Opinion & Commentary
Training the unskilled doesn’t help them to get jobs
Imagine you are Julia Gillard. As new Minister for Education, Training and Workplace Relations, it’s your job to reform the Coalition’s Work Choices legislation and to implement Labor’s election promises on education.
You are itching to get started, but wading through the paperwork on your desk, you discover two other pressing problems demanding your attention.
First, employers are complaining about a ‘skills shortage.’ After fifteen years of sustained economic growth, we are running out of skilled workers. Forecasters predict a shortfall of quarter of a million by 2016.
Second, unskilled workers are finding it difficult to get jobs. Official unemployment is at its lowest for thirty years, but many jobless people have been transferring to Parenting Payment or Disability Support Pension. Many of these people could work, but relatively few of them have formal qualifications, and most of the new jobs created today are for graduates.
As you ponder how you might solve these two problems, there is a knock at the door, and in come representatives of the business community, the education profession and the welfare organizations. Speaking with one voice they demand you expand education and training.
The business groups want an increase in the number of youngsters completing high school. In 1980, one-third of Australian pupils completed year 12. Today, three-quarters do. But this upward trend has stalled in recent years. The Australia Industry Group says the year 12 retention rate should be raised to 90 per cent.
The educationists agree with this, and add that you should expand the universities too. The number of university places has doubled since 1980, and 40 per cent of young people are now in higher education, but the delegation tells you we need more if we want to be a ‘smart country.’
The welfare organizations want more training for the unemployed. The Coalition emphasized getting people off welfare and into work. The thinking was that any job is better than no job. But the welfare lobby says jobless people should not be required to take ‘dead-end’ jobs. They should be trained and given new skills so they can compete for well-paid jobs in the new skills economy.
Relaxing in the bath later, you mull over what you’ve heard, and then: Eureka! You realize you can solve both your problems with the same bundle of policies. Increase year 12 retention rates, expand university numbers and boost training for jobless adults, and the result will be an increase in the supply of skilled labour and a fall in the number of unskilled, jobless people on welfare.
What’s more, expanding education and training will be popular. The pressure groups will love you and the voters will get a warm glow. Nobody will criticize you for increasing education spending.
Next morning, you summon your bureaucrats and set out your plans. ‘First,’ you tell them, ‘I want year 12 retention rates raised to 90%.’ There is some coughing and shuffling of feet before one brave soul outlines the evidence.
Pupils doing vocational courses beyond year 10 receive no benefit when it comes to getting jobs. And while bright students who remain at school improve their earnings and their employability, this is not true for low ability students. Their risk of unemployment actually increases with two additional years of schooling, and their earnings fall. If you push retention rates beyond their current level, a lot of kids will end up taking courses for which they are not suited and which might even damage their prospects.
‘Well,’ you respond, ‘we can still expand the universities. This country needs more graduates.’
Another awkward silence. It turns out that half a million graduates (more than 20%) are currently unemployed or doing jobs for which a degree is not required. There are shortages in some specialist areas, but the country is drowning in arts graduates.
You throw your final dice. ‘Surely,’ you say, ‘it makes sense to train jobless people on welfare. Employers report skills shortages, let’s train the unemployed to fill these jobs.’
The same deathly hush. Someone pushes an OECD report across the desk which shows that training jobless adults rarely does any good. Middle-aged women returning to the labour market after raising families do benefit from training – they are motivated and they have skills that just need brushing up. Few others get anything out of it.
‘If you want to solve the skills shortage,’ one adviser tells you, ‘it makes more sense to delay early retirements, increase skilled immigration and attract more women back into work. All these people already have skills. Training unskilled welfare recipients doesn’t work.’
You send the bureaucrats away. It seems this government lark is more complicated than it appears. Policies that sound attractive don’t necessarily work. But how do you break this to the PM? You take a deep breath and pick up the phone. ‘Hi Kevin, it’s Julia…’
Professor Peter Saunders is Social Research Director at the Centre for Independent Studies.
