Chapter 6 Labour market skills needs

State of Australia’s Skills 2021: now and into the future

Chapter 6 Labour market skills needs

This chapter gives the NSC’s industry, occupation and skills forecasts to 2025.

At present the labour market is buoyant, after a strong recovery from the worst effects of the COVID-19 pandemic. From the occupational lens, there are pockets of shortages across most occupation groups. Generally, shortages are greatest among ‘technicians and trades workers’ occupations. Technicians and trades workers are employed in a wide range of occupations important to many different industries, and include electricians, carpenters, chefs, fitters and motor mechanics.

The five year industry employment outlook projects that the long-term structural shift in employment towards services industries will continue. Four services industries – ‘health care and social assistance’, ‘accommodation and food services’, ‘professional, scientific and technical services’, and ‘education and training’ – are expected to generate over three-fifths of the total projected employment growth. However, future employment growth is not confined to these areas, with further increases projected across a range of industries.

Tertiary education and skills development beyond secondary school is increasingly important. Employment in STEM occupations (using science, technology, engineering and maths skills) is projected to grow more than twice as fast as non-STEM occupations.

By combining the five year employment projections with the Australian Skills Classification (ASC), the NSC has produced five year skills projections. Continuing the trend from the COVID-19 recovery, the food services cluster family is projected to experience the fastest growth. ‘Computer and electronics’ and ‘performance evaluation and efficiency improvement’ are the next fastest growing families. A large amount of time is projected to be spent on skills in the health and care family and the importance of communication and collaboration in a broad range of occupations comes through.

Some of the most important and rapidly growing skills needs over coming years, identified by this analysis, can be summarised as the ‘Four Cs’: care, computing, cognitive and communication skills.

The NSC has a suite of useful tools for analysing the skills needs of the economy now and in future. The commission uses well-established techniques for generating employment forecasts by industry and occupation. The newly-developed Australian Skills Classification (ASC) provides another dimension – projections of skills themselves.

The Skills Priority List (SPL) is another new NSC research program. The SPL outlines the occupations that are currently in shortage as well as their expected future demand. It will form the backbone of the NSC’s labour market advice, including on skilled migration, training and employer incentives. The SPL is published on the NSC’s website.

Among their key insights, these tools highlight the occupations and skills in demand now and likely to be in demand in the near future.