At last, our system caters reasonably well for people’s initial tertiary education …

In 1989, the government’s blueprint for the tertiary sector was called Learning for Life.  Since then, New Zealand’s focus has been on initial tertiary education – the qualifications young people do early in life as they prepare for a career. That’s learning for life but certainly not throughout life.

And for good reason.  At that time, 28 years ago, relatively few young people were taking on post-secondary education.  And many of those who did so failed to complete what they started.

Also, most early ventures beyond an initial tertiary education were of poor value.  Through the late 1990s and the first half of the last decade, we were treated to a succession of wasteful polytechnic community education programmes (who remembers twilight golf?), low-value, exploitative qualifications focused on “harvesting” EFTS and funding (who can recall the ignominy of CoolIT?) and the obsessive hunt for industry trainees to consume the funding the government lavished on ITOs.  It used to be said that anyone who could draw breath was valued as a source of funding in tertiary education.  However, for some ITOs, the capacity to breathe was no longer necessary – it turned out that the reason some trainees were achieving no credits was that they had died.

New Zealand ended up with the second oldest (to Iceland) student population in the OECD, as providers thought up ever more creative ways of expanding the market in response to demand-driven funding and in response to the absence of any incentives for performance. Other countries looked at our data and envied us for having addressed the challenge of education for older people.  If only they knew!

But the pendulum swung.  That all changed.  The government clamped down on community education, launched quality reviews of non-degree tertiary education, introduced performance measures and performance-linked funding and stopped funding industry trainees – dead or alive – who achieved no credits. The average age of the student population fell. Completion rates rose.  Educational attainment improved. New Zealand had become serious about getting value from tertiary education.  At least, we had gotten really serious about tertiary education for young people.  That was a very good thing.

But the world has moved on …

We cut the crap.  And no one should understate the importance and the value of the measures made since 2006 to do so.  We should have no regrets.  But the world has moved on. It’s time we talked about life-long learning, serious, high-value education beyond one’s initial post-secondary education.

What do we know about life-long learning in NZ?

Compared with most other OECD countries, the take-up of life-long learning (LLL) in NZ is good.  Data from the OECD’s Survey of Adult Skills shows that New Zealand workers aged 25-64 were third most likely (after Finland and Denmark) to take some form of education or training, with more than 70% reporting that they had undertaken some form of training.

Figure 1: Take-up of education or training by workers aged 25-64, OECD countries

Source: OECD, Data from the Survey of Adult Skills.

Note:  Year of reference 2012, except for Chile, Greece, Israel, New Zealand, Slovenia and Turkey whose data was collected in 2015. Data for Belgium refer only to Flanders and data for the United Kingdom refer to England and Northern Ireland jointly.  Data for Hungary, Iceland, Luxembourg, Portugal and Switzerland is not available.

And the take-up of adult education and training among the unemployed and those who aren’t in the labour force is also relatively good – New Zealand ranked 6th in the take-up of training by the unemployed and first for take-up by adults not in the workforce.

Part of the reason for the good take-up is that New Zealand workers are relatively open to new ideas and to learning.  The OECD has constructed a “readiness to learn” index, based on people’s responses to questions on how they deal with new ideas, relate ideas to the world and source information.  On this index, New Zealand ranked 7th of the 28 participating countries.

Figure 2: Readiness to learn index, OECD countries

Source: OECD, Data from the Survey of Adult Skills.

Note:  Refer to Figure 1

And those workers who do life-long learning in New Zealand find it to be of value. At more than 60%, New Zealand was second (to Denmark) in the proportion of workers who found their education and training “very useful” for their work while the proportion who found their job-related training of little or no use was relatively low – around 15%, the fifth lowest of the 28 countries in the Survey of Adult Skills.

There isn’t any reliable data on how much of that work-related training is subsidised by the government.  Some will be – for instance, for workers who take supplementary credit programmes funded through the industry training system and those who take courses at providers like polytechnics and universities.  According to the Survey of Adult Skills, nearly two-thirds of New Zealand workers who undertook work-related training were given financial support for that training by their employer.  And, presumably some training will be funded partly by the government and partly by the employer.  But some won’t be publicly funded at all – the employer and the employee will see an advantage in the training and between them, will bear all the cost.

But work is changing

People’s jobs always change and that has always meant that workers need to use new or different skills at work.  Recently, there has been lots of talk about how AI, automation, machine learning are likely to change our work.  That followed influential research published in 2013 by two Oxford academics, Benedikt Frey and Michael Osborne, who did a study of the likely impact of automation on the US labour market. Frey and Osborne looked occupation by occupation to assess which jobs were at risk from automation as AI spreads through industry.  The Frey and Osborne analysis has been enthusiastically adapted for most countries and we’ve all seen the dire forecasts of jobs at risk.  But the problem with the Frey and Osborne approach is that most jobs require a range of tasks – some that can be readily automated and some that are what the research calls “engineering bottlenecks”, tasks that need the sorts of judgements that are likely to require people.

The Survey of Adult Skills collected data on what workers actually do at work.  From that, OECD researchers have been able to refine the Frey and Osborne analysis.  Using the Frey and Osborne categorisation of the characteristics of tasks likely to be able to be automated, they have instead assessed jobs (rather than occupations) by the proportion of tasks that can be feasibly automated.  This more finely grained analysis forecasts the loss of fewer jobs but creates estimates of the jobs that will need to change significantly as firms adopt automation.

