This is an area that has been under-studied relative to its economic importance. Employers and employees combined invest more than $12 billion in training annually. Increasing work-related training could also help lift Australia’s weak productivity growth.

New analysis in this report, using HILDA data that tracks outcomes for the same individuals over more than two decades, shows that participation in work-related training is associated with considerably higher incomes for employees. 

Compared with otherwise similar people who do not participate in training, incomes increase by an average of about 20 per cent in the year after starting training. Training cannot just be a one-off, however, as this effect fades over time. 

There are benefits for firms who provide training, too, as participating workers will on average be more productive, more satisfied at work and less likely to move jobs. 

Despite these favourable outcomes, we find that the rate of participation in work-related training has declined by 14 per cent since 2007, with Australian Bureau of Statistics (ABS) data showing a similar decline from 2013. For those participating, average hours spent in training have also declined. Participation has declined in 17 of 19 industries, with only arts and recreation and wholesale trade groups recording small increases.

The strong income growth for those who do training, payoffs for firms and the increasing need to upgrade skills make declining participation in training something of a puzzle, particularly as available data suggest it has increased in most other developed countries over the past decade.   

Participation in formal education in Australia has increased over this time, which on balance should also increase work-related training, as more educated people are more likely to participate in training. Changes in the structure of the economy have favoured industries with high rates of training, such as health and education, which also should have boosted overall training participation.

One explanation is the increasing challenge of creating enough time. More than three-quarters of the 27 respondents to a questionnaire of CEDA members indicated that time and workload were a key barrier to delivery and take-up of training, a result that also came through strongly in consultations with CEDA members across a variety of industries. 

An increasingly dynamic economy can create near-term pressures to work harder on immediate priorities, reflected in greater working hours among professionals in the past decade.

But as CEDA’s previous work on dynamic management capabilities has shown, organisations need to make forward-looking decisions to adapt to new realities. Firms that actively nurture a culture that values and encourages learning (a learning culture) demonstrate greater innovation, profitability and resilience than those that do not. This will become more important as key trends such as AI reconfigure how work is organised and the skills in demand.

Organisations need to ensure training is effective 

Employers need to prioritise training that will develop valuable skills. Compliance training can be necessary to ensure safety, but when poorly delivered it can cut the time available to develop more practical skills. 

Organisations should require a clear use case for compliance training and look to better recognise prior learning through short assessments in place of long and often repetitive compliance training.

Measuring the return on training can demonstrate its benefits for both the employer and employee, while helping to prioritise types of training with greater payoffs. We found only 15 per cent of organisations had a clear approach to measuring return on training investment. This can be challenging, but starting with simple measures such as quality of training and staff retention can build towards measures with closer links to employee productivity. 

In sum, employers need to foster a culture that values and encourages learning through data and digital technology to better measure training outcomes and recognise employees that demonstrate skills they need. Best practice also sees training adopted on an ongoing basis and integrated into everyday work tasks.

Governments also need to support training

While organisations must take the lead, governments at federal and state level need to step up efforts to build the foundation skills necessary for all workers to effectively engage with further learning, including literacy, numeracy, digital and communication skills. 

A good school system is the key to foundation skills, so this adds to the critical importance of reversing the declines in literacy, numeracy and school completion rates, while ensuring disadvantaged students are not left behind. A holistic strategy should also be developed to reduce the number of adults with low foundation skills.   

Better accreditation is needed so that people who move jobs can have their skills properly recognised, reducing the costs of training duplication. Work currently underway to develop a National Skills Taxonomy can help by creating a consistent classification of key labour market skills. Using this system to accredit work-related training would enable sharing of skills and qualifications through a trusted digital system such as the National Skills Passport currently under consideration.

To build trust from employers, accreditation should proceed gradually, beginning with formal micro-credentials and other courses developed in conjunction with higher or vocational education providers. Along with funding of innovative collaborations, staged accreditation can help drive collaboration between higher education providers, vocational education and industry to develop rigorous and practical training offerings.

There is not a strong case for new, broad-based public funding of training. The key barrier to training is time rather than money. In other countries, government funding of work-related training has mostly just paid for training that would have occurred anyway. An exception is training for people who face considerable barriers to getting into work, such as the long-term unemployed. CEDA has previously argued that training for such people should be scaled up, monitored and evaluated to expand programs that work well.