Determining Priorities for Publicly Funded VET:

The Industries’ Shares Model

Presentation to the VET Research and Planning Network Forum – 22 April 2005

Overview

Priorities work to date

Between Industry Priorities

Industries’ Shares Model

Phase One – Quantitative

Phase Two – Qualitative

Implementation

Re-alignment of Training Within Industries

State-wide Priority Advice (2003)

Identify the nature and extent of industry and community training needs (i.e. priority training); and

Map needs against the supply of publicly funded training to identify where there is over-supply and/or poor training outcomes (i.e. lower priority training)

Applying State-wide Priorities Locally

Study Area Moderation (2004)

13 Study Area Reference Groups contribute to Study Area Reports

Provides and evidence-base for applying priority advice at a regional level.

Re-alignment of Training Between Industries

Industry Share Model (Endorsed by VLESC 2005)

Assess the capacity and develop strategies to re-align lower priority training to high priority training between industry areas.

Refresh Priority Advice in accordance with outputs of Industry Share findings – to guide re-alignment of training effort

The Model – Phase One

Assesses the level of imbalance between an industry’s current share of training ‘delivery’ and its calculated share of training ‘need’

On the Demand Side, the model is comprised of: Criteria; Factors; and Weightings.

On the Supply Side: 2004 delivery data

All Government Funded Excludes ACFE, VETiS

Need Share

Delivery Share

v

The Model - Criteria

Industry Skill Needs: Primary purpose of government funded training Not adequate for all needs

Return on Investment: Assumption that training needs outstrip resources Scarce resources allocated on the basis of optimal utilisation

Government Policy: Impacts public training resources

The Model - Factors

Industry Skill Needs New Entrants to occupations Skill Gaps in the existing workforce

Return on Investment Net Replacement Rates (capturing turnover) Skill Shortages Contribution to the economy

Government Policy Current Policy Settings (age targets)

The Model – Weighting each factor

New Entrants – 0.5 weighting Important source of training Reflects primacy of Industry Skill Needs within the model Key interest for government Reflects motivation for training

Skill Gaps – 0.2 weighting Less of a focus Enterprise contribution to training Looks at workers with and without qualifications

The Model – Weighting each factor

Skill Shortages – 0.1 weighting Place constraints on the economy Addressing shortages = higher return on training**Not necessarily training issue

Contribution to the economy – 0.1 weighting Based on average weekly earnings by industry Assumption = greater earnings —> greater public benefit

Government Policy – 0.1 weighting Reflected in age targets 15-24 and 45+ (0.05 for each)

The Model – Measures for each factor

New Entrants: VET relevant workforce calculated Training Intensity Adjustment Factor applied Forecast Growth and Net Replacement Rates (NRR) applied NRR used to discount New Entrant number Shares for each industry determined

Skill Gaps: Calculated separately for workers with/without qualifications Up-skilling adjustment factor applied Training likelihood adjustment factor applied

The Model – Measures for each factor

Skill Shortages: Limited reliable data DEWR list – best source of data for useful analysis Employment within skill shortage occupations calculated Industry share determined

Contribution to the economy: Initially, GSP per worker “What Jobs Pay” – Average Weekly Earnings Industry share of total ‘wage bill’ for VET workforce

The Model – Measures for each factor

Government Policy: Number of workers aged 15-24 and 45-64 calculated Each Industry’s share for the total determined High levels of either = larger share of training need

Applying the Model

Building and Construction:Weights 0.5 0.05 0.15 0.05 0.05 0.1 0.1 1.0

Delivery Shares

Industry Skill Needs Government policyReturn on

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Applying the Model

Building and Construction:

Delivery Share = 7.9%Need Share = 12.2%

Need > Delivery = 4.3 percentage points*

* Potential realignment into Building and Construction

Moderating Outputs – Phase Two

After the model is applied: Any realignment to occur only in industries where the

absolute imbalance is greater than 1 percentage point

Usually small industries

Realignment will only have a marginal impact

Realignment should be concentrated in areas where the imbalance is most profound

Moderating Outputs – Phase Two

Consideration of qualitative evidence:

ITAB Change Driver Reports

Industry Reports ( 1st and 2nd generation )

Study Area Reports ( 1st and 2nd generation )

Reference Group advice

Moderating Outputs – Phase Two

Factors external to the model: Equity Scope and Rates of change in Industry sectors Volunteers Student Outcomes Skills Transfer and HE Pathways Share for ACFE programs Second job holders

Implementation

Principles:

TAFE ‘P’ profile as the main lever

Within industry priorities to guide realignment

Gradual realignment – 2006-08

Not a one-size-fits-all approach – consider institute and regional specific factors

Implementation

Issues for OTTE:

Assess the impact of realignment at the Institute and State-wide level and guard against new imbalances

Influencing the realignment of training

Monitoring training realignment

Limitations to the realignment of training e.g. employer reluctance to take on apprentices

Implementation

Issues for TAFE:

Workforce – re-skill / re-structure

Facilities and Infrastructure

Course Viability – critical mass especially in regions

Client Choice – Student aspirations