Chapter 1. Basic skills in Australia

In Australia an estimated three million adults have low basic skills according to the OECD Survey of Adult Skills (PIAAC). Relative to other OECD countries in the Survey, adults in Australia have an above-average performance in literacy, but only average numeracy skills. Well-developed literacy and numeracy skills have a positive impact on economic and social development for both individuals and societies. This chapter describes the characteristics of the low skilled in Australia, and discusses the consequences that low skills have on their economic and social outcomes. As in most OECD countries, the low skilled in Australia are more likely to be inactive, earn less, work in elementary occupations and report low levels of well-being.1

Introduction

Building Skills for All: An overview

This study on Australia, Building Skills for All: Policy Insights from the Survey of Adult Skills, is part of a series on low-skilled adults. It draws on findings from the Survey of Adult Skills, which is a product of the OECD Programme for the International Assessment of Adult Competencies (PIAAC) (see Box 1.1). A similar study was also conducted in the United States (OECD, 2013a). Full reviews involving missions to countries and a thorough analysis of the country policies bearing on skills development were carried out in England (United Kingdom) (Kuczera, Field and Windisch, 2016) and Finland (Musset, 2015).

Scope of the study

Drawing on international comparison, and in agreement with the Australian Government, this study focuses on the strengths of the Australian skills system and areas where Australian performance could be improved. It also looks at the factors promoting or limiting basic skills and what could be done through education, training or workplace measures to enhance basic skills.

How the study is structured

Chapter 1 describes who the low-skilled adults are and discusses risks associated with being a low-skilled adult in Australia. Chapter 2 focuses on the strengths of the Australian skills system. It points to strong basic skills in the migrant population, widespread knowledge of ICT in Australian society, and to the positive role of workplaces in skills development. The last three chapters focus on challenges faced by Australia in the area of basic skills, and provide policy suggestions to address these challenges. Chapter 3 discusses lower numeracy skills; Chapter 4 looks at young people who are NEET; and Chapter 5 focuses on low skills in post-secondary vocational education and training.

The basic skills challenge

How the low skilled are defined in this report

In this report “low skilled” are defined as those who are below Level 2 in literacy or numeracy in PIAAC. Problem solving in technology-rich environments (PSTRE) will be addressed separately in Chapter 2. “Adults with higher skills” refer to adults with literacy and numeracy at Level 2 and above.

Instead of using “levels of proficiency”, it is sometimes more relevant to look directly at proficiency in literacy or numeracy, for example, when an association between wages and basic skills is explored. Whenever analysis is performed on individual domains, the results are reported for literacy and numeracy. As literacy and numeracy are highly correlated, those with strong skills in one domain also tend to perform well in the other.

Box 1.1. The OECD Survey of Adult Skills

The Survey, a product of the Programme for the International Assessment of Adult Competencies (PIAAC), assesses adult proficiency in three key information-processing skills.

Literacy assessment covers a range of skills, from the decoding of written words and sentences to the comprehension, interpretation and evaluation of complex texts (but not writing).
Numeracy assessment involves managing a situation or solving a problem in a real context by responding to mathematical content/information/ideas represented in multiple ways.
Problem solving in technology-rich environments assessment focuses on the ability to solve problems for personal, work and civic purposes by setting up appropriate goals, and accessing and making use of information through computers.

Each of the three assessments yield results scaled from 0 to 500 points. The scales are divided into six levels in literacy and numeracy (Levels 1 to 5, plus below Level 1), and four for problem solving in technology-rich environments (Levels 1 to 3, plus below Level 1). The purpose of skills levels is to facilitate the interpretation of the results, and not to use as standards that define levels of skill required for particular purposes.

The Survey also provides a rich array of information regarding respondents’ use of skills at work and in everyday life, their education, their linguistic and social backgrounds, their participation in the labour market, and other aspects of their well-being.

The Survey was conducted over two rounds of data collection, one in 2011-2012 and one in 2014-2015. In the first round, more than 160 000 adults aged 16 to 65 were surveyed in 24 countries and in the second round, an additional 9 countries and more than 50 000 adults were surveyed.

The Survey of Adult Skills was conducted in Australia from October 2011 to March 2012. A total of 7 430 adults aged 16-65 were surveyed.

Source: OECD (2013), OECD Skills Outlook 2013: First Results from the Survey of Adult Skills, https://doi.org/10.1787/9789264204256-en; OECD (2013), The Survey of Adult Skills: Reader’s Companion, https://doi.org/10.1787/9789264204027-en.

