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Determining Priorities for Publicly Funded VET: The Industries’ Shares Model Presentation to the VET Research and Planning Network Forum – 22 April 2005
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Overview Priorities work to date Between Industry Priorities Industries’ Shares Model Phase One – Quantitative Phase Two – Qualitative Implementation
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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)
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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.
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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
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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
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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
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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)
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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
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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)
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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
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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
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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
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Applying the Model Building and Construction: Weights 0.50.050.150.05 0.1 1.0 Delivery Shares Industry Skill NeedsGovernment policy Return on Investment Need Share 2004 Government funded SCH shares New Entrants Skilled – Skill Gaps Unskilled – Skill Gap Workers aged 15-24 Workers aged 45 + Average Weekly Earnings Skill Shortages Weighted measure 7.914.22.712.15.86.412.613.012.2
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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
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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
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Moderating Outputs – Phase Two Consideration of qualitative evidence: ITAB Change Driver Reports Industry Reports ( 1 st and 2 nd generation ) Study Area Reports ( 1 st and 2 nd generation ) Reference Group advice
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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
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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
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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
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Implementation Issues for TAFE: Workforce – re-skill / re-structure Facilities and Infrastructure Course Viability – critical mass especially in regions Client Choice – Student aspirations
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