Are Young Australians Prepared for the Future?

A VETtrak series on Australia’s preparedness for changing roles and industries

Part 1: The Challenge

Australia’s young students and workers face challenges on multiple fronts. From automation and credential inflation to stagnating wages and delayed adulthood, they are up against forces that also threaten to adversely impact the economy. To prepare for the future of work, the education system must adapt to skilling students for the jobs of tomorrow, not just today.

Following on from our first inaugural Voice of VET RTO Industry Australia 2018 Report, here VETtrak investigates some of the challenges Australian students, education providers, and employers face in preparing for the workforce of tomorrow.

Rise of Automation

Automation represents a considerable challenge to participation in the future economy, though predictions on its impact vary significantly between sources. The OECD, for example, predicts only 9% of jobs will be impacted over the next decade, while the Committee for Economic Development of Australia (CEDA) foresees up to 40% of our workforce being displaced by 2030.

This lack of certainty is pervasive. Adzuna finds “1 in 3 jobs are at risk of automation Australia-wide by 2030.”, with “a huge disparity between the percentage of jobs at risk in capital cities compared to their respective states. Though “low-paying and low-skilled jobs will be impacted most” white collar jobs are not immune, most notably accountancy.

These reports share a common theme: that the nature of work is changing with automation, AI and technology (collectively the “Fourth Industrial Revolution”), which will increasingly augment or replace work traditionally delivered by humans. Where they differ is whether the technology will wholly replace roles, or simply remove some of their more predictable tasks.

Frost & Sullivan have a different take. They predict “more than 40% high-routine and low-skilled tasks to be automated by 2025-2030,” but that technology will assist, not replace workers. “AI implementation is set to complement human jobs, not eliminate them. By 2036, it is likely that physical jobs and routine jobs will only comprise 22% and 17% respectively, whereas a majority at 61% will be knowledge-based jobs.” Among their findings, they conclude that AI would have a “positive impact on job creation: high-skill functions and jobs requiring human interaction, STEM skills, creativity, and care are not at risk.”

Increasing Costs of Study

While the threat to workers appears to be a question not of “if”, but “to what extent”, the solution put forward is consistent: education. Yet in parallel to automation, there has also been a rise in the cost of education and the duration of student study.

Government-funded places in VET, for example, have declined as the study-aged population grew. The University of Melbourne found “total real government funds for VET providers increased in real terms from 2008 to 2012 and then fell 20 per cent to $5 billion in 2016, lower than in 2003…in this period the population in relevant age groups grew more than 20 per cent and will continue to grow. ”

 

This comes as the burden of delivering VET education fell more heavily on private providers who managed 50% of an estimated 4.2 million students while “publicly funded students make up about 33 per cent. ”

Students find themselves forced into a decision of whether to continue to study without the support of government funding at a time when their peer group is increasingly better educated. The decision to study seems rational when “90 per cent of the 948,000 new jobs expected to be created by 2022 will require a post-school qualification.”

Delayed Adulthood

With intergenerational finger-pointing about smashed avo aside, the reality remains – young people have been told education will protect them against the threat of automation, while at the same time the cost of education is increasing. What should they do? Under these conditions, the result is that the transition from youth to young adulthood is slowing.

“For the first time in history, the wealth accumulation trajectory of the generation of workers entering employment is well below that of their predecessors at comparable ages…the future of work is more uncertain for the youngest generation of workers than ever before,” argues the Senate Select Committee on the Future of Work and Workers.

The Select Committee further says, “youth transitions [to work] have become longer, especially with the expansion of higher and further education, more precarious and complex, which is associated with vulnerability to job loss and unemployment, and differentiated and individualised, due to the pluralisation of options in education and the labour market.”

The Foundation for Young Australians concurs in its report The New Work Reality. “The proportion of young Australians in full-time work prior to age 25 has declined markedly over the past 30 years. In 1980, 53% of 15 to 24 year-olds were in full-time work, compared to only 26% today.”

Vocational Education’s Response

The reality for young people is clear – they must learn how to adapt. That’s because FYA’s data suggests that “today’s 15 year-olds will likely navigate 17 changes in employer across 5 different careers”. Further, according to the Senate Select Committee, “31.5% of young people are unemployed or underemployed” and “more than three in four of the young people (76%) do not believe they possess the relevant vocational and practical work experience to gain full-time hours of work.

Education – including VET – has a crucial role to play. When it comes to automation, for example, the Senate Select Committee says “investment in vocational skills to enable our workforce to effectively participate in and manage automated environments is critical to the success of strategies to develop advanced services and manufacturing… transitional support needs to become part of the skilling and reskilling infrastructure to support all Australians who need to carry out work and career transition.”

The good news is, the VET sector is ready. Our Voice of VET RTO Industry Australia Report found that the majority of RTOs are bullish about their prospects over the next 12 months, with 78% expecting revenues to be as good or better than the last 12 months. As part of this outlook, 25% of RTOs are looking at growth as a key opportunity in the next 12 months.

VET is skilling the workforce of tomorrow and is uniquely positioned to leverage the agility of private sector response, and a student populace that’s significantly more likely to pay fee-for-service Will VET take the opportunity on offer?