

Examples of occupations allocated to this category are: Advertising, Public Relations and Sales
Managers, Construction Managers, and Civil Engineering Professionals.

Retention gap

Retention gap shortages are where there is above average job mobility (below average rates
of retention) potentially reinforced by low numbers of new applicants per vacancy. A priori, the
retention gap category is where low job retention appears to be the core driver of the problem.

This is a category where simply increasing the throughput of qualified applicants, if it were
possible, is unlikely to solve the problem, because of the low likelihood of retaining them in the
occupation.

A priori, it appears that what needs to be explored are ways to enhance the attractiveness
of the occupation through improved remuneration and/or working conditions, professional
development and clearer career pathways. If attention was paid to that, then increasing the
throughput of qualified people would be more likely to pay dividends. Migration options may be
another part of the strategy.

Examples of occupations in this category are: Human Resource Professionals, Chefs, Child
Carers, and Aged and Disabled Carers.


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Table 2: Top 20 occupations in demand by shortage type, 2023

**Classification of skills shortage** **Top 20 occupations in demand**

**Longer training gap** - Early Childhood (Pre-primary School) Teachers

- Occupational Therapists

Few qualified applicants per vacancy,
bachelor degree, Certificate IV or - Physiotherapists
apprenticeship required - Registered Nurses

- Solicitors

- Social Workers

- Metal Fitters and Machinists

- Electricians

**Shorter training gap** - Retail Managers

Few qualified applicants per vacancy,
Certificate I to III or less required

**Suitability gap** - Advertising, Public Relations and Sales Managers

- Construction Managers

Many qualified applicants per vacancy,
but few suitable applicants per qualified - Advertising and Marketing Professionals
applicant - Civil Engineering Professionals

**Retention gap** - Human Resource Professionals

- Chefs

Above average job mobility (below
average rates of retention), potentially - Child Carers
reinforced by low number of total new - Aged and Disabled Carers
applicants per vacancy


Source: Jobs and Skills Australia, Skills Priority List, 2023
Note: There are 3 occupations in the top 20 occupations in demand – General Practitioners and Resident Medical
Officers, Software and Applications Programmers, and Motor Mechanics – which are yet to be categorised. Additional
analysis required as they may fall in more than one skills shortage category.

It can be seen there are likely to be a number of factors that need to be addressed to deal with
persistent shortages and the strategy may need to be multi-pronged. For example, increasing
training places while exploring migration options in the short-term, combined with higher wages
to attract more workers to the roles. Aged and disabled carers are an interesting case in point.


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## Employment projections
 for the decade ahead

#### Aggregate growth

Total employment in the Australian economy is projected to increase by around 6.5% over the
next 5 years to stand at 14.8 million, and 14.2% over the next 10 years, to stand at 15.9 million.
That is, around 2 million more people will be employed in the Australian economy in 2033 than
presently.

#### All industries are expected to grow

While growth across industries is broad-based, the greatest growth, by far, is expected in
Health Care and Social Assistance, with its share of total employment projected to increase
from 15.2% in 2023 to 16.7% in 2033. Other sectors expected to increase their employment
significantly, in terms of actual increases in persons employed, are Professional, Scientific
and Technical Services and Education and Training (Figure 2). After a long period of decline
in its share of employment, Manufacturing is expected to experience significant growth in
employment and slightly increase its share of total employment over the decade ahead.
Mining is also expected to grow strongly in percentage terms over the next 10 years.


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Figure 2: Employment projections by industry, May 2023 to May 2033, persons

Source: Projections produced by Victoria University for Jobs and Skills Australia

#### Occupational variations

The occupation groups projected to experience the strongest employment growth, in terms
of actual increases in persons employed, in the next decade are Professionals, Managers, and
Community and Personal Service Workers.

It is anticipated that the shift towards employment in occupations such as Professionals and
Managers will continue over the next decade, with these 2 groups constituting 39.1% share of
total employment in May 2023, and projected to make up 40.7% of employment in May 2033.
The continued trend of growth in care and support occupations is also expected to continue
with Community and Personal Services Workers expected to make up 11.4% of those employed
in May 2033, compared to 11.1% in May 2023.


