In addition to the influences on employment growth across the whole labour market, there are specific demand and supply factors for each industry, some of which are discussed below. Insights discussed come from the modelling commissioned by the Victorian Skills Authority as well as information from the 10 Industry Advisory Groups (IAGs) who provide critical on-the-ground insights and intelligence for Victorian industries.
This appendix focuses on employment growth forecasts between 2023 and 2026, which is not the same as new workers expected presented throughout the report. This is because employment growth does not include workers retiring over the period.
Employment growth in some industries will grow much faster than the Victorian average of 1.3%, such as health care and social assistance (3.1%) accommodation and food services (3.1%), and education and training (2.5%).
However, some industries are facing a decline in employment, such as agriculture, forestry and fishing (-0.8%), retail trade (-0.6%), other services (-0.2%), and construction (-0.1%).
The strong employment growth in health care and social assistance is driven by strong demand for the National Disability Insurance Scheme, aged care services, early education and care services, and discretionary and non-discretionary spending on health services. The projected demand in this report does not fully account for the effects of the staged pre-prep rollout as part of the Best Start Best Life reforms commencing in 2025.
Industry Advisory Group members reinforced the impact of increased government investment on the demand for new workers. In addition, they found that the following factors are likely to have a positive impact on the demand for new workers:
- changes in regulation such as increased quality of services
- population growth and ageing population increasing demand for services
- changing society perceptions around wellbeing increasing demand for services
- adoption and continued use of digital health care increasing ease of access to and use of services
- staff burnout and increased turnover due to COVID-19.
The above-average employment growth in accommodation and food services is driven by the recovery from travel restrictions associated with the COVID-19 pandemic, particularly for international visitors. The supply of workers to accommodation and food services is mainly from people with no post-school qualification, which is forecast to decline. However, the supply of workers is not expected to be problematic as there are reduced opportunities in retail trade employment, which is another major employer of non-post-school qualified workers.
Industry Advisory Group members highlighted that population growth and some potential future government investments are likely to have a positive impact on the demand for new workers.
The above-average employment growth in education and training is mainly driven by growth in the tertiary education sector as employment continues to recover post-COVID-19 and strong growth projected in early childhood education due to the rollout of the Victorian Government’s Best Start, Best Life reforms, which includes both three-year-old and pre-prep expansions. However, this report does not fully account for the effects of the staged pre-prep rollout.
Growth in employment in school education is expected to be slower than the Victorian average, as it is mainly driven by growth in the school-aged population, which is forecast to grow more slowly than the general population.
New workers expected for teachers differs from the Department of Education’s Teacher Supply and Demand Report due to different methodologies and inputs.
Employment growth in professional, scientific and technical services is expected to be close to the Victorian average. While supply of university qualified workers – a main cohort of supply for the industry – will continue to grow, there will be strong competition for these workers from the health care and social assistance and education and training industries.
Employment in the industry has grown significantly over the past decade. While growth is still expected to be positive over the forecast period, the slower growth forecast is due to aggregate employment slowing. Further, employment in this industry has grown rather quickly over the past few years, which is not expected to be sustainable as industries that have grown quickly in the past slow down as they reach maturity in the market. For example, computer system design has grown extremely quickly in the last decade, with employment doubling from around 50,000 in 2012 to 100,000 in 2022.
Insights provided by the relevant Industry Advisory Group indicate that leveraging advances in technology to improve existing business models is expected to have a positive impact on the demand for workers with higher-order and specialised skills. This is because it will drive productivity improvement and increase the quality of service outputs through sensor technology, robotics and automation.
Employment growth in transport, postal and warehousing is expected to be close to the Victorian average. However, growth wise it is a two speed industry. Air transport, water transport and tourism transport are expected to grow much faster than the Victorian average.
Road and rail freight and passenger services and warehousing are expected to grow slowly. This reflects both slow growth in transportation of bulky manufactured products and improvements in productivity, with better logistics and improvement in roads enabling an increase in service delivery per worker. Slow growth also reflects poor supply to the industry, with supply of workers with no post-school qualification declining as older workers retire.
