Demand for training needs to be considered in a number of dimensions. The first is the type of training. The second is who is the agent (the demander), and the third is the institutional setting. Training can be accredited, formal but not accredited, or informal, such as on-the-job training. It can also be at various levels—in the vocational education and training (VET) sector, from certificates I through to advanced diplomas. It can also cover many fields of study. For example, a very wide range of people undertake occupational health and safety training, while other training could be for very specific technical skills or more generic business and communication skills. Formal training can cover whole qualifications or, as is very common in Australia, a selection of one or more modules.
 

The ‘demanders’ of training can either be individuals or employers. Individuals typically undertake training because they see some sort of benefit in it—the benefits outweigh the costs. In VET, almost all individuals undertake training for employment-related reasons (table 1). Most individuals foresee future benefits, although on occasions individuals will undertake training because ‘they have to’, either because it is mandated by an employer or because it is necessary under an obligation associated with a social security benefit.
Employers demand training for their employees because it will lead to higher skill levels and hence higher productivity, or because it assists in building the quality of their workforce. In relation to the latter, it is worth noting that, while a narrow economic perspective would suggest that employers will only engage in training which directly benefits the firm, we know that many employers are quite happy to support general training for their employees (that is, training which will be useful to the employee in other jobs).
Finally, the institutional setting can range from training at a technical and further education (TAFE) institute or a private provider in a classroom, to an apprenticeship or traineeship combining off-the-job and on-the-job training, to formal training by a provider at the workplace, to computer-based training, and to informal training on the job. The whole notion of flexible delivery has become important in recent years.
 

To see full article, go to: http://www.ncver.edu.au/publications/2124.html 

Key messages

• The demand for training by individuals depends on the premium attached to skill, as well as the costs of the training, which may be split into direct costs—such as tuition fees—and the indirect opportunity costs.
• The demand for training by employers is driven by the need to acquire skilled labour (in the case of apprenticeships), and by business needs in most other cases.
• The demand for training by employers is variable across industries and tends to be much higher for large organisations than for small enterprises. The demand for unaccredited training is also much larger than the demand for accredited training.
• The distortion to the prices that individuals pay for training caused by government intervention means that governments do have to steer the provision of training places. Here, they should be guided by labour market signals, in particular, by vacancies, unemployment and wage rates.

Tom Karmel
Managing Director, NCVER
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