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#### Demand for VET and higher education graduates is expected to grow strongly

Over the next 10 years, more than 9 out of 10 new jobs (around 92%) expected to be created
will require post-secondary qualifications (Skill Levels 1 to 4). Around half (48.4%) will require a
bachelor degree or higher qualification as the primary education training pathway (Skill Level 1),
and around 44% will have VET as the primary pathway (Skill Levels 2 to 4) (Table 3).

Table 3: Projections by skill level, May 2023 to May 2033, persons

**Employed,** **May 2033** **10-year** **Share of 10-year**

**May 2023** **Projection** **employment** **employment**

**Skill Level** **(000s)** **(000s)** **growth (000s)** **growth (%)**

Skill Level 1 4,811 5,766 955 48.4%

Skill Level 2 1,720 1,941 221 11.2%

Skill Level 3 2,049 2,275 226 11.5%

Skill Level 4 3,322 3,744 422 21.4%

Skill Level 5 2,012 2,162 150 7.6%

**Total** **13,915** **15,889** **1,974** **100.0%**


Source: Projections produced by Victoria University for Jobs and Skills Australia
Note: Skill Level 1 relates to bachelor degree or higher qualification; Skill Level 2 relates to advanced diploma or
diploma; Skill Level 3 relates to Certificate IV or III (including at least 2 years on-the-job training); Skill Level 4 relates to
Certificate II or III; Skill Level 5 relates to Certificate I or secondary education.

#### All states and territories are expected to experience employment growth

The employment growth across states and territories is expected to be in the range of around
12 to 16% over the next decade. The strongest percentage growth is expected in Victoria and
the weakest in South Australia, with largest absolute growth being in Victoria, New South Wales
and Queensland.

Many of the same drivers and pressures for increased numbers of tertiary qualified workers,
increases in health and care, greater digital skills and increased capability in the clean energy
sector, are anticipated in all jurisdictions. Regional variations will be an increasing focus of our
work going forward.

It will be important to work with partners across jurisdictions and sectors, including with Jobs
and Skills Councils and states and territories, to enhance the employment projections over time
and make them more accessible to better inform workforce planning and decision-making.


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## Meeting the needs of the clean energy transformation

#### Three scenarios about the clean energy future

Jobs and Skills Australia has undertaken a detailed study of the workforce implications of the
transition to net zero with preliminary modelling of 3 scenarios.

Under all the scenarios, demand for employment in the sectors related to clean energy – supply,
demand and enabling – will be among the sectors with the strongest employment growth in the
Australian economy over the next 10 years.

#### Workforce implications

Jobs and Skills Australia has identified 38 critical occupations, mainly in trades and technical
occupations, that occur across the various clean energy segments involved in developing,
generating, storing, transmitting and distributing energy generated from renewable, net zero
emissions sources, installing and maintaining the technology that uses clean energy rather than
fossil fuels, and enabling the clean energy transition through education, training, regulation, and
supply chains. Electricians and Electrical Engineers are critically important across these areas.
Metal Fitters and Machinists, Industrial, Mechanical and Production Engineers and managerial
occupations such as Production Managers and Construction Managers are also very important.
In all the net zero scenarios, demand for these occupations will be greatest.

#### Regional implications

The preliminary modelling suggests that employment growth in regional Australia is likely to
be higher than in metropolitan areas. By region, under the central scenario many regions are
likely to have average annual employment growth rates close to 2% between 2023 and 2030,
including Northern NSW and Southern NSW, Eastern Victoria and the Northern Territory. This
growth reflects renewable energy projects and the associated construction pipelines. Some of
these regions, for example Northern NSW and Eastern Victoria, also have transitioning sectors.


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#### Implications for the skills system

The education and training sectors have a critical role to play, complemented by the migration
system. It will be critical to stand up initiatives to increase the number of apprentices in
electrical and related trades. This is a big challenge, noting that this is already an area of
significant skills shortage.

