The Value of Completing a Vocational Education and Training Qualification

By Tom Karmel and Nhi Nguyen

Using wage data from the Student Outcomes Survey, this study examines whether there is a pay off to actually completing a vocational education and training (VET) qualification, noting that many VET students do not complete full qualifications.

It is important to acknowledge that students' motiviation for undertaking VET is very varied, as is their educational background. Returns to study also vary. This report is useful to policy-makers in terms of defining performance indicators for the sector and also in terms of thinking about resourcing and fee models for the sector.

The aim of this report was to quantify the benefit, in terms of higher wages, of completing a vocational education and training (VET) qualification. Two factors influenced the direction of this research. First of all, VET is concerned primarily with improvements in skill levels (with a likely consequence of improved productivity and therefore increased wages). Secondly, it is certainly the case that many students do not complete qualifications; it is apparent that students take what they want from VET and do not necessarily desire a qualification.

The data examined for this study came from the Student Outcomes Survey and the national VET collection conducted annually by the National Centre for Vocational Education Research (NCVER).

Can we conclude from this research that, indeed, there is a return from completing a qualification and that we should be concerned about the high non-completion rate? There is no simple answer and we need to acknowledge, first, that VET is very varied and, second, there are positive wage returns from completing a VET qualification for some students, but not for others.

These findings stand in sharp contrast to the perceived wage benefits that graduates (and module completers to a lesser extent) report as a result of their training. This contrast is particularly sharp for those with higher-level (certificate IV or higher) previous qualifications.

Do these results have any policy implications? The first point is that we should be wary of using qualification completion rates as a performance indicator without taking into account the educational background of students.

The second point is that the differences in return prompt the question of whether it is worth considering student admission and funding arrangements. For example, the analysis indicates that low-level qualifications (certificates I and II) appear to have little return. If funding is constrained, are these qualifications as worthy as higher-level qualifications? Perhaps a rejoinder to this question is that the lower-level qualifications act as stepping stones to higher-level qualifications.