FSO National Forum, 13 August 2025
Background
Highlighted in the CEDA report Learning Curve: Why Australia Needs a Training Boost is a significant and ongoing decline in work-related training across most industries, with participation dropping 14% since 2007 and hours spent in training falling by 17%. This is despite clear evidence such training boosts worker incomes by 20% and increases employer productivity.
In the report it is highlighted that over the past decade, Australian industry has faced mounting challenges including economic headwinds, labour shortages, and rapid technological change. These pressures have heightened the importance of a skilled and adaptable workforce. However, these challenges have also contributed to declining levels of industry engagement in training and proactive workforce development. Businesses are increasingly focused on short-term survival, scaling back investment in training and innovation, and relying on incremental process improvements rather than broader, future-focused strategies.
This shift in employer behaviour to short term priorities exemplifies a challenge FSO and other JSCs face in terms of proactive engagement with industry in the design and delivery of training. Industry engagement in training, and particularly vocational education and training (VET), is critical but is difficult to undertake in practice.
There is a growing need for coordinated action to highlight the benefit of a more proactive approach to workforce development, participation in training, and to strengthen industry engagement mechanisms to ensure Australia’s workforce remains skilled, adaptable, and prepared for the future.
Key Themes from the CEDA Report
Workforce Shortages and Operational Impact
In 2024, 75% of businesses reported being affected by workforce shortages, with over half experiencing reduced efficiency, hindered growth, or deferred projects. Relying mainly on existing staff and in-house training may not be enough to address these skill shortages or support business growth.
Entrenched Pessimism and Short-Termism
Since 2012, annual surveys show industry leaders have a persistent negative outlook on business conditions. In 2024 and 2025, uncertainty, cost pressures, and workforce shortages are pushing businesses to focus on immediate needs rather than long-term investments like training and research. This short-term focus threatens future capability and innovation.
Falling Training and Engagement Levels
Investment intentions for training dropped by 20 percentage points over the last two years, reaching their lowest levels in a decade (excluding the pandemic year of 2020). Without renewed investment, the skills gap will continue to widen, negatively impacting productivity and Australia’s global competitiveness.
Work-related training participation is falling, with a 14% decrease overall; formal study rates are at 13% and work-related training at 27%, representing a 17% decline since 2007. Despite clear economic and individual benefits, underutilisation of training continues to threaten productivity and competitiveness across the economy.
Possible Implications
For industry, there is a risk of entrenched skills gaps if renewed investment is not made, potentially leaving the workforce unprepared for emerging technologies and business models. A short-term focus could reduce long-term competitiveness by undermining innovation and adaptability. To address these challenges, it is essential to foster a culture that values continuous learning and ongoing skills development.
For the workforce, declining participation in training may disproportionately impact individuals with lower levels of education or those working in shrinking industries, reducing equity and access to opportunities. In addition, fewer training options could limit career mobility and hinder workers’ ability to adapt and progress in a rapidly changing job market.
For government, there is an opportunity to use policy levers such as levies, tax credits, or direct support to incentivise training. System reform—including simplifying training systems and recognising or funding non-accredited and work-based learning—can boost participation, particularly among small and medium enterprises (SMEs). In addition, developing a national skills taxonomy will help support the development of foundational and transferable skills across the workforce.
Thought Starters
How can the necessary cultural and systemic shifts be achieved to drive lasting change?
What incentives or supports are needed to encourage industry investment in training?
How can we foster a culture of lifelong learning and skills development across all levels of business?
How do we reinforce the importance of engagement in VET specifically?
How can the challenges of recognising work-related and non-accredited training be addressed?
How can formal systems better recognise and integrate informal and on-the-job training?
What standards or frameworks are needed for quality assurance?
How can training programs remain relevant in a rapidly evolving landscape, and what are the most effective ways to assess their impact?
How can we ensure training is relevant to current and future business needs?
What data and metrics are required to demonstrate the return on investment (ROI) and business outcomes of training?
How crucial are digital technologies for effective training delivery?
What is the role of digital leadership in driving training uptake and effectiveness?
How can digital offerings be leveraged to reach more workers, especially in SMEs?
What policy settings are required to support effective workforce development and training?
Should a training levy or similar mechanism be introduced to stimulate investment?
How can the system be simplified and made more responsive, particularly for SMEs?
What are the most promising and innovative opportunities for collaboration between employers, trainers, community partners, and government to address workforce challenges?
How can industry, education providers, and government better collaborate to address skills gaps?
What models of partnership or co-investment could be scaled?