1 - Introduction

1.1    Purpose of this report

One of the four priorities set out in the Tertiary Education Strategy 2007-12 is to “increase achievement of advanced trade, technical and professional qualifications to meet regional and national industry needs”.

The success of this priority will be seen through an “increased supply of people with advanced-level trade, technical and professional qualifications, particularly in areas of long-term skill shortage”. Progress is to be measured through increased participation and achievement in these types of qualifications and progression into advanced levels from lower levels. It is intended that “measurement will focus on a set of trade, technical and professional qualifications which can be monitored consistently and relate to areas of ongoing skill need within the economy” (Office of the Minister for Tertiary Education, 2006).

The overall purpose of this work is to provide a broad basis for understanding which areas the tertiary education system should concentrate on in terms of addressing skill shortages. In each of these areas, further detailed work will be required to understand issues of quality, quantity and timeliness of supply. This requires providers and industry to work together to understand and address these issues.

In April 2008, the Ministry published the first in a series of three reports in this area, which looked at skill demands within occupations and the qualifications held by the current workforce (Earle, 2008). This report concluded with initial comment on the nature of unmet demand for advanced qualifications.

This is the second report in the series. This report looks at the qualification areas highlighted in the first report. It considers how well these qualifications match the occupations with identified skill shortages, as well as examining measures of employment rates and income premiums to assess the value placed on these qualifications in the labour market.

The third report will examine the number of people graduating with advanced trade, technical and professional qualifications and establish a list of qualifications, and specialisations within qualifications, that will be monitored over time. It will include baseline information on trends in participation and achievement.

1.2    Linking education to skill needs

The first report discussed the link between education and skill needs. It noted that skill shortages arise and can persist for a number of reasons. These can include both insufficient supply of people with the required skills and lack of attractiveness of work within certain occupations and industries.

The link between education and skill demand was conceptualised as:

• People make decisions about what they would like to study and/or what occupation(s) they would like to work in.
• People attain education relevant to one or more occupations.
• People build experience relevant to one or more occupations (which may be before, during or after their period of study).
• Their qualifications and occupational experience enable them to be employed within one or more industries.
  

1.3    Approach to monitoring achievement of advanced qualifications

The key to understanding the contribution of tertiary education to alleviating ongoing skill shortages is to monitor the link between changes in the supply of graduates with occupationally relevant qualifications and the level of unmet demand within those occupations.

The first report in this series identified the occupations that are experiencing ongoing skill shortages and require advanced-level qualifications, and broadly identified the qualifications that enable entry to those occupations.

This second report starts from the identified qualifications and checks the extent to which they are in demand across occupations, in particular professional, associate professional and trades worker occupations. It examines the match of qualifications to occupations, levels of unemployment by qualification field and level and evidence of income premiums being paid for specific qualifications. This analysis will refine the scope of the qualifications where there is strong evidence of unmet demand.

Having done so, we can then look at whether the supply of people attaining those qualifications is increasing or decreasing. This will signal areas for further investigation in terms of the dynamics of individual choice, intake, retention and completion – as well as which occupations those graduates are moving into within New Zealand and overseas.

This information provides a nexus for monitoring changes in supply and demand. From this, further exploration can be made of contributing factors and effects. However, it doesn’t necessarily provide an evaluation of the effectiveness of tertiary education in reducing skill shortages, given the wide range of factors involved.

This approach focuses entirely on the quantity of provision and number of people graduating. A critical question for further examination will be the extent to which new graduates take up jobs within New Zealand or move overseas. It will also be important to look at how long New Zealand graduates remain overseas and what skills they return with.

An important aspect in many occupations and industries will be the quality and relevance of the content of the qualifications. This is much more difficult to measure at a system level and is an area that can only really be addressed by providers, learners and employers having stronger engagement with regard to specific qualifications.

Finally, the set of qualifications identified through this approach is likely to be reasonably valid for monitoring changes across the whole of the tertiary education system. However, it may not be sufficiently robust to inform specific decisions about funding and provision of qualifications. These decisions need to take account of a wider range of information about existing and future demand and be informed by active engagement among providers, learners and employers. Even where there is a reasonable argument to increase the number of graduates, this still needs to be addressed in a coordinated way.