This graph, from a 2018 OECD paper shows the extent of jobs at risk in the countries that participated in the Survey of Adult Skills.

Figure 3: Variation in job automatability in OECD countries: Percentage of jobs at risk from the onset of automation, by degree of risk

Source: Nedelkoska, L. and G. Quintini (2018), Automation, skills use and training, OECD Social, Employment and Migration Working Papers, No. 202.

Note: The analysis drew on data from the OECD Survey of Adult Skills.  Refer also to the notes to Figure 1.

There is a clear message here: around a third of all jobs in our labour market will change very significantly as tasks are automated.  Some jobs will likely disappear in rationalisation, but those that remain will be different, with workers operating machines to do some tasks that are now done by hand.

Tasks that involve creative or social intelligence, such as planning, influencing and advising, and complex problem solving …. will all require workers.  But many more routine tasks can be automated; that doesn’t mean that occupations will disappear (and others will arise).  Rather, workers will manage their work differently.  Fewer workers will be needed and some jobs will disappear.  This process isn’t actually new – for decades, occupations have changed as new technologies and new approaches to work have emerged.  But AI developments are likely to speed up the process of change and extend its reach.

What does that mean for training?

Job change means a change in skill needs.  Higher levels of foundation skills, ICT skills, problem-solving skills.  Non-cognitive skills.  Planning and organising skills.  That needs training, beyond one’s initial education and throughout people’s careers.  It needs recurrent education.

We’ve spent more than a decade reorienting our tertiary education system to have a primary focus on initial post-secondary qualifications.  Now that pendulum has to ease back, to allow for recurrent education.  Not to replace initial qualifications – there is a clear need for young people to gain broad credentials that build generic and transferable skills and that demonstrate progression of skills and knowledge.  There is a clear need for the system to retain and enhance the focus of initial tertiary education on learning how to learn, on improving educational attainment and on improving labour market outcomes.

But alongside the policies that privilege initial qualifications for young people, we need policies that enable high-quality recurrent education focused on adults in the workforce or those seeking to re-enter the workforce, people who will (for the most part) already have a qualification, who know how to learn and how to manage their learning and who have specific skills gaps.  And who, for the most part, are time poor – they have work and family commitments and can’t afford the time and the financial outlay implied by full qualifications.

The government has made a first step …

The development of a framework for the creation of micro-credentials, announced by Chris Hipkins on 1 August, is a first step.  Credentialising short courses entails setting criteria that require a statement of learning outcomes, that draw micro-credentials into the quality assurance system and that require industry support.  This is a shield against the abuses of the past. Micro-credentials resolve the major obstacle to the take-up of life-long learning – the time commitment.

But the really hard part is still to come …

Funding policy currently favours full qualifications.  The justification for public funding of tertiary education is that it creates a public benefit by lifting the skills of the population and hence, it strengthens the labour market (while also creating a private benefit for individuals who gain an earning premium in their careers as a result of having a qualification).  Public funding reflects the fact that qualifications create a pool of skilled people from which all employers can draw, meaning that in most cases, no one employer can capture the benefit – qualifications are portable and create opportunities for people to move from employer to employer as they develop careers.

But smaller, more narrowly-focused chunks of learning bring the prospect that an employer can capture the benefit.  One of the points that emerged during the 2012 review of industry training was the suggestion that employers were using industry training to opt out of their obligation, as employers, to invest in developing their staff, instead putting them into small, government-funded programmes that had low portability and whose benefit would, therefore, be captured by the employer.

In its decisions on the industry training review, the government addressed that risk by introducing a funding differential, with apprentices (who follow programmes leading to substantial qualifications) being funded at a higher rate than other trainees.  And it established a minimum size for limited credit programmes and supplementary credit programmes.

That minimum size happens to be above the maximum size of a micro-credential, so that, under current rules, micro-credentials can’t be funded.  Meaning that, if micro-credentials are the way in to a more sophisticated life-long learning system for New Zealand, we need to address important questions about funding policy.

So what is the place for funding life-long learning? 

Employers will gain a benefit from life-long learning. So will employees.  But there will be subgroups of employees and employers who will be price sensitive, especially small, low-margin businesses and individuals on modest incomes.  Meanwhile, institutions will need to see an economic return – either through high user charges or else via government funding.

So, as the labour market undergoes fast change, there is a risk of under-supply and of low take-up of life-long learning.  That would argue for some level of public funding.

But if so, what is a right balance between the contributions of government, the employers and the employees?  And what is the appropriate margin between public funding for micro-credentials and full qualifications?  What is an appropriate mechanism for delivering the funding? And how would the performance of the funding be monitored and analysed?

Important questions the government needs to get right.

Roger Smyth has 30 years’ experience working in tertiary education – initially in senior management in a university and later in the Ministry of Education. At the Ministry, he managed the Tertiary Sector Performance Analysis team and then took over as Group Manager, Tertiary Education Policy. He retired from the Ministry in April last year and now works as an independent adviser on and contractor in tertiary education.

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