Does workplace based industry training improve earnings? Publications
This report forms one of the initial outputs from a project between the Ministry of Education, the Department of Labour and Statistics New Zealand looking at the employment outcomes of tertiary education (EOTE). It examines the labour market outcomes of employees who left industry training during 2003–05, by comparing earnings and employment post training with earnings and employment prior to and during training.
Author(s): Sarah Crichton, Department of Labour and Statistics New Zealand.
Date Published: September 2009
In recent years, workplace-based industry training has been growing at a faster rate than other forms of tertiary education and training. Government and industry have substantially increased their investments in industry training. However, there is not much information available on whether training improves participants' skills, productivity, and labour market outcomes. In this paper, we examine the labour market outcomes of employees who left industry training during 2003–05. We use a new dataset constructed for the Employment Outcomes of Tertiary Education Feasibility Study (Statistics NZ, 2009) that assessed whether tertiary education and training data could be linked to Statistics New Zealand's Linked-Employer Employee Dataset (LEED).
Thirty-one percent of those who left industry training during 2003–05 gained a qualification. Thirteen percent gained a qualification at National Qualifications Framework (NQF) level 4 or above, 9 percent at level 3, and 9 percent at level 1 or 2. We found that gaining a qualification at level 4 or higher improved participants' earnings. Their average monthly earnings were 7 percent higher than those of comparable nonparticipants 48 months after training started. The improvement in participants' earnings was evident from around 12 months after training started, while the greatest improvement occurred around the time training ended. The impact on average earnings varied considerably by age and sex. The earnings of males aged 15–24 years were 11 percent higher than those of comparable non-participants 48 months after training started. The earnings of males in other age groups improved between 1 and 4 percent, and the earnings of females improved 2 percent.
Gaining a qualification at level 3 improved the average earnings of males but not females. The average earnings of males were 2 percent higher than those of comparable nonparticipants 48 months after training started. Gaining a qualification at level 1 or 2, completing a limited credit programme, or gaining no qualification did not improve average earnings during the 48 months after training started. Employment rates were between 3 and 8 percent higher 24 months after training started for those who completed qualifications or limited credit programmes than for comparable non-participants.
Our analyses by the Industry Training Organisation (ITO) overseeing the training were generally consistent with the overall results. In most cases, differences between ITOs reflected the different demographic profile of learners associated with the various ITOs.
Our findings are based on comparing the earnings patterns of participants with those of nonparticipants who had very similar demographic characteristics and employment histories before training started, and are subject to some caveats.
We also examined the extent to which participants were retained by employers and within industries. We found that jobs ending with no immediate re-employment accounted for about 17 percent of training non-completions, and changing jobs accounted for a further 10 percent. Of those who completed their last training programme, about 75 percent were with the same employer at the start and end of the training period, and 50 percent were with the same employer 12 months after training ended. Of those who did not complete their last training programme, 25 percent were with the same employer 12 months later. Around 65 percent of those who completed their last training programme were employed in the same industry subgroup 12 months later.