The Australian Workforce and Productivity Agency has released a discussion paper which examines skills and workforce development needs arising four different scenarios for Australia’s economic future.


The paper, Future Focus: Australia’s skills and workforce development needs, has been released as part of the AWPA’s process to develop a second National Workforce Development Strategy to be released late this year.


It sets out factors that are currently limiting Australia’s growth potential and presents modeling of the supply and demand for skills and qualifications based on the four scenarios.


The scenarios, described in full in a paper published with  the discussion paper, include:

  • The Long Boom: sustained prosperity and a restructure economy;
  • Smart Recovery: uncertainty to 2015 with low growth and knowledge-based recovery;
  • Terms of Trade Shock: resource prices fall, a more balanced economy; and
  • Ring of Fire: risky world, multiple shocks.


The paper predicts continued strong demand for high level skills and the need for continued investment by enterprises and government to build the future workforce necessary to sustain Australia's economic growth.


The modelling finds that the trend toward higher level skills will continue into the future. Currently, almost 60% of the Australian workforce has post school qualifications. In the future, the proportion holding post school qualifications could increase to be between 65% and 75% of those employed.


Demand for qualifications at Certificate III and above is projected to grow by 3% or above per year in all but one scenario.


Mr Philip Bullock, Chair of AWPA, said the paper reinforces the need for policies and approaches that will help to generate the skills needed for Australia to remain globally competitive.


"Our growth as a nation will be constrained unless we have the right settings over the medium term to produce sufficient supply of qualifications to meet continuing strong industry demand. The mining boom has focussed attention on one area of skills shortage, but over the longer term, shortages are possible in many jobs and industries unless we start now to plan for the future."


All the scenarios used in the paper show the demand for higher level skills increasing to 2025.


The higher skills base reflects a range of factors including the changing industry structure of the economy, higher expectations of consumers, the challenge to improve productivity, and the different skills required to participate in the "Asian Century".


Across all four scenarios, there is relatively strong growth in demand for services such as healthcare, due to the ageing population, and for agriculture, arising from demand in the Asian region. However trade-exposed industries such as manufacturing, tourism and education see substantially different outcomes across the scenarios.


One of the key challenges addressed in the paper is the need to lift productivity, which has been weak over the last decade, notwithstanding some recent improvement. Better use of the skills and abilities of the workforce is a key factor in improving Australia's productivity.


"The role of leadership and management is critical in unlocking our potential. We need better use of technology as well as increased innovation in the workplace and greater investment in research and development. The prime movers in transforming our economy have to be industry and enterprises, assisted by government," Mr Bullock said.


The paper also raises questions about employment participation. While Australia's unemployment rate is the envy of most western economies, participation is uneven across demographics and regions. Low skills are a major factor in the lower participation of many people.


Assisting individuals to be both physically and upwardly mobile will be critical if Australia is to avoid an over reliance on migration to meet its future skills needs.


The Discussion Paper can be viewed at: