A few ideas to help meet the demand for new workers
The education, training, and government response needed to help meet Victoria’s demand for new workers over the next few years is discussed in the Victorian Skills Plan for 2023 into 2024(opens in a new window). Further to what is covered in the plan, improved productivity, participation in education and employment and labour mobility will help Victoria meet its employment needs.
Improving labour productivity
Productivity is key to Victoria’s long-term prosperity. Productivity growth can be driven by strengthening education and training, which will also alleviate skills shortages in the labour market.
Australia’s productivity must improve. In 2021, Australia’s labour productivity levels were near the middle of the Organisation for Economic Cooperation and Development (OECD) rankings, placing 16th out of the 24 OECD countries (Figure 4.1).
Figure 4.1: Labour productivity across OECD countries US dollars (2021)
In recent years, labour productivity growth in Victoria is well above the previous labour productivity cycle, and is also slightly above the national average, with growth between 2017–18 and 2021–22 at 1.3% compared to the national average of 1.2%. In contrast, labour productivity growth in the previous labour productivity cycle for Victoria was below the national average (Table 4.1).28
Table 4.1: Labour productivity cycles, annualised growth
| State or territory | 2009–10 to 2017–18 | 2017–18 to 2021–22 (incomplete) |
| Northern Territory | 2.6% | 6.8% |
| Australian Capital Territory | 1.8% | 4.7% |
| South Australia | 0.3% | 1.6% |
| New South Wales | 1.5% | 1.5% |
| Victoria | 0.8% | 1.3% |
| Tasmania | 1.2% | 1.3% |
| Australia | 1.7% | 1.2% |
| Queensland | 1.8% | 0.6% |
| Western Australia | 3.3% | 0.5% |
Source: Australian Bureau of Statistics (ABS) Estimates of Industry Multifactor Productivity 2021–22.
While some factors may be structural, opportunities exist to further increase productivity in Victoria by supporting businesses to innovate through adopting new business models, practices, and technologies. As stated by the Productivity Commission, there is a large number of Australian businesses whose management practices, adoption of technology and productivity are below their best practice peers, with many undertaking little to no assessment of their performance. Therefore, much productivity improvement will involve the wider adoption of established technologies and practices among the 98% of businesses that are not directly creating new-to-the-world innovation.29
Innovation will also drive new business activity and create new demand for different and higher-order skills due to the rapid technological change. Skill requirements increase as technology can replace more routine tasks, freeing up workers to focus on higher-skill activities.30
New occupations will emerge, and in many existing occupations, the skills required for success will change. The idea of a job-for-life and a linear career path is becoming less relevant. This also means that most workers will need a basic skill level to adapt to the changing nature of work. Many will need some form of additional education and training (or up-skilling) for their knowledge and skills to be contemporary for advancement in their career.
Notes
28 Labour productivity growth is best measured over the business cycle (identified by the Australian Bureau of Statistics) as it can minimise the effects of some temporary influences (such as variations in capitalisation).
29 Productivity Commission (2023) Inquiry report, volume 5: Innovation for the 98%, Inquiry report – volume 5, p. iv.
30 Productivity Commission (2023) 5-year Productivity Inquiry: Advancing Prosperity, inquiry report – volume 1, p. 13.
Updated