The keys to developing a skilled and educated workforce

Mark Dean likes to point out the difference between economic growth and economic development and its impact on the labour market.

Economic growth is more of a short-term phenomenon, he says, and can be achieved through higher corporate profits that rely on lower wages and – inevitably – a more casualised workforce. Sustainable economic development, however, requires a skilled and educated workforce adaptable to changing technologies.

Strong economic development brings with it higher wages for a greater percentage of workers and has associated benefits in the building of the national community, says Dean, who is a distinguished research fellow at the Carmichael Centre and an adjunct principal research fellow of RMIT University’s Graduate School of Business and Law.

While Australia may be good at economic growth, he says, it isn’t very good at economic development. For this, Dean blames the lack of a cohesive industry and education policy at the federal level.

“We need to understand that the market-driven nature of the changes in the workforce we’re seeing undermines forward planning around the kind of economy we want to see, which is one that provides quality work for all workers,” says Dean. “It’s clear we have relied on the most vulnerable workers through this pandemic and they are also some of the lowest-paid workers in the economy.”

Australia appears to have the elements needed to succeed in training the workforce of the future.

The newly created National Skills Commission has the task of looking at labour market forecasting and job training needs. The commission has created a project called JEDI, which is a labour market intelligence gathering service that classifies skills and seeks to match them with occupations. There is also the JobTrainer fund, which is part of the government’s COVID-19 response and provides free or low-fee training courses across the nation.

The missing link in all of this, according to Dean, is the underfunded TAFE system, which he believes needs to be the bedrock of developing a future national workforce.

“The massive training opportunity to upskill Australia’s current and future workforce must centre on TAFE, and that requires adequate funding,” he says. “Through cutting billions from the TAFE budget in recent years we’ve stunted our ability to respond to the pandemic and rebuild.”

Dean says TAFE contributes $92.5 billion in annual benefits to the economy. This is calculated from the direct operation of TAFE, the higher incomes of people who have been to TAFE and then entered the workforce, and the savings through the reduced cost of providing welfare to people who have been unemployed or underemployed.

“Apprenticeships were down by 140,000 last year and restoring them to pre-2013 levels will require billions of dollars restored to TAFE, and that is a federal government responsibility that needs to be intertwined with industry policy and a broader skills and training strategy,” says Dean. “We are really not seeing a sustainable system developed that leads to long term skills development.”

Dean cites the example of Scandanavian nations as models Australia might turn to. Those countries’ governments play a more decisive role in directing the longer-term development of the economy and matching skills development with technological change.

In Denmark, for example, people made redundant due to automation or other technology changes are provided with the training and skills they need, and the benefits they require, until they find another job. What emerges from this, says Dean, is that these people move into higher-skilled jobs, to their own benefit and that of industry and the broader economy.

“These kinds of ideas have a history in Australia,” says Dean. “In the past, we had a much stronger role for the government in shaping the economy. We can do that again.”

Role of employers and industry associations

One element in the transformation of the workforce lies in industry and industry associations.

One professional organisation acutely aware of this is IPWEA, the Institute of Public Works Engineering Australasia, representing 5000 engineers in Australia and New Zealand. Most members work in the local government sector managing assets that deliver services to the public.

There is currently a demonstrated shortage of asset managers. In 2017, the LGNSW Workforce and Future Skills report revealed asset managers were sixth on a list of top 10 professions dealing with a skills shortage. LGNSW’s recent NSW Local Government Priorities report found that four in five councils are experiencing skills shortages in engineering, asset management or planning.

IPWEA’s response has been to focus on education and professional development to upskill and seek to create better career paths for its members and make asset management a more desirable career.

“Asset managers are assets in themselves, and we need to make sure they are adequately prepared for their increasingly complex roles,” says David Jenkins, IPWEA’s chief executive. “If we don’t do that, then we won’t attract good people to the profession, the skills shortage will continue and the public will be poorly served by the expensive infrastructure governments are investing in.”

IPWEA has developed an Asset Management Foundations course that draws on the institute’s International Management Manual (IMM), which has been setting benchmarks for asset management since 2000. Courses are taught by experienced practitioners, include practical outcomes and assessments, and present new educational pathways for asset management professionals with no barriers to entry.

IPWEA’s Foundations course has been rolled out to staff at six South Australian councils, with funding from the state government. The state’s local government association administers it.

Employers, too, have a role to play in boosting the skills of their workforce. According to the National Centre for Vocational Education Research, 50.9% of Australian employers used the vocational education training system to upskill their employees.

Research shows that not only do employers benefit from the productivity gains of a better-skilled workforce, but their employees also have higher job satisfaction. For example, a recent MetLife survey found that “ongoing training and retraining” is in the top three things they want from their employer to help them thrive in the workplace.

Mark Dean welcomes the participation of employers and industry groups as active participants in the process of matching skills with the changing labour market. He does, however, bring it all back to the over-arching issue of government leadership to provide a holistic strategy.

Without that, he says, market forces by themselves will create anomalies and short-term corporate responses will undermine the longer-term needs of the economy. Leadership is required in areas such as the transition to renewable energy and the adoption of robotic and automated technologies, which won’t necessarily negatively impact the workforce if the right planning decisions are made.

“We run the risk of digital innovation being used to erode working conditions,” says Dean. “Uber didn’t replace taxis; it just created cheaper opportunities and worse conditions for workers.

“Even with digital automation, workers are still the most important part of the process. In Germany, automotive workers are critical to the high quality of parts and the success of that industry.”

To succeed, Dean says, Australia needs to return to the catchphrase used at the beginning of the pandemic – “we’re all in this together”. If we fail in that, Australia risks creating more disempowered and casualised workers in menial jobs and misses a chance to fulfil its economic potential.