How Useful are Demand and Supply Indicators for Vocational Education and Training Planning?
Paper presented at the European Conference on Educational Research, University of Lisbon, 11-14 September 2002
Author: Kerry Barlow, Senior Education Officer - Research, TAFE NSW, Australia
Context
The paper discusses a project being implemented in an Educational Services Division of the Department of Technical and Further Education, New South Wales (TAFE NSW), which is a part of the NSW Department of Education (DET). With a population of 6.4m, NSW is the most populous of Australia’s six states and two territories.
Following several rounds of restructuring, TAFE NSW currently consists of eleven regional Institutes (each with multiple campuses), four Educational Services Units, and seven curriculum Divisions. Course delivery and assets management has been devolved to Institute level, and the DET central planning unit all but dismantled. There are processes in place, however, for strategic infrastructure management planning and reporting to the national funding body, the Australian National Training Authority (ANTA).
The role of curriculum Divisions is basically curriculum development and review (of statewide courses, national training packages, teacher, learner and assessment resources, all done in consultation with industry), professional development of institute staff, and provision of high level industry advice (including what many call “business intelligence”) to state offices and Institutes.
The project relates to this last role and is aimed mainly at improving the labour market and occupational advice provided to Institutes, as one important source of information for their planning purposes.
The implementation of a recent review of TAFE products and processes requires divisions to increase their focus on the provision of high-level business intelligence and industry advice as one of their core roles (Schofield, 2001, part of Recommendation 3). The cut in Commonwealth funding to Industry Training Advisory Boards (ITABs) in the 2002 budget, has seen the rapid demise of industry consultative bodies that were used by Divisions, in part to gather business intelligence. Some believe this factor may also put more pressure on Divisions to improve their business intelligence advice.
A Quality Improvement Project
The paper outlines the nature of the project, the resultant model (from which an online business intelligence resource was developed), and a discussion of the usefulness of such a model. The project itself is a quality improvement process being carried out by the Community Services, Health, Tourism and Hospitality (CSHT&H) Division, for the twice-yearly advice (called the Planning Advice to Institutes) that the Division provides to Institutes. The Institutes use this advice to inform their course profile, staff development planning, and capital and equipment planning for these industry areas. These are both short and longer term planning efforts, not made any easier by very short-run (18 monthly) financial allocations by ANTA to the Institutes.
A review of the labour market and occupational trends component of the 2001 planning advice provided by all seven Divisions to institutes, and of the information officially provided by DET (NSW BVET, 2001; TAFE NSW, 2001) for developing such advice, indicated a need for some improvement in the current approach.
Critique of Current Advice - Internal
A brief content analysis of all seven divisions’ 2001 Planning Advice to Institutes found major gaps in the advice in relation to:
· Sources of occupational projections information
· Quality and coverage of advice
· Appropriate referencing of data/information sources
· Commentary on both demand and supply issues
· Analysis of international and national economic trends, and implications for the relevant industries
Further, the analysis indicated a lack of consistency, within divisions and across divisions, in the following areas:
In relation to categories of data
· There was no distinction made between the types (categories) of labour market data, which led to a lack of clarity in the analysis components of the advice
· The demand for labour was not sufficiently delineated from the supply issues
· Demand for labour was sometimes treated as synonymous with demand for training
· No note of possible time lags between the different categories of data (ie, insufficient delineation between short-term and longer term demand for labour – which relates to the issues immediately below)
In relation to the cyclical nature of economic growth
· The cyclical nature of economic change didn’t appear to be taken into account (eg short-term business cycles – 7 to10 years duration; or longer term cycles - especially rates of profitability and productivity, and resultant effects on employment levels)
In relation to the nature of particular industries
· The longer term contribution of each major industry sector to the economy was not always reflected in the industry projections of growth in the relevant sector
· An analysis of the vacancies in many industries (which may reflect high labour turnover due more to industrial relations issues than training issues, and may be reflective of industry unwillingness to develop internal labour markets)
· An analysis of the way technology is employed by businesses, affecting the demand for labour, and for particular types of skills. So the ratio of capital/labour ratio (ie labour intensive or capital intensive) was an important consideration, very rarely mentioned in the advice.
