The National Skills Agreement needs time in the policy spotlight and it must include these 3 things

Australia continues to grapple with acute skills shortages. Businesses are struggling to find workers with the skills they need. Meanwhile, workers struggle to get jobs because of the mismatch between available training and occupations.

There is currently a high-profile debate about the university sector’s role in this via the Universities Accord review process.

But the role of vocational education and training is not getting the same level of attention, even though the National Skills Agreement) is also being developed this year.

This is timely. While enrolments in vocational education and training courses increased during the pandemic, the latest national data shows in the first nine months of 2022, there was a decrease of 6.1% in government-funded enrolments in these courses, compared with the same period in 2021.

This is despite the fact that seven of the current top ten jobs facing skills shortages require vocational qualifications, rather than university degrees.

Read more: Yes, we know there is a 'skills shortage'. Here are 3 jobs summit ideas to start fixing it right away

What is the national skills agreement?

The federal government is proposing a five-year National Skills Agreement to start in January 2024. This will be with the states and territories, with the aim of developing “high quality” vocational education to “boost productivity and support Australians to obtain the skills they need to participate and prosper in the modern economy”.

Its predecessor was the National Agreement for Skills and Workforce Development (NASWD), established in 2012. Under this, the federal government provided about A$1.6 billion per year to governments to help deliver vocational education services and run training systems.

But a 2021 Productivity Commission review found that the NASWD was not increasing skill levels and qualifications. The former Coalition government had planned to finalise a new National Skills Agreement in the second half of 2022. But the election changed the timeline.

After the Jobs and Skills Summit in September last year, the new Labor government signed an interim 12-month agreement. This one-year agreement provides $1.2 billion to support 480,000 fee-free vocational education and training places (mainly in TAFEs).

This is a welcome start but the longer-term National Skills Agreement needs to focus on three key areas if it is to succeed.

1. Retaining more apprentices

The latest national data shows about half of apprentices drop out before they complete their training, with a quarter quitting in their first year.

Completion rates have been in decline for a decade now, from a high of 61.6% in 2012.

One of the key reasons for this are low wages. Starting apprenticeship wages are generally below the national minimum wage of $21.38 per hour. Increasing apprenticeship and traineeship wages to a competitive level will provide an incentive for apprentices to stick with their employer and complete their training

Other reasons apprentices drop out are poor relationships with colleagues and not enjoying the work. This means we also need to look at improving work experience opportunities and changes to workplace culture to ensure apprentices go in with a good understanding of what apprenticeships will involve and complete their training in a supportive environment.

2. Making training more flexible

Recent reviews like the 2019 Joyce review and a 2020 Productivity Commission review have highlighted the lack of flexibility in the current apprenticeship model.

The OECD also found Australian apprenticeships were rigid and seem to depend on duration rather than competence. Meanwhile, training has not been able to keep up with technology or changes in market demand.

This makes it hard for employers to meet skills shortages by upgrading employees while they are still on the job. They may have to wait until apprentices complete their qualifications before they train them in more updated technologies and processes.

Micro-apprenticeships are mini qualifications done in smaller blocks. As our research shows, they can be done on the job, instead of going through vocational education providers. They are flexible and can allow apprentices to be rapidly trained to meet ongoing technology and market changes.

If these are going to work in Australia, the new skills agreement will need to support employers who want to “top up” their workers’ qualifications.

3. Encouraging more vocational-uni collaboration

The Universities Accord is currently looking for ideas on how universities and the vocational education sector can collaborate more.

A key ongoing challenge is lack of cooperation between the two sectors. Both often see each other as competitors for school leavers and government funding.

However, our research shows we need closer collaboration between the two. Thanks to changes in technology, Australian workers will increasingly need both “hard” or technical skills and “soft” or non-technical skills. So the current defined boundary between higher education and vocational education will be unhelpful.

Read more: The Universities Accord will plan for the next 30 years: what big issues must it address?

The vocational and university sectors have already proven they can work together. For example, Swinburne University has worked with the Australian Industry Group and Siemens to establish the Advanced Manufacturing and Design Centre, to give students the opportunity to use the latest manufacturing and design techniques and technologies. The centre provides vocational education (including certificates and diplomas) which can lead to bachelor and higher degrees.

Victoria University, BAE Systems Australia and the Australian Industry Group have also collaborated on a “degree apprenticeship”. These programs combine university study with on-the-job training.

Why it matters

With both the Universities Accord and the National Skills Agreement being developed, this year can be the catalyst for the vocational and university sectors to collaborate more and for governments to make changes to keep more apprentices in training and make it easier for them to keep training.

There are huge challenges to get the skills we need in nursing, disability, aged care, garages, retail, construction, and hospitality. It is worth getting this right, both for now and into the future.