What does it mean to have low skills?

“Low skills” is an abstract notion, particularly when it depends on an arbitrary cut-off point. Box 1.2 therefore gives examples of the instruments used to test whether individuals are at or below Level 2. The skills measured are those of everyday life, such as reading a petrol gauge and understanding how to sensibly take painkillers. Numeracy skills do not require specific technical capacities such as algebra, but they are mediated by literacy.

Box 1.2. How low basic skills are measured in the Survey of Adult Skills (PIAAC)

Individuals are classified at different levels of numeracy and literacy based on their probability of responding to tasks of different difficulty levels (see Chapter 18 in OECD, 2013b). At each point of the scale, an individual with a score of that particular value has a 67% chance of successfully completing items located at that point. Low skilled (below Level 2 with our definition) adults would, more often than not, be unable to perform these tasks.

Q: What is the maximum number of days you should take this medicine? List three situations for which you should consult a doctor.

Q: The petrol tank in this truck holds 48 gallons. About how many gallons of petrol remain in the tank? (Assume the gauge is accurate.).

Source: Kuczera M., S. Field and H. Windisch (2016), Building Skills for All: A Review of England. Policy Insights from the Survey of Adult Skills, www.oecd.org/edu/skills-beyond-school/building-skills-for-all-review-of-england.pdf.

Skills not reported in the survey

The Survey of Adult Skills measures only a specific set of skills. Other skills, such as vocational and soft skills, are also valued in the labour market and by society and should be part of the “skills package” developed by education and training systems.

In Australia, an estimated three million 16-65 year-olds have low basic skills

According to the findings from the Survey of Adult Skills, one in five working age adults has low literacy or numeracy skills, or both. Australia has a similar share of low-skilled adults as New Zealand; a smaller proportion than the United States, the United Kingdom (England and Northern Ireland) and most European Mediterranean countries; and a larger share than Nordic countries, Japan, and the Netherlands (see Figure 1.1. Share of adults with low basic skills).

Numeracy represents a major challenge in Australia. By international standards, adults in Australia have an above-average performance in literacy, but only average numeracy skills. Low numeracy skills will be discussed in more detail in Chapter 3.

In Australia three million adults have either low numeracy or literacy skills, or both. In this group:

A very small percentage of people have low literacy and good numeracy skills.
More than 1 million adults have low numeracy levels and average to good literacy skills.
1.7 million Australians have both low numeracy and low literacy skills.

Basic skills are fundamental to life chances

Well-developed literacy and numeracy skills have a positive impact on economic and social development for both individuals and societies. Many people with weak basic skills are disadvantaged, often because they have low pay, unpleasant or insecure jobs, are unemployed, or are poor and excluded from the labour market (see for example Vignoles, Coulon, and Marcenaro-Gutierrez, 2010; Bostock and Steptoe, 2012). Policy options to address low basic skills should consider that these skills and poor life chances reinforce each other. Low basic skills lead to bad jobs, and bad jobs provide few opportunities to use and develop skills, which also contributes to skills decline.

ICT and the use of computers have revolutionised working methods and work organisation. As a result, employment in jobs subject to automation has been shrinking, along with demand for the skills necessary to perform these jobs (Acemoglu and Autor, 2011). This trend could even accelerate in the future as technology is increasingly applied in workplaces, and computers are able to perform more and more complex tasks. Sound basic skills could therefore be even more important in the future to preserve jobs and secure good life chances.

Characteristics of the low skilled in Australia

More low skilled among older adults

In the majority of participating countries, Australia included, young people aged 16-24 score higher on literacy and numeracy scales than adults aged 55-65 (OECD, 2016, Figure 3.7). In some countries, such as Finland, Belgium (Flemish Community), France, Korea, the Netherlands, Poland and Spain, the reduction in the share of adults with low skills across generations was larger than in Australia. Differences in skills between generations can be due to the decline in skills over time, whereby skills peak around the age of 25 and then tend to decrease (see for example Paccagnella, 2016). In Australia work practices are more favourable to skills preservation than the work environment in other countries, which may explain a relatively good performance of older adults (this issue will be discussed in more detail in Chapter 2). But the skills gap between the young and older can also be explained by differences across cohorts, changes over time in education and training systems, and changes in labour market and economic and social contexts. For example, in many countries, the basic skills of young adults have improved (at least partly) due to greater availability of good quality education. Similarly in Australia, the better performance of young people can be explained, to some extent, by the fact that they are better educated and have a more favourable socio-economic status than older cohorts.

