Australia needs a vibrant and productive skills ecosystem if we are going to be able to meet our skills needs now and in the future.
Employers need to be able to keep pace with current and future workforce needs. An effective framework for skills and education must be responsive to the needs of both employers and students. A strategic approach to ensuring a vibrant and productive skills ecosystem will be essential if NSW is to sustain a skilled workforce in the longer term.

1. Finding new ways of engaging with employers

There remains substantial scope for ensuring the NSW education and training system is fit for purpose. This includes supporting a greater role for employers in informing the strategic direction of education and training across the state. This includes informing both current and future skills needs over a 2-5 year time horizon. Opportunities for leveraging industry engagement include in the development and use of shared data assets, and through collaborative initiatives for bringing sector stakeholders together.

Industry-engaged collaborative training models provide an innovative means for building capacity in the state's education and training system. They support the development of industry-relevant skills. They also facilitate mobility between vocational and higher education. Innovations of this kind are of particular interest in regional Australia, where substantial infrastructure investment and renewable energy initiatives are projected to lead to huge demand for skilled workers in regional areas. Governments state and federal have an opportunity to play a leading role in this context through the continued development of training institutes, centres of excellence, skills hubs and other collaborative models for engagement, education and training.

Other opportunities for doing so include to:

• Ensure learning opportunities are both available and aligned with the needs of employers in both urban and regional areas.
• Develop a centralised, publicly available data assets in partnership with industry (in line with recommendation 7 of the NSW VET Review); 
• Invest in structured opportunities for engaging with small and medium businesses on meeting their skills needs, particularly in regional Australia, including place-based collaborative models that integrate industry involvement with education and training.
• Establish industry-specific and place-based workforce development Compacts with the aim of helping employers across NSW meet their skills needs (in line with recommendation 8 of the NSW VET Review).
• Ensure policy and funding settings support cross-sector models for employer engagement in innovation, workforce development, education and training.
• Create a policy environment that encourages and rewards organisations for investing in skill development.
• Commit to the continual development and maintenance of a VET sector that is industry-led, competency-based, and built on occupational skill standards.

2. Enhancing the digital capabilities of SMEs

The NSW Digital Skills and Workforce Compact is a partnership between the NSW Government, industry, and providers of education and training. The initiative brings a collaborative approach to addressing the projected shortfall of 85,000 digital workforce jobs in NSW by 2030. The Compact aims to transform the digital skills ecosystem in NSW through developing six pillars of action:

• Perceptions of digital careers;
• Pipeline of digital talent;
• Widening participation in the digital workforce;
• Up-skilling and re-skilling; and
• Training relevance.

Participants in the digital skills ecosystem include education providers, government agencies, and employers relying on digital talent. They include employers in the tech industry, those considered ‘tech-adjacent’, and those across all sectors with a wide range of digital skills needs. Many of those employers are small and medium-sized businesses. SMEs comprise 99.5% of all employers in NSW, supporting roughly 82.7% of jobs across the state. Business NSW therefore has a prominent role in the Compact in ensuring small and medium employers are not left behind as influential stakeholders in the tech sector work together to enhance the digital capabilities of the NSW workforce. 

The next phase of this initiative provides opportunities to consider how these may assist small and medium-sized businesses across NSW in meeting their digital skills needs.

Opportunities for doing so in 2025 include:

• Assisting in campaigns promoting digital careers;
• Sharing case studies and resources for good practice in improving diversity of participation in digital careers;
• Supporting the continued development of targeted up-skilling and re-skilling opportunities; and
• Ensuring the relevance of education and training opportunities with the digital skills needs of small and medium-sized employers.

3. Leveraging skilled migration and international education

A comprehensive workforce strategy includes a streamlined migration policy that complements the national investment in skills, education and training. Our skilled migration program is an essential component of Australia’s workforce planning and development. It enables employers to adapt and respond to workforce shortages in areas of critical skills need. The Federal Government has recently announced some welcome reforms to Australia’s skilled migration program. The end result should be a streamlined migration system; one that is responsive, economical and effective. It should be easy for both workers and employers to navigate, with needlessly complex and onerous requirements removed. 

International education is a cornerstone of Australia's $48 billion export sector. It also plays a critical role in strengthening the nation's skills base. Our December 2024 NSW Business Conditions survey found the majority of NSW businesses (56%) recognised the economic benefits available through supporting Australia’s once-thriving international education sector. Current policy settings, such as caps and limits on student numbers, risk stifling the sector’s growth and damaging legitimate providers. 

A thriving international education sector will not only bolster the economy but also contribute to a more diverse and dynamic workforce, with international students bringing global perspectives and in-demand skills to Australian industries. If the Federal Government continues to pursue policies which bridle our international education sector, we risk further damage to our hard-earned reputation as a welcoming and high-quality education provider. 

Skilled migration has long been a key pathway for employers to meet their workforce needs, and will remain so, especially in regional NSW. However, there remain features of Australia’s skilled migration program that deter employers from making greater use of it.

Opportunities for improvement include to:

• Improve the timeliness of procedural aspects to Australia’s skilled migration program, including responses to inquiries and visa processing times, through ensuring that 75 per cent of skilled visa applications are processed within 120 days, and 90 per cent of Working and Holiday Visa applications processed within 90 days;
• Proceed with improvements to the employer experience of skilled migration processes, in line with commitments outlined in the 2023 Migration Strategy;
• Ensure visa fees do not disadvantage Australia in competing in a global market for talent.
• Increase the NSW allocation of regional skilled visas (subclass 491) from 2,000 to 3,000 places to assist regional employers in meeting their skills needs in areas of critical shortage; and
• Implement the widespread adoption of The Innovation and Early Careers Skills Exchange and the Skills Development Exchange pilot initiatives currently underway as part of Australia’s free trade agreements with the UK and Indonesia by 2026.
• Ensure Commonwealth education policies and programs are developed and implemented for the purposes of education, with migration goals achieved through Australia’s newly reformed migration policy framework.
• Restore the status of Australia’s international education sector as a world-leading example of education and innovation.