Digitalisation, globalisation and demographic change are challenging the adequacy of labour market and training policies to ensure that workers have the skills needed in the labour market. In most countries, many employers complain that they cannot find workers with the skills that their businesses require. At the same time, a number of graduates face difficulties in finding job opportunities matching their qualifications. In light of these challenges, the OECD has launched a new programme of work on how to achieve a better alignment between the skills people acquire and those needed by employers, with a focus on: i) understanding how countries collect and use information on skill needs; ii) investigating cost-effective training and labour market policies to tackle skill mismatch and shortages; iii) studying the incentives of training providers and participants to respond to changing skill needs; and iv) setting up a database of skill needs indicators. This work builds on the extensive programme of work of the OECD in the area of skills, including the OECD Skill Strategy and its follow up national studies, the Survey of Adult Skills (PIAAC) and its rich analytical programme, and several studies in the areas of skills mismatch, vocational education and training, and work-based learning.

Global trends like technological change and globalisation are transforming the nature of work, and in particular, the demand for and supply of skills. In Australia, the end of the mining boom has been coupled with an ongoing decline in the manufacturing industry, while the construction and services sectors are growing. For many individuals and employers, these economic changes imply the need to shift towards sectors and occupations in higher demand – a potentially difficult transition.

Global trends like rapid technological change, increased globalisation, and demographic developments, are transforming the nature of work and the demand and supply of skills in particular. These trends have already contributed to a change in the skill profile of employment across OECD countries, and these changes are expected to continue. In this context, there is a critical need to assess current skill needs and to anticipate future skill needs.This chapter provides an overview of skill imbalances in Australia by focusing on skill mismatches and skill shortages. It discusses the cost of skill imbalances to individuals, firms and the economy as a whole; and sets the scene for a discussion about how skill assessment and anticipation (SAA) exercises can be powerful tools in responding to them.

Skill assessment and anticipation exercises are carried out in every OECD country, but the approaches used vary and each has its advantages and disadvantages. This chapter first provides an overview of the main tools for assessing and anticipating skill needs in Australia, both at the national and sub-national levels. It then reviews the methodological challenges associated with each exercise and discusses steps that Australia has taken to address these challenges. The third section analyses the policy relevance of the information produced and the fourth section focuses on how SAA information is disseminated.

The use of SAA information spans multiple policy domains, including employment, education and training, and migration. This chapter provides an overview of how SAA information is used to inform policies in Australia, and highlights challenges hindering even further exploitation of such information for policy purposes.

Wide collaboration across stakeholders ensures that the skill assessment and anticipation system is designed to meet the needs of a variety of users. This chapter focuses on the governance of the skill assessment and anticipation system in Australia, and maps out how stakeholders are involved in discussing findings and shaping the policy response. The first section describes the general governance model. The second section identifies the main mechanisms in place to support coordination across levels of government, while the third section focuses on how different ministries coordinate with one another. The role of social partners is discussed in the fourth section. The final section describes how Australia resolves conflicts when they arise in regard to the interpretation and use of SAA information, and suggests how this process could be improved.