It will be necessary to substantially increase the number of completions in electrotechnology
and other critical trade apprenticeships, maintain high levels of graduates across many
engineering disciplines, as well as ensure we maintain university programs in several other
specialist fields such a geology and metallurgy. As important is ensuring that these graduates
have the attributes and sector-specific technical skills that will be needed in the clean energy
sector. Ensuring there are sufficient VET instructors and teachers with relevant clean energy
sector experience will also be critical.

Stronger links between higher education and industry and the VET sector will be needed,
including expanding and regularising higher apprenticeships and promoting degree
apprenticeships and other combinations of the VET and higher education sectors.


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## An emerging reform agenda

To achieve low unemployment, strong productivity and wages growth and increase inclusion
in the labour market will require all elements of the national skills system to improve and work
better together. A focus on matching workforce skills with industry’s needs will help retain
low unemployment with stable inflation. Enhancing Australians’ skills is also an important
productivity enhancing strategy both directly but also to help facilitate innovation, a key driver
of long-term productivity growth, which in turn should support real wage growth. And the
skill system is a key lever to bring disadvantaged groups into stable, rewarding and valuable
work. Increased skills should also enhance labour force participation, another contributor to
sustainable and inclusive growth.

#### Vocational education and training

Workers qualified through VET pathways play a key role in the Australian economy. Job roles
requiring applied learning and practical skills continue to be in demand and in persistent
shortage across Australia.

A key challenge of the VET sector is its status and perceptions relative to higher education. A
House of Representatives Committee is undertaking an inquiry into the status and perceptions
of VET. A priority for Australia in meeting its skills challenges of the future is to raise the status
of skills relative to knowledge, and VET relative to higher education, through raising the value of
the application of skills and knowledge, contextualised to the workplace. Quality improvement
of the VET sector, a focus on excellence, the development of higher-level vocational
qualifications, and reform of the school system to place greater value on vocational skills, and
enabling pathways for lifelong learning, are amongst the elements of a reform agenda required
to support the culture change needed.

The VET sector in general, and Technical and Further Education (TAFE) in particular, have been
significantly challenged relative to the higher education sector in the attention paid to their
resourcing in recent decades. The negotiation of a new National Skills Agreement aims to start
a process of addressing that problem, to strengthen the sector and initiate a reform process, so
that VET can progressively improve in its ability to meet Australia’s skills needs of the future.

The proposed National Skills Agreement would embed a new model of shared national
stewardship of the VET sector to support a more collaborative and evidence-driven approach to
delivering high quality, responsive and accessible education and training to boost productivity
and support Australians to obtain the skills they need to participate and prosper in the modern
economy.

Completion rates of VET courses is a concern that Skills and Workforce Ministers have
identified as a problem to be addressed and a taskforce led by South Australia is currently
analysing this issue.

A strong focus on developing required competencies is a strength of the VET sector, but
sometimes these competencies are too detailed. This can stifle innovation and flexibility in
training delivery and hinder the recognition of transferable skills and increase upskilling and
reskilling costs. Other strengths include the direct relationship with industry in the development
and delivery of training and the ability to rapidly upskill to meet changing skills needs in the
workforce. At the same time, the time it takes to update VET courses to include new skills
demanded by employers is a challenge identified by many stakeholders. An increased focus


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on transferrable skills, resilience and adaptability are viewed by stakeholders as increasingly
important in a rapidly changing labour market. Skills Ministers have established a tripartite
process to implement reforms to VET qualifications to make them more fit for purpose.

Ten Jobs and Skills Councils with deep understanding of the VET sector and industry needs
have been established to support the VET sector in meeting industries’ needs and providing
industry with a stronger voice. Keen understanding of the cross-cutting pressures and
challenges across their sectors, for example, on the need for digital skills, will be a strength of
the new system.

