Demography, Universities and the Trades in Australia

Graphic: Australia's population structure. Australian Bureau of Statistics

Two things happened today. Actually three, Clare gave me access to her blog, but I can't talk about that!

Seriously, because I write about my daughters I have to watch what I say. As indeed I need to do with anybody else. This blog is about reflection, conversation, subjecting things to analysis and report. Sometimes, my key board fuming with the heat, I compose the most brilliant and cutting (or at least so I think) put-downs. Those I delete.

So I showed Clare the last story that featured her. She just laughed and said that I should have selected a better photo! Now in fact that photo I selected has a special place in my heart because it was our family trip to France and Italy, I will write about that trip sometime, but all I said was give me some better photos.

Back to the two things that happened today.

The first was an announcement by the Australian Prime Minister on new funding support for trade training in Australia. This has led to considerable discussion on talk-back radio. Australia presently faces major shortages of trades people, and the key issue is how best to address this.

Those who read this blog will know that David Anderson, Dave Lee, Neil Whitfield, Tony Karrer, I and others have been talking about differences in education and training between the US and Australia, discussions carried on via blog and email. Part of that difference lies in varying approaches to trade training. Because I know that there is interest in the Australian experience, I will outline Mr Howard's announcement in a moment.

The second is an on-going email discussion among my Ndarala colleagues about changes in Australia's university sector, about numbers entering University (down), about competition among Australian universities (growing), about the vulnerability of some of our universities because of the high number of overseas full fee paying students.

Education is now Australia's fifth largest export industry with the value of exports estimated at $A9.8 billion in 2005-2006. Since we only imported around $A720 million of education services, the net contribution to our balance of payments is very substantial. As a sign of the commercial importance of the market, Seek (Australia's largest on-line job portal) has just purchased a half share in IDP Education, a university owned company marketing education services internationally, for $A36 million. Yet not everything is rosy.

Impact of Demographic Change

Both the PM's announcement and the challenges faced by Australia's universities are linked to the demographic changes now taking place in Australia.

The fact that Australia's population is aging is well known.

Depending on the assumptions used, the Australian Bureau of Statistics (ABS), projects that the median age of Australia's population will rise from 36.4 years at June 2004 to between 39.9 years and 41.7 years in 2021 and then to between 44.6 years and 48.2 years in 2051.

Because the age structure of the existing population varies from region to region across Australia (inland areas generally have older populations as do the retiree areas especially along the eastern coastal strip), so the projected impact of aging varies. Theoretically, I say theoretically because dynamic factors will bring about a measure of re-adjustment, some areas face substantial and sharp population declines.

The age structure of the Australian population is usually expressed in terms of a graphic such as the one shown above showing the proportion of the population in each age group. This has moved from a pyramid shape to a beehive and is projected to become a rectangle. However, for practical purposes I am more interested in changes in absolute numbers.

If we look at the ABS figures (2005 provisional) for resident population age distribution nationally and by state, we find:

• Nationally, there are 1,388,471 people in the 15-19 age cohort. This is the main traditional feeder group for both university and trades training. Compare this first with the number in the 20-24 age cohort (1,431,363) and 25-29 cohort (1,361,259). Now compare it with the numbers in the 10-14 cohort (1,392, 249) and 5-9 cohort (1,321,465). The numbers do bounce around a bit, but there is not all that much difference in absolute terms.
• There is an interesting break in the pattern, though, when we look at the numbers in the 0-4 cohort (1,264,507), sufficiently lower to establish a downward trend. I would not read to much into this at national level, however, since current birth rates suggest something of a mini-baby boom in part because women who deferred having children previously seem now to be catching up.
• If we look at individual state and territory patterns the picture changes somewhat. The Northern Territory is the only state or territory to show a consistent upward trend in numbers, rising each year from 14,771 in the 15-19 cohort to 17,499 in the 0-4 cohort. While the NT numbers are small in absolute terms, they are sufficient to affect the overall pattern. If we look at the other states and territories, we can see a variable but downward downward trend in numbers. This appears most pronounced in South Australia with numbers falling from 103,078 (15-19) to 87,820 (0-4), a fall of almost 15 per cent.
• If we now shift our focus to the main working age cohorts. Here we can compare the numbers in the 15-19 cohort (1,388,471) with the largest working age cohorts. Ranked by size, they are 40-44 (1,536,470), 30-34 (1,508,761), 35-39 (1,471,707) and 45-49 (1,459,228). So there is a reasonably large gap in absolute numbers between these numbers and the numbers now entering the workforce.