Industry Advisory Group (IAG) members found that the following factors are expected to have a positive impact on the demand for new workers:
- increased government investment driving greater demand for services
- climate change driving greater demand for sustainable products is expected to drive demand for workers with new skills to deliver on the decarbonisation of transport options.
In particular, IAG members highlighted that freight carriers are experimenting with hydrogen and biofuels and the decarbonisation of transport options.
Employment growth in rental, hiring and real estate services is expected to be similar to the Victorian average. The main activity in this industry is real estate. While real estate agents require a Certificate IV qualification to practice, many have higher qualification, with 20% having an advanced diploma and a further 25% having a bachelor degree or higher level qualification. With this even spread across the qualification profile, growth in the supply of real estate agents is expected to be close to the Victorian average.
In general, the occupation profile of this industry is spread out across the qualification levels, with professional and managerial occupations including land economists and accountants, along with sales and clerical occupations. The combination of occupations from the fast-growing university graduate cohort and the slow-growing vocational education cohort means that the industry growth rate overall is expected to be close to the state average.
Automation in the sector is mixed, with automation likely to crowd out some clerical tasks. However, the largest occupation in the sector, real estate agents, is not expected to be vulnerable to automation.
Employment growth in arts and recreation services is expected to be similar to the Victorian average. Expenditure on arts and recreation is discretionary, which tends to grow more quickly than expenditure on essential goods and services. Furthermore, occupations are not expected to be subject to automation, adding to the expectation that employment growth will be faster than average.
Counteracting this, the sector competes with the fast-growing education sector for some of its key occupations. For example, the education sector is the largest employer of sports coaches, drawing supply of this occupation away from arts and recreation services. To a lesser extent, the education sector also absorbs a proportion of the supply of professionals in music and visual arts.
For the recreation services sector, Industry Advisory Group members highlighted that increased government investment is expected to have a positive impact on the demand for new workers as it is likely to drive greater demand for services.
Employment growth in public administration and safety is expected to increase slightly below the Victorian average. This is driven by an expected moderation of government spending following the strong growth throughout the pandemic, which has significant effects on this industry given its exposure to government expenditure policy.
Industry Advisory Group members reinforced the role of government spending on this industry, with varying responses depending on their outlook for government investment.
The positive but below-average expected employment growth in manufacturing counteracts the long-term negative trend. In the past, technological change has been significant in replacing human labour in routine manual occupations. Automation is expected to play less of a role in the future, with new workers in manufacturing being more oriented towards skilled trades, management, logistics, and professionals.
Industry Advisory Group members also noted that onshoring, energy prices, and shortage of workers relating to research and development are some of the challenges facing manufacturing in the near term.
Employment growth in electricity, gas, water and waste services is expected to be positive but below the Victorian average. As a provider of essential services, the industry is exposed to all parts of the economy, with some areas of employment being subject to automation. Relatively slow growth in the supply of workers with vocational qualifications may constrain employment growth in the industry. However, professional occupations including engineers will account for a growing proportion of employment in the sector.
Industry Advisory Group (IAG) members have highlighted that there is a potential upside to employment forecasts given the current pipeline of investment in renewable energy and transmission upgrades. IAG members also noted that the following factors could have a positive impact on the demand for new workers:
- increased regulatory requirements meaning that more staff will be required to ensure compliance
- population growth driving demand for services.
Information, media and telecommunications is expected to grow at a slower rate than the Victorian average. It is a two speed industry, with very little employment growth in publishing (for example, journalists) and growth close to the Victorian average in telecommunications.
Industry Advisory Group members noted that technological factors such as the increasing digitisation of work and leveraging the advances in technology to improve existing business model are likely to have a positive impact on the demand for new workers.
Employment growth in mining is expected to be low, mainly due to declining prospects for coal mining as it is being phased out of the domestic and global economies.
Employment growth in wholesale trade is expected to increase below the Victorian average. This reflects the ongoing shift in the allocation of household budgets towards services and away from manufactured goods.
