State of Australia’s Skills 2021: now and into the future
The Skills Priority List
The Skills Priority List (SPL) outlines the occupations that are currently in shortage or may be at risk of a future shortage. The focus of the SPL is on occupations rather than skills.
The SPL forms the backbone of the NSC’s labour market advice, including on skilled migration, training and employer incentives. It is published on the NSC’s website.
The SPL determines a Current Labour Market Rating for each occupation. Ratings are provided nationally and for each state and territory. Where there is evidence suggesting variation between metropolitan and regional areas this is reflected in the rating.
Each occupation is given an indicative Future Demand Rating of strong, moderate or soft to indicate the likely demand for the occupation over the coming five years. These ratings are available only at the national level.
Providing a single source of advice on occupations creates highly-specific information for stakeholders and ensures greater consistency and better targeting of resources across the various policy responses implemented by government.
The identification of occupational shortages and future demand is a crucial element in the development of timely and effective labour market policy. Historically, there is a range of labour market indicators that have been used in Australia and internationally to identify occupations, and sometimes the underlying skills, in short supply. However, it is difficult to cohesively combine these indicators into a single measure.
Occupations used in the SPL are:
- defined in the Australian and New Zealand Standard Classification of Occupations (ANZSCO) as skill level 1 – 4 occupations at the six-digit level, excluding occupations ‘not further defined’ or ‘not elsewhere classified’
- occupations with an open and contestable labour market 54.
The SPL does not generate results on skill level 5 occupations because they have fewer barriers to entry and generally do not require significant post-school education and training.
Current Labour Market Rating
The Current Labour Market Rating of the SPL draws on evidence from several sources:
SPL Indicator Model – The NSC developed the SPL Indicator Model to help assess the current labour market for around 800 occupations at the ANZSCO six-digit level. It provides a valuable link to, and extension of, the targeted long-standing research on skill shortages: the Survey of Employers who have Recently Advertised (SERA).
Survey of Employers who have Recently Advertised (SERA) – The SERA employer survey undertaken by the NSC is unique. It provides an estimate of current skills shortages and can show whether there is adequate supply to meet demand.
Peak and representative body input – Formal consultation for the SPL involves a twice-yearly online survey and face-to-face or online engagement with representative bodies throughout the year. The survey captures information from stakeholders on recruitment challenges and skills needs across a wide range of occupations and industries.
Federal and state or territory government input – The NSC consults with government stakeholders on the development of the SPL. Many federal and state and territory government agencies conduct their own occupation and skills shortage research. Federal government agencies are consulted on the SPL occupations that are relevant to their portfolio – for example, the Department of Health is consulted on health-related occupations – and state or territory agencies are consulted on the SPL findings within their region. SPL findings are tested for verification and to seek any additional context or evidence that may not have been considered in the initial occupation assessment.
Other data and evidence – The availability of data varies from occupation to occupation and additional information is considered to provide accurate commentary and ratings. The following list is not exhaustive but outlines some of the additional sources which are considered in the assessment of occupations:
- studies, assessments and reports by federal government departments
- state and territory government occupation and industry findings
- relevant skills needs or workforce planning information from government departments or industry groups
- industry activity statistics, projections and reports
- media articles
- training activity or migration flows of significance to the occupation.
Future Demand Rating
Evidence informing the composition of the indicative Future Demand Rating for the SPL encompasses:
Five-year employment projections – Each year, the NSC produces employment projections by industry, occupation, skill level and regional areas for the following five years. These employment projections are designed to provide a guide to the future direction of the labour market and were discussed in more detail earlier in this section.
Replacement rates data – The NSC produces replacement rates by occupation at the national level, to provide an estimate of the total replacement demand resulting from flows of workers exiting a job irrespective of the inflows to employment over the same period.
In addition to the five-year employment projections and replacement rate data, other sources of reliable information on future demand may be used. These additional sources are considered in the final assessment of future demand and are similar in nature to those discussed earlier in respect to Current Labour Market Rating.
Once all available sources of information have been considered, a determination is made regarding the Current Labour Market Rating and Future Demand Rating.
As noted previously, the SPL is published on the NSC’s website.
‘Nfd’ is used when a respondent has not provided adequate information for the response to be put into a category at the most detailed level, while ‘Nec’ allows occupations which do not fit into a suitable category in the classification to still be included. Defence force roles are an example of excluded occupations, as recruitment is mainly conducted internally. In some cases, stakeholder insight or external data may be available for closed labour markets, and in these cases an assessment of the occupation may be possible.