#### Higher education

Australia’s higher education sector, in general, and its universities in particular, are highly ranked
internationally. The sector has also achieved remarkable growth in the last 15 years, driven
largely by the now lapsed ‘demand-driven system’, resulting in a substantial increase occurring
in the share of the labour force with higher education degrees, especially bachelor degrees.
The employment projections suggest that this growth will need to continue.

One problem to be solved is that the current construct of higher education poses a challenge to
providers in terms of balancing their research and knowledge accumulation role with teaching
and preparing students with the skills and knowledge they will need in the workplace.

There is a current review of higher education in place, to establish a Universities Accord. The
Review Panel is considering current and future skills needs, learning and teaching, access and
opportunity, research, innovation, international education, funding and regulatory settings,
employment conditions and strengthening engagement between the higher education and
vocational education and training sectors.

There is a very strong focus on the need for the higher education sector to play an important
role in meeting Australia’ s skills needs. The Interim Report identifies Jobs and Skills Australia’s
analysis as an important source of intelligence on current and future demands for skilled
graduates.

Most young Australians undertake some form of tertiary education following school, with higher
education currently being the most popular pathway. This is likely to continue although there
are pleasingly some signs of VET recovering from its decline in popularity.

Higher education provides the attainment and transfer of knowledge, generally providing
a broader knowledge base than required to succeed in a particular occupation. However,
there is evidence that many qualified graduates find it difficult to get a foothold in the labour
market because of a lack of work experience and practical employability skills. This is one of
the key issues identified in the Accord Panel’s Interim Report. Stronger collaboration between
universities and industry is warranted.

Further, the Interim Report concludes that to successfully tackle our big national priorities,
our higher education sector needs to become much, much stronger. It identifies 10 possible
system shifts over the next decade. The first listed shift that it envisages is a more integrated
tertiary system, with a commitment to access for everyone and achieving significant growth
in pursuit of national skills and equity targets. Other shifts identified include for example:
the transformation of teaching and learning, with an ambitious commitment to student
experience and the use of technology; reskilling and lifelong learning provided though more
modular, stackable qualifications, including microcredentials, with full scaffolding of pathways;
population parity in participation by 2035; and First Nations at the heart of higher education.


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#### A more joined-up tertiary education system

The Accord Panel’s Interim Report cites a focus on skills and on stronger connections with
VET as key priorities. Indeed, there has been a growing interest in the case for greater
complementarity between the VET and higher education sectors over a number of years. A key
aim would be to enhance the ability of students to navigate the tertiary education system to
obtain the knowledge, skills and capabilities they need to successfully participate in the labour
market. It should also help industry to work more effectively with both sectors to obtain the
skills it needs, and encourage education and training providers from both sectors, and industry,
to collaborate on designing fit for purpose education and training programs, drawing on the
strengths of both sectors.

The Interim Report and the Employment White Paper both see this as an important priority. The
Interim Report argues that Australia’s skills needs will only be met if the higher education sector
and an expanded VET sector, with TAFE at its core, work together within a more integrated
system to deliver flexible, transferrable skills people want and need. The Interim Report also
argues the case for working towards parity of esteem between VET and higher education.

Policy considerations in the Accord Review include, for example: the creation of a universal
learning entitlement; new types of qualification closer aligning VET and higher education
starting in areas of national priority – like clean energy, the care economy and defence; and
expanding commonwealth supported higher education places at some Australian Qualifications
Framework (AQF) levels to the TAFE sector.

The Interim Report also suggests that the reform of the AQF proposed by the Noonan Review
could be a critical element of new joined-up tertiary system and that an Australian Skills
Taxonomy relevant to both VET and higher education would offer common language between
sectors that would assist with the co-design of fit for purpose qualifications. A national skills
passport using a common skills language could also be explored as a way of increasing the
transparency of the skills people possess and increasing the efficiency of the market for skills.

It also indicates that the Review is giving further consideration to the benefits of establishing a
Tertiary Education Commission, whose initial focus would be to oversee the higher education
funding model, but over time in partnership with the states and territories could encompass the
whole tertiary system to pursue greater opportunities for alignment and collaboration between
the VET and higher education sectors.


