A greater focus on skills, rather than occupations, is shaping the future of the labour market. 

The trend means that developing skills needs to be viewed as an ongoing path for workers at all levels.  

The fastest growing skills in demand over the next five years will be related to computers and electronics, Adam Boyton, National Skills Commissioner, National Skills Commission, told an Ai Group Centre for Education and Training (CET) webinar yesterday. 

“One thing we typically always do with labour market forecasts is to forecast on an industry or occupation basis,” Mr Boyton said. 

“We don’t typically forecast on a literal skills basis, which is something we’re keen to change.  

“Earlier this year we released something called the Australian Skills Classification. It takes occupations and breaks them down into the skills that people use to do those occupations.  

“Across 600-odd occupations, we’ve broken these down into three elements. There are 10 core competencies which are common to all jobs – things like digital literacy, numeracy, reading, writing, teamwork, problem-solving etc.  

“There are 88 technology tools across software and hardware that are allocated to various jobs and there are 1900 specialist tasks linked to each of these jobs.  

“These cluster up into 279 skills clusters, which, in turn, group up into 29 skills cluster families. 

“So, by taking our forecasts of employment growth by occupation and linking them to the skills classifications, which then turns these occupations into a range of skills . . . we can attempt to forecast the skills needs of the economy over the next five years.” 

In terms of the increase in the number of hours worked weekly and the percentage increase of projected growth — five years to 2025 — the categories of health and care and computers and electronics are growing rapidly. 

“Computers and electronics are not as large a part of the economy but [the category] is growing very rapidly,” Mr Boyton said. 

“The fastest growing skills in demand over the next five years will be related to that computers and electronics [skills cluster] family.  

“What this is attempting to do is to shift away from a straight occupational-based view of the labour market to thinking about skills across the labour market and, in particular, skills that might be transferable or common across a range of occupations.  

“We find things like communication and collaboration important in a range of occupations and highly transferable. 

“This sort of analysis is one way that we can provide a degree of resilience to the inevitable forecast errors you get in labour market forecasting, if we can think a little more about skills and the portfolio of skills the economy might need.  

“In particular, which of those skills might be transferable. It’s a really useful way to think about the economy's future skills needs going forward.” 

Megan Lilly, Executive Director of the CET, said developing skills was a big challenge for all workers.  

“Everyone in the workplace will have to continually deepen their skills over their working lives,” Ms Lilly said. 

“It doesn’t necessarily mean they have to go up qualification levels; it might be sideways or it might just be keeping up with things, but that whole notion of skills deepening needs to become part of our framing.  

“Instead of thinking about how we deal with occupations, we think about how we deal with skills and free up the range of solutions you can put into place. 

“The work the National Skills Commission is doing in terms of what skills combine together and how they combine together, what’s shared and transferable and perhaps what isn’t, will be really helpful for companies to move from a fixed, rigid system that struggles to move quickly to something that’s much more dynamic.  

“In that process, not only do we create more complex dynamic combinations of skills, we create more interesting jobs for people in the process.” 

Mr Boyton said COVID had accelerated many underlying changes that were already starting to occur across the economy.  

“For example, people were already working from home before the pandemic, but it’s become a lot more accepted and acceptable,” he said. 

“There was online activity prior to the pandemic but the acceleration and uptick of that has been quite significant.  

“Through most of the scenarios we looked at, come 2024 or 2025, the structure of the economy doesn’t end up looking hugely different to what it might have in the absence of the pandemic. A lot of the industries that were going to grow pre-COVID are still those that are going to grow post-COVID. 

“Some of the themes that have come through our forecasts show nine out of 10 jobs that will be created in the next five years will require some form of post-secondary qualification; four out of 10 will require some sort of VET qualification. 

“Occupations that have a STEM component to them are likely to see around double the jobs growth as non-STEM occupations.” 

Ms Lilly said offering employees the chance to upskill would help reduce the growth of high turnover facing many employers. 

In findings that reflect the Australian workforce, a McKinsey report, Great Attrition or Great Attraction — The Choice is Yours, revealed last month that 40% of employees said they were at least somewhat likely to leave their current job in the next three to six months. 

Nearly 65% of employers expect voluntary turnover to remain elevated or to increase. 

“As a company, are you in the attraction space or the attrition space?” Ms Lilly said. 

“What’s your relationship with your employees? Is it transactional, or are you developing that relationship in new and different ways to help them stay – and skilling being a core part of that?  

“There are a lot of challenges for companies, a lot of skilling solutions. This is going to be an ongoing conversation . . . and current arrangements, or previous arrangements, may be good but we probably need to reconsider a lot of them. 

“The challenge for companies is to look at all their attraction and retention strategies – both in terms of the jobs people do and how they work and the continuous upskilling that’s going to be essential. 

“If people don’t get upskilled within their current role, they will move to a different role that provides that for them.” 

Please save the date for Ai Group’s Centre for Education and Training’s next webinar, Literacy, Numeracy & Digital Literacy on November 10, 10am AEDT.  

Wendy Larter

Wendy Larter is the Senior Content Writer at Ai Group. She is a former journalist with more than 20 years’ experience as a reporter, features writer, contributor and sub-editor for newspapers and magazines including The Courier-Mail in Brisbane and Metro, News of the World, The Times and Elle in the UK.