· The pattern of size of businesses in an industry was a factor that was rarely taken into account
Critique of Current Advice – by Institutes
Feedback from all divisions’ consultations with the eleven Institutes and the Distance Learning Unit (six focus groups, 72 participants, the majority Faculty Directors, Heads of School and Planning Unit officers) regarding the Divisions’ 2001 Planning Advice to Institutes, indicated the usefulness of a lot of the content, but that some improvements were required (MSS, 2002).
Institutes asked for all sources of data to be appropriately referenced so they could validate conclusions drawn, and for careful analysis of all the data. They pointed to a need for information on trends and shifts in business and industry, occupational employment and community activity, in relation to overseas (mainly of interest), Australia (high need), and state (very high need). They asked that divisions articulate the ramifications of this information for institutes.
Institutes saw their responsibility as tracking trends within their own boundaries (regional and local), and divisions as better placed to source and analyse data to develop advice. They expressed a high need for advice on changes to legislation and government policy that may affect their business opportunities and the nature of teacher/learner materials (ib id).
This feedback, and the implication of the Schofield Report (Schofield, 2001), implies a more formal division of labour between the Divisions and the Institutes than has operated to date. It implies Divisions need to become better at collecting, analysing and disseminating broad economic and industry level information, and Institutes need to become better at understanding the characteristics of their region and how the broader economic, social, and industry trends impact at the local level.
Formal Sources for Developing Advice
Currently, the two main sources of information provided at departmental level to compile this type of advice are the TAFE NSW Educational Profiles series [which includes industry and occupational projections supplied by the National Institute of Industry & Economic Research (NIEIR)- on CDRoM], and the BVET Industry and Regional Profiles, mainly provided by ITABs, and available at the DET intranet site.
Individual Divisions also use a variety of their own sources to develop the trends and industry advice components of the Planning Advice to Institutes.
The DET- provided data and information consists of labour market and occupational forecasting reports supplied by two well-known Australian providers, demographic and social data (mainly Australian Bureau of Statistics census and survey data) and information on immediate skills shortages (vacancy data). Potential users of these sources of data are given very little, if any, background information on their nature (including reliability of underpinning assumptions). There is some (although limited) critique in the Australian literature of the various economic and labour market forecasting models used for VET planning purposes in Australia (e.g., Burns and Shanahan, 2000), but it is unlikely that many VET planners are aware of such critiques.
The range of data and information sources is not coherently organized for access by Divisions and Institutes, which often results in a lack of consistent and systematic use. Neither are the VET demand and supply issues always clearly differentiated.
Thus the project was designed to develop useful VET indicators of supply and demand relating to particular industry sectors, on which to build a model that enables access to the most current data and information, with a brief commentary on the use of such data included. Part of the project includes a survey instrument to gather feedback on the model by its users (incomplete at this stage).
Developing Supply and Demand Indicators for VET Planning
The two directly relevant literature sources relating to VET planning advice are the Australian states’ own VET industry and regional planning data and other similar (OECD) countries’ planning data, and the literature on VET demand and supply and training indicators.
For the current purpose I reviewed the contents of the NSW Department of Education and Training (DET) planning data relevant to TAFE, that of the Victorian Office of Employment, Training and Tertiary Education (DEET - Victoria), and the United Kingdom’s Department for Education and Skills (DFES –UK), and the most recent work relating to VET demand and supply by economists of education.
The NSW DET planning data made available for TAFE Institutes and Divisions consists of the TAFE Educational Profiles series (on CDRoM), and the Board of Vocational Education and Training (BVET) data provided in their Industry Program. Also available at the BVET website is a monthly NSW/ACT Labour Market Report and a list of media reports of major (usually capital works) developments, both produced by the NSW Labour Economic Office of the Commonwealth Department of Employment and Workplace Relations (DEWR).
The current version (2001) of TAFE Educational Profiles contains a range of demographic, economic and socio-economic regional data, and a full report of state, industry, and occupational data, including occupational projections to 2005. The latter was produced by the NIEIR, and whilst it contains a wealth of data and analyses of occupational trends over time, it concentrates on the demand side of the planning equation and doesn’t include any business cycle or longer-term cycle advice, particularly at an international level. A brief summary of this NIEIR report, entitled Economic and Employment Outlook in NSW, 2001-2005 is provided at the BVET website.
The BVET Industry Program planning data, which consists of industry and regional information and advice, has been provided by the NSW Industry Training Advisory Boards (ITABs), to this point in time. DET provides a framework for the preparation of this ITAB information on key industry trends and critical training issues, and is also said to provide data to the ITABs to assist this process, including from Monash University’s Centre for Policy Studies Forecasts (Monash) of occupational employment growth. On the whole, however, this Industry Program material represents the more immediate occupational and skill shortages or projected needs of industries. There is no information relating to the international, business cycle or longer-term economic trends.
The Victorian government’s Office of Employment, Training and Tertiary Education Planning Guide for Providers of Training and Further Education in Victoria, 2001 consists of occupational employment projections provided by Monash, estimations of occupational replacement needs and an upgraded Labour Market Training Needs (LMTN) model (containing estimations of skills required). The guide doesn’t distinguish between the demand and supply indicators, and, although it provides an analysis of statewide employment and training trends, it does not mention the international or national economic context. Its focus is on specific regional advice by each industry area.
Both the NIEIR (for TAFE NSW) and the Monash (for TAFE Victoria) occupational and employment projections are based on the respective labour market modelling techniques of those organisations. Forecasts from large and complex economic models are prone to error, for a variety of reasons[1], but reputable models do yield useful (if not completely accurate) information (Shah et al, 2001). Users of information based on such models need to be made aware of their limitations, including currency of the information, in light of major changes in the parameters of the models (ib id).
In light of this, a useful approach for planners would be to monitor international and national economic and industry trends from regularly up-dated sources to reality-test the models’ projections.
In a review of general labour market models, Burns and Shanahan (2000) claim that the Monash model is backed by a more coherent and public explanation of the modelling technique than the NIEIR approach. It is not within the scope of this review to draw conclusions about the superiority of either model.
Within OECD countries, the labour market and training context most similar to Australia’s is probably that of the UK. A review of the DFES (UK) model of labour market information indicates that it contains a quite extensive database and analysis of information. It includes both demand and supply indicators (with the distinction between the two clearly drawn) and is more extensive and better organised than the NSW and Victorian planning data. As well as the usual informational content relating to the macro-economic context and employment projections, it includes a range of data and information on skill deficiencies, innovation and skills, and earnings. The most useful aspect of the UK approach is the analysis of the data that explains how the data can be understood and its implications. Like the NSW and Victorian sets of information, it contains a fair amount of regional data.
The training indicators literature, relating to VET demand and supply, adopts a market framework, and implies there are several key indicators that can be used to ascertain VET training needs. An assessment of this literature can assist judgement about the adequacy of the currently provided NSW planning data.
Billett and Hayes (2000) and Kilpatrick and Allen (2001) provide a discussion of the general demand factors, whilst Shah and Burke (ud) develop a way of measuring net replacement demand. Selby Smith et al (2001) provide a full discussion of the issues relating to the different sources of demand for VET. They point out that individual, industry/employer and government demand for VET is derived demand, that is, from the various circumstances and needs of each particular group. As the authors indicate, only part of what is called skill requirements or training needs (say of industry or employers) will translate into realised demand for VET programs. Whilst the paper is of assistance in developing some demand indicators, it doesn’t offer a lot help with supply indicators.