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#### Migration systems reform

The Australian Government Review of the Migration System released in April 2023, concluded
that the migration system is not fit for purpose.

The Review considered that Australia needs a new data-driven approach to identifying
skills needs, with Jobs and Skills Australia playing an important role as the trusted source of
evidence, research and analysis on the labour market and workforce skills and training needs.

It also pointed to the need for a tripartite approach, involving perspectives from industry,
unions and government in determining the role of migration in meeting labour market gaps and
delivering fair and efficient outcomes.

The Australian Government’s subsequent Migration Strategy will set out a wide range of reforms
so that skilled migration can more effectively address labour shortages and boost productivity.
The Government is progressing this as a priority and has indicated that it will build in a greater
role for Jobs and Skills Australia.

#### A joined-up national skills system

There is significant policy work underway across the national skills system and each element
has called for a more joined-up, whole-of-system approach to meet Australia’s current and
future skills needs.

This will require our higher education, VET and migration systems to effectively complement
each other and flexibly respond to skills and workforce needs. And we will need the whole
population to be supported by a lifelong learning system that enables them to continually
develop their skills to meet the needs of a dynamic economy and changing labour market.

The potential benefits of a joined-up national skills system are immense. A more joined-up
system has the potential to contribute to minimising unemployment, increasing productivity,
economic growth, participation and real wages, and increasing equity and reducing
disadvantage. The challenge is to clearly articulate the essential components of the joined-up
national skills system, how they differ from the current approach within systems, and how to
progress towards a joined-up system.

There is much potential in these reforms in delivering the skills Australia needs now and into
the future. All of these reforms have signalled the importance of each of these pillars of the
system working together and a role for Jobs and Skills Australia to bring together practitioners,
academics, business, unions, policy makers, service providers and data holders together to set
out a roadmap to achieving this goal.


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## Towards a national
 jobs and skills roadmap

A roadmap would create an indicative strategic plan for the national skills system and chart
major steps or milestones along the way. A roadmap for the national skills system is anticipated
to include the 4 elements outlined in Figure 3.

Figure 3: National jobs and skills roadmap elements

Source: Jobs and Skills Australia

#### Pressures and drivers

The first step in the development of a national jobs and skills roadmap is to identify the key
pressures and drivers that need to be attended to, to enhance the ability of the skills system
to meet the nation’s skills needs. This is a key focus of this 2023 Jobs and Skills Report and
will be further developed and refined over the next year in partnership with the Jobs and Skills
Councils and the states and territories, in consultation with business, unions and education and
training providers, and with relevant Australian Government agencies.

#### Reform

The next step in the development of a roadmap, is to undertake reform of the national skills
system where it is deemed to be inadequate or in need of significant improvement. A range of
reforms have been under active consideration and development this year, to the tertiary system
encompassing the VET and higher education sectors, and to the migration system – which has
been outlined in the previous section. These reform agendas will be further shaped and refined
in the months ahead and move to their respective implementation stages.


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#### Implementation

The third step in the national jobs and skills roadmap is policy implementation, progressively
incorporating a range of reforms over time. Over the next year we can expect the progressive
introduction of a range of new initiatives, reforms and ways of working to the VET sector, higher
education, and the migration system.

#### Monitoring and feedback

The last step in the roadmap is monitoring policy implementation and assessing its success
against its objectives. This will then provide feedback to the system to act on and into the
policy development process to support its refinement and further policy reform.

Jobs and Skills Australia is uniquely placed to provide insights and analysis in relation to VET,
higher education and the migration system, with the added advantage it can monitor the
coherence and complementarity of the component parts across the national skills system.
Partnership with Jobs and Skills Councils and the states and territories will be a key success
factor in this process.

## Conclusions: Roadmap priorities and opportunities

The roadmap is starting to emerge, both through analysis, the policy development process and
extensive stakeholder consultation.