With these few statistics as background, we can now look at the discussion threads I started with.

Prime Minister's Announcement on Trade Training

For the benefit of overseas readers, the Australian economy has been growing steadily for an extended period, with the unemployment rate falling to 4.8 per cent as measured by the ABS. This has created significant skills shortages. At the same time, there are a significant number of unskilled people in the workforce especially in older age brackets, many of whom have been experiencing far higher levels of unemployment.

The pattern of economic growth has varied widely across Australia. Resource rich WA, NT and Queensland have experienced rapid growth, in WA's case over 14 per cent in some years, while NSW and Victoria have been lagging. There are also considerable variations within states with both growth hot-spots and depressed areas.

The real mobility of the Australian population - the willingness of people to move areas - has declined over recent decades primarily because of the rise of the two income family and the associated need to take partner considerations into account. So there is both an overall skills shortage problem and a distributional problem. And all this at a time when absolute numbers in the workforce as well as the number available to do trades are both being affected by demographic change.

Earlier this year, the Council of Australian Governments agreed to launch a new National Reform Agenda which included a focus on Human Capital. An agreed priority was to "increase the proportion of adults who have the skills and qualifications needed to enjoy active and productive working lives".

Prime Minister Howard's announcement on skills followed the COAG meeting and contained the following elements:

• Work skill vouchers: To assist the almost third of Australians between the age of 25 and 64 who are without a year 12 or equivalent qualification, the Commonwealth Government will provide up to 30,000 vouchers each year worth up to $3,000. Courses for which the vouchers can be used in TAFEs and private or community colleges will be all accredited literacy/numeracy and basic education courses and all vocational Certificate II courses.
• More support for apprenticeships: To make it easier for mature age workers to acquire trade skills, the Commonwealth Government will invest an additional $307 million over five years in new financial incentives to support mid-career workers undertaking a traditional trade apprenticeship. From 1 July 2007, these incentives will be available each year for up to 10,000 people aged 30 and over who are starting an apprenticeship at the Certificate III or Certificate IV level in an occupation in high demand. Those 30 and over already undertaking an apprenticeship in these occupations in July 2007 will also be eligible.
• Business skills for apprentices: To assist Australia's new breed of "worker-entrepreneur", the Government will introduce a new Business Skills Voucher for apprentices to be available from 1 January 2007. About 6,300 apprentices each year will receive vouchers of up to $500 to contribute towards the costs of accredited business skills training.
• New Engineering places: An additional 500 commonwealthlth supported engineering places will be established at Australian universities.
• Skills upgrades: Additional employer incentives worth $54.4 million over five years will be provided so that more Australians will be supported in their workplaces to undertake Diploma and Advanced Diploma level qualifications. Up to 28,400 people are expected to benefit over the period.

The Prime Minister's announcement reflects many of the things I have been talking about:

• It reflects demographic changes that have already flowed over, for example, into changing Australian approaches to migration.
• It targets skills upgrades in the existing workforce and is set within the formal qualifications structures that I have talked about and which, I suggested, made change easier in Australia than, say, the United States despite the sometimes rigidity built into the Australian system
• The ideological tone of the statement also reflects current ideological debates within Australia. Leaving aside specific political shots in the statement - some of these are badly written and just plain silly - the approach is a large scale trial of the voucher system, long a favourite concept on the Liberal side. The approach is designed to fit within and support work place changes. But it also reflects an emphasis now common on both sides of politics and reflected in talk-back radio discussions of the importance of trades relative to university training.

Change in the University Sector

This brings me to the second on-going discussion thread, changes within the university sector. Because this has become such a long post I will keep it short, returning to the issues at a later point.

If we look at the demographic data, the absolute numbers in the traditional University age entry while bouncing around are not much different. However, what does appear to be changing is the proportion interested in going to university. I have not analysed this, but I get the strong impression that the combination of the costs of a degree with the increasing attractiveness of non-degree options such as trades is having an impact.

When we look further up the age chain, I think that the impact becomes clearer and can only increase. That is, mature age students are less willing and/or able to consider the traditional university option. The Prime Minister's announcement is likely to reinforce this affect.

The demographic data also illustrates the extent of variability across the nation. Combine this with the stay-at-home nature of Australians and you get a feel for the difference in impact on different institutions.

I will leave all this here, returning at a later point.