Changing wage benefits highlight need to align skills and jobs

Research from Adelaide University highlights the need to better align skills and jobs in Australia. While higher education (HE) and vocational education and training (VET) both offer financial returns, the size of these premiums has changed over the past 24 years. HE graduates earned roughly a 46% hourly wage premium in 2024, while VET graduates earned about 10%.

The study, published in International Review of Economics & Finance, examined data from 2001 to 2024, covering over 250,000 people aged 25-64. Despite an overall increase in HE graduates' wages from 53% in 2001 to 38% in 2024, and a smaller rise for VET graduates from 14% to 2%, the year-to-year analysis showed a peak around 2010 for HE and 2005 for VET, followed by declines.

This decline is linked to reduced work hours, underemployment, and growing skill mismatches, where about 30% of high-skilled workers now hold middle- or low-skilled jobs. The research emphasizes the importance of aligning education with labor-market demands to ensure both efficiency and equity in Australia's post-school education system, particularly as the government aims for 80% of the working-age population to have tertiary qualifications by 2050.