The relevant Industry Advisory Group highlighted the positive impact of population growth on new workers expected.
Employment in financial and insurance services is expected to grow at a slightly slower rate than the Victorian average. While there will be strong supply and demand for professional occupations, employment growth for some clerical occupations is forecast to be slow as many of the tasks performed by these occupations are likely to be automated.
Employment in administrative and support services is expected to grow more slowly than the Victorian average. Although the industry is very integrated with the rest of the economy, employment growth is projected to be slow as many of the tasks performed by clerical occupations in the industry will continue to be automated. For example, employment of commercial cleaners in Victoria has declined over the last five years, perhaps due to the increasing prevalence of working from home, which may have decreased the amount of cleaning required in commercial spaces.
Many of the clerical tasks performed in the industry are also subject to automation, such as labourers (including packers) and clerks. Occupations that provide a package of information and services, such as event organisers and travel advisers are crowded out by the accessibility to information and apps that can do these tasks online.
As at mid-2023, employment in construction was forecast to decline, consistent with the Victorian Department of Treasury and Finance’s forecast for dwelling investment, with rising interest rates expected to dampen demand for new housing and construction activity. However, the Victoria’s Housing Statement announced in September 2023 may change these forecasts.
Construction may experience issues with labour supply. This is because the main supply of employment in construction is from workers with vocational qualifications, which is forecast to grow slower than average. IAG members have also raised concerns around the availability of skilled workers and trainers. In particular, IAG members noted that higher-order qualifications are not necessarily required to get a high salary job, meaning that it can lead to lower educational attainment of workers over the longer term.
IAG members noted that inflation, rising costs, and high energy prices are also likely to have a negative impact on the demand for new workers in construction.
Employment growth in other services is expected to decline. Around 43% of workers in the industry have a Certificate III to IV qualification, which is double the state average of 22%, and second only to construction. With slow growth expected in the number of people with vocational qualifications, employment growth rate in the sector is forecast to be below the state average.
Employment in personal care services (which includes hairdressing) the largest subsector in the industry is expected to be below average due to the slow growth in the supply of the number of people with vocational qualifications.
Parts of the sector in which employment is forecast to grow particularly slowly include automotive repair and private households employing staff (such as households employing cooks, maids and nannies). In the case of automotive repair, employment has not grown in Victoria for three decades, perhaps due to better road safety and new, less labour-intensive techniques for repairing cars. Similarly, employment in private households has not grown, probably due to changing social norms and low supply of labour to this industry.
Industry Advisory Group highlighted that economic factors such as inflation, rising costs, and slowing global economic growth are likely to have a negative impact on the demand for new workers.
Employment is expected to decline in retail trade due to compounding factors of weak growth in household spending, the ongoing allocation of household spending towards services and away from manufactured goods, and technological change in the sector with automation of tasks and a shift to less labour-intensive online shopping. The supply of workers to retail trade is also expected to constrain growth, as the main cohort of supply in this industry is from people with no post-school qualifications, which is expected to decline. Further adding to these supply pressures, this cohort of workers also supplies labour to the fast-growing hospitality industry.
Industry Advisory Group members found that inflation, rising costs, high energy prices, and slowing global economic growth are likely to have a negative impact on the demand for new workers in retail trade.
Employment is expected to decline in agriculture, forestry and fishing. This is driven by falling demand for the industry’s products, domestically with the squeeze on household budgets from inflation, and internationally, with diminished export prospects. Industry Advisory Group members found that inflation, rising costs, and high energy prices are likely to have a negative impact on the demand for new workers in agriculture, forestry and fishing.
Agriculture accounts for 89.7% of employment in the broader industry and the reduction in employment is mostly expected to come from this sub-industry.
The forestry and logging sub-industry will also be affected by the closure of native timber harvesting by 1 January 2024. Forestry and logging is a relatively small component of the broader industry, accounting for 1.5% of employment.
More generally, agriculture, forestry and fishing is a particularly challenging industry to forecast, given its disparate nature, transient workforce and exposure to seasonal factors, climate change and trade conditions.