Methodology
The Victorian Skills Plan for 2023 into 2024(opens in a new window) forecasts of employment growth, retirements and new workers expected come from the Victorian Skills Authority Employment Model 2023.
It is a ‘stock and flow’ model, comprising:
- the total number of workers in employment – the stock – across Victoria’s industries, occupations and regions from 2023 to 2026
- the entry and separation of workers to and from occupations – the flow – over the same period for the same breakdowns.
Regions in metropolitan Melbourne and regional Victoria reflects the place of work of the employee, rather than the place of residence.41
The stock estimates were developed by the Centre of Policy Studies with its Victoria University Employment Forecasting (VUEF) model of the Australian economy. The VUEF uses a dynamic computable general equilibrium framework in which linkages between all major sectors of the economy are represented. It incorporates a large body of macroeconomic, employment and demographic data and is calibrated to key forecasts and projections, including:
- Department of Treasury and Finance – total employment and dwelling investment forecasts
- Department of Transport and Planning – Victoria in Future population projections forecasts
- Reserve Bank of Australia – GDP, household consumption, terms of trade and other forecasts.
The Victorian Skills Authority (VSA) consulted widely across the Victorian Government to refine the forecasts. The final results reflect advice from the extensive workforce modelling and sectoral experience across infrastructure, social services, education, early education, clean economy, regional economic development and other areas. Where possible, the forecasts reflect known government policy and investments, for example, implementation of the Best Start, Best Life early childhood education reforms across the state.
The flows were developed by the VSA and they include the number of retirements each year. The VSA estimates retirements by applying occupation specific retirement rates to the stock employment forecasts. Retirement rates were derived from the Australian Census Longitudinal Dataset by identifying the share of workers over 50 years who leave the labour force each year.
New workers expected is an estimate of demand for workers to join an industry, occupation or region. In this analysis, demand comes from growth in employment (as business, government and other employers expand their operations) and the need to replace retirees who leave the workforce.
The number of new workers expected between 2023 and 2026 is calculated as the simple sum of employment growth (the change in stock of employment) and retirements. Employment for 2023 and 2026 is the estimated stock of employment at the commencement of the calendar year. Employment growth, retirements and new workers expected represent changes in employment over the calendar years.
This year’s employment model makes substantial improvements on last year’s model. Previously, the VSA benchmarked its forecasts to the National Skills Commission employment projections, and broke down national data to detailed occupations, industries and regions using ABS Census and other data. The VUEF significantly improves the disaggregation process, particularly by incorporating Victoria in Future population projections, which gives a more robust spatial picture of growth across the regions. Calibration to Victorian Treasury forecasts also ensures quality and consistency across the Victorian Government.
Notes
41 For information on how these regions are defined, see Department of Jobs, Skills, Industry and Regions (2023), Metropolitan Partnerships(opens in a new window); Regional Development Victoria, Regional Partnerships(opens in a new window).
Updated