We suggest 8 priorities should guide the further development of the national jobs and skills
roadmap:

-  deep engagement with key partners and stakeholders

-  close collaboration with key policy advising/policy making bodies and departments of

government



-  set ambitious goals/outcomes, such as the 3 strategic objectives for the Australian

population as a whole and keep them in mind

-  set and chart goals and milestones for how the national skills system and each of its 3 key

pillars are seeking to contribute to these goals/outcomes



-  ensure that Jobs and Skills Australia focuses strongly on the interoperability and

complementarity of the component parts of the national skills system

-  produce subsidiary roadmaps in priority areas (industry, regions and cohorts)

-  chart progress against roadmap milestones

-  ensure feedback loops and continue to enhance the evidence base.

Fourteen potential roadmap opportunities are presented to help facilitate this dialogue.


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#### Potential roadmap opportunities

1. Identifying Australia’s top 20 persistent skill shortages and charting a joined-up approach to

solving them, including the respective roles of a range of different levers such as:

– increasing the throughput of qualified workers by increasing intake and/or completion rates of
relevant training and education pathways

– enhancing the attributes of graduates of VET and higher education by improving their
employability skills and creating greater work experience opportunities

– working with employers and unions and governments to enhance job opportunities through
better working conditions, including strategies to tackle gender imbalance in key skill shortage
occupations

– supplementing the Australian workforce through well-targeted migration.

2. Continue the dialogue between Jobs and Skills Australia, the states and territories and Jobs and

Skills Councils on a nationally consistent approach for labour market and skills forecasting, and
improve the coherence of workforce planning across regions and industries.

3. Support the reform of the VET, higher education and migration systems by providing advice and

analysis and monitoring achievement of progress against their objectives. This should be done in
a way that highlights the synergies between the 3 reform processes.


4. Work with Jobs and Skills Councils to assess how the range of reforms implemented as a result of

the National Skills Agreement, the Australian Universities Accord and migration reforms, help meet
the skills needs of industry.

5. Identifying the top 10 examples of weak pathways between VET and higher education, where

collaboration between VET and higher education, supported by Jobs and Skills Australia and Jobs
and Skills Councils, in consultation with business and unions can create a stronger pipeline of
skilled graduates.

6. Identifying VET qualifications which if completed alongside higher education qualifications would

enhance graduate employability.


7. Supporting the existing process of VET qualifications reform to enhance the adaptability,

resilience and employment prospects of VET graduates.

8. Identifying key enhancements in the evidence base that will assist the development of the

roadmap and improve our ability to monitor its success, including in relations to the outcomes
of learners and workers. For example, expanding the VET National Data Asset into the higher
education sector.

9. Supporting the net zero transition challenge by charting a roadmap for education, training and

migration to make that transition successful, in partnership with the new Net Zero Authority.


10. Shaping a national skills taxonomy in a collaborative partnership between business, unions,

higher education and VET, and the Jobs and Skills Councils, to underpin more joined-up tertiary
education system.

11. Develop a regional Australia jobs and skills roadmap to identify the key steps in enhancing

regional Australia’s human capital in ways that will ensure success in meeting regional employment
opportunities.


12. Co-create a First Nations workforce roadmap in partnership with First Nations people and with

key partners in the national skills system.

13. Develop a roadmap for enhancing the prospects of international students playing a significant role

in enhancing Australia’s skills profile as permanent migrants.

14. Establish a dialogue between Jobs and Skills Australia and the Productivity Commission to identify

key elements of the national jobs and skills roadmap that will assist Australia’s productivity growth
strategy.

In parallel, Jobs and Skills Australia will work with partners and stakeholders to progress a range
of projects, outlined in our 2023–24 work plan, to enhance and expand the analysis and evidence
to activate Australia’s skills potential. All projects will provide insights into at least one of the above
14 roadmap opportunities


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For more information, see

_Towards a National Jobs and Skills Roadmap_

_- Annual Jobs and Skills Report 2023_

in full at

**JobsandSkills.gov.au**

JSA23-0127


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