The Business Council of Australia says significant investment in education and training is needed to help stem the tide of rising unemployment, particularly among young people and those already experiencing disadvantage. Jennifer Westacott outlines the case.
The Australian economy is beginning to face the challenges of an increasingly global labour market, which is altering the kinds of jobs we have in this country and the skills and qualifications that Australians workers need to have.
To minimise the human cost of this inevitable change, we need to face up to what’s happening in the economy overall.
Victoria and Australia’s future workforce will be very different to the one we know today. These changes are already unfolding, with the closure of traditional manufacturing operations like those in the car industry.
The Business Council of Australia (BCA) recently released a discussion paper, Building Australia’s Comparative Advantages, which identified human capital development – that is, developing people to their full potential – as the game changer in keeping Australia productive, competitive and prosperous.
To ensure we maximise our human capital, Australia is going to have to invest heavily and cleverly in education and training, and ensure that those who are able to work are properly supported by governments, business and community organisations.
Succeeding in this task is essential if we are to stem the tide of rising unemployment, particularly among young people and those already experiencing disadvantage in our society.
While Australia has performed relatively well in terms of human capital compared to other advanced economies, many important trends are heading in the wrong direction.
BCA member companies are increasingly telling me that finding skilled, highly capable people at all levels of qualification is becoming more difficult, and that they think it will only get harder into the future.
Forces of change
Economic power in the world is shifting dramatically and this will have an increasing influence on what happens in Australia’s labour market, including the type of jobs available and qualifications required.
Everything is now mobile and tradeable, including labour. The best people will go to the best jobs wherever they are in the world, while many lower skilled jobs and tasks will move offshore or be automated.
The spread of technology and the rise of emerging economies will be felt across all sectors of our economy. The speed and scale of change and the level of disruption that this will cause is unprecedented.
Globalisation and technology will profoundly alter the landscape for both businesses and workers.
Our future workforce
The fact that we are now seeing skills deficits and mismatches at a time of rising unemployment shows that we are beginning to see the effects of these changes, and that we are not yet able to respond to them.
“Our workforce must be equipped with the right skills and capabilities and this requires far better collaboration across government, business and the education sector.”
Our workforce must be equipped with the right skills and capabilities and this requires far better collaboration across government, business and the education sector.
It also makes investments at key points in the education and training spectrum critical, which is why the BCA is as interested in Vocational Education and Training (VET) and skills, as we are in schools and universities.
VET simply cannot afford to be seen as the ‘also-ran’ of the education system. It is a crucial piece of the national armour we need to protect Australia’s economic competitiveness and social cohesion, and a core part of an education and training system, helping facilitate transitions for people across their adult life.
VET is also a valuable pathway for obtaining a Year 12 qualification, and we know that completing Year 12 leads to much higher rates of full-time employment, lower incidence of unemployment, higher wages and higher status jobs for people.
In 2011, 83 per cent of Australians with a post-Year 12 school qualification (a Certificate III or equivalent) were employed, compared to 57 per cent of those without it.
Analysis published by the federal government in 2012 found that 70 per cent of the new jobs created in the five years to 2016-17 will require at least a Certificate III qualification. More than half of the new jobs will require a diploma level qualification or higher.
If we undervalue VET we will abrogate our responsibility as a nation to maximise people’s potential to have rewarding jobs and adapt to new ones over the course of their lifetime.
Encouraging more students into a revitalised VET system does not mean discouraging young people from aspiring to a university degree. It means increasing the quality and diversity of their educational options, while acknowledging how vital skills and trades are to our economy.
Learning about the world of work
Investing cleverly also means looking at how we teach young people about the world of work.
Reforming the way we offer careers learning to enable business and employers to engage with schools will lead to students making more informed choices about their studies and training.
The Work Inspirations program, coordinated by the Foundation for Young Australians, NAB and The Smith Family, is a good example of these kinds of partnerships.
“If we undervalue VET we will abrogate our responsibility as a nation to maximise people’s potential to have rewarding jobs and adapt to new ones over the course of their lifetime.”
Work Inspirations is a work experience model designed entirely by the employer. It aims to give young people a real-world sense of being in a workplace, and of the kind of skills and competencies employers expect.
Many BCA member companies are involved in this program, and options can range from three-day courses to tailored internships. Students from years 10 to 12 can see how companies like McDonalds and Microsoft work through discussions and activities with a range of staff, and also receive advice from them about future career paths.
More opportunities like this, where young people can participate in a workplace and develop important employability skills need to be created in partnership with schools, business and non-government organisations.
Careers learning, including work exposure, needs to become a central part of our education and training system.
New partnerships required
There is no ignoring the reality that a combination of global forces of competition and increased skills requirements for jobs make it harder for disadvantaged jobseekers to get work.
This means it is absolutely critical that labour market policies and programs are squarely focused on working with employers and jobseekers to bridge the gaps that prevent people from accessing sustainable employment.
If we fail in this task there will be consequences in unemployment and rising welfare costs, at a time when state and federal budgets are already strained.
A few months ago the BCA together with the Australian Council of Social Service (ACOSS) and the Australian Council of Trade Unions (ACTU) jointly proposed improvements to employment services to deliver better job outcomes for people disadvantaged in the labour market.
We recommended reorientating the system towards a ‘partnerships approach’ to more effectively link employment services with employer needs, and redirecting funding to more targeted training and in-job support.
Business wants to play a role in ensuring all jobseekers are in a position to contribute to and benefit from economic growth. We want to see disadvantaged jobseekers including young people, Indigenous Australians and the long-term unemployed receive effective support, as well as strong incentives to become job-ready and find pathways into work.
Lessons can be drawn from the way businesses have adopted a demand-led approach in the area of Indigenous employment. Demand-led means starting with a real, identified job and working with a jobseeker to equip them for and support them into that job.
The annual survey the BCA conducts on Indigenous engagement shows that since companies began to adopt clear Indigenous engagement strategies there has been considerable employment growth. In 2013 BCA member companies grew their collective Indigenous workforce by 3,500 people to a total of about 20,000.
Employers identify four success factors when employing and retaining Indigenous jobseekers:
- pre-employment training/preparation matched to real roles;
- matching jobseekers with a job they actually want and giving them a line of sight to that job;
- long-term mentoring when in the job; and
- building culturally safe workplaces.
Reconciliation Action Plans (RAPs), of which there are now more than 500 in the private, public and community sectors, provide an effective template for organisations to develop a strategy for how they plan to increase opportunities for Indigenous employment.
The best way to help disadvantaged jobseekers is to shape the job services system around the evidence we have about what really works.
Issues facing Victoria
Victoria is facing a challenge with the downturn in manufacturing, and as it is not a resource-rich state like Queensland or Western Australia, developing people to their full potential is essential if it wants to compete in a truly global labour market.
Developing Victoria’s human capital and utilising it fully will only happen when business, the community sector including VCOSS members, and the state government, all work together.
Collaboration of this kind is the foundation needed for businesses to invest and create the jobs and the revenue Victoria needs to prosper into the future.
Jennifer Westacott is Chief Executive of the Business Council of Australia.