Women perform lower than men in numeracy

In Australia, men (51%) and women (49%) are equally represented among adults with low literacy, similar to many other participating countries. However, women are over-represented among those with low numeracy: 57% of women score below Level 2 compared to 43% of men. This issue is discussed in Chapter 3.

Some low-skilled adults are well educated

Table 1.1 explains how levels of educational attainment in Australia are identified in this report and how they compare to the International Standard Classification of Education (ISCED). (This classification is created for the purpose of this study and does not take into account the problems of mapping the AQF to ISCED definitions of upper-secondary and tertiary as presented in the 2009 AQF Pathways Project Technical Report (Australian Qualifications Framework Council, 2009).

Educational attainment is associated with skills levels. In Australia, nearly half of those with low skills, more than 1.3 million adults, have education and training at the level below upper-secondary (primary school, junior secondary school or certificate I, II). Many adults with low skills are well educated: around 30% of low-skilled adults have upper-secondary education (certificate III or senior secondary school), and 13% have post-secondary non-tertiary education (certificate IV, diploma, advanced diploma and associate degree). The low skilled in post-secondary education is addressed in more detail in Chapter 4. Some 9% of low-skilled adults in Australia have a tertiary degree (bachelor's degree, graduate certificate and graduate diploma, master's degree or doctoral degree).

Table 1.1. Academic and vocational education and training (VET) qualifications in Australia
	Below upper secondary	Upper secondary	Post-secondary	Tertiary
VET	ISCED 1,2 and 3C shorter than 2 years – primary school, junior secondary school or cert certificate I,II	ISCED 3C 2 years and more – certificate III	ISCED 4A-B-C and 5B and area of study – Certificate IV + Diploma, Advanced diploma and Associate Degree in the following areas of study: social science, business and law; science, mathematics and computing; teacher training and education science; engineering, manufacturing and construction; agriculture and veterinary; health and welfare; services.
Academic		ISCED 3A-B – senior secondary School	ISCED 4A-B-C and 5B and area of study – Certificate IV + diploma, advanced diploma and associate degree in the following areas of study: general programmes, and humanities, languages and arts.	ISCED 5A and 6 – bachelor degree, graduate certificate and graduate diploma Master degree level Doctoral degree level

Low-skilled adults come from more disadvantaged backgrounds

Family background has a strong impact on skills in all countries, and in some, such as the United States, Germany and the United Kingdom, this association is particularly strong. In Australia, similar to Japan, New Zealand, the Netherlands and Nordic countries, the association between a country’s average literacy and numeracy skills and parental background (measured by parental education) is weaker than in OECD countries on average.

The association between family background and skills is higher for young adults

The relationship between parents’ education and skills proficiency varies across generations. In most countries, Australia included, the relationship between family background and skills proficiency is stronger among younger than older adults. For example, access to school may be closely related to social background, while subsequent skills development may primarily reflect an individual’s ability, irrespective of social background. In some countries, such as the United States, Spain or Korea, the reverse is true: family background has a stronger impact on skills among older adults than younger adults.

Immigrants (foreign born) in Australia have lower skill levels than natives (native born), but better than migrants in other participating countries

The Survey of Adult Skills suggests that Australia has the highest proportion of immigrants among the participating countries. Immigrants in Australia have lower levels of literacy and numeracy than native Australians, but the difference is among the lowest across participating countries. Immigrants in Australia have better skills than immigrants in other countries. This topic is discussed in more detail in Chapter 2.

There are large difference across regions

The highest share of low-skilled adults is in Tasmania (24%) followed by the Northern Territory and Victoria; the Australian Capital Territory has the smallest share of low-skilled adults (14%).

The consequences of having low skills

Low-skilled adults are more likely to be inactive

Low-skilled adults are more likely to be out of the labour force than those with stronger basic skills. In Australia, some 60%, or two million adults, with low skills are employed, 5% of low-skilled adults are unemployed, and another 36%, or more than one million, are out of the labour force (see Figure 1.3 and Figure 1.4).

Low-skilled adults are more likely to work in elementary occupations

Low-skilled adults are over-represented in sectors such as manufacturing and construction. Some 17% , or around 400 000 of low-skilled adults, work in elementary occupations, such as labourers and production workers relying on low basic skills, compared to 8% of adults with stronger performance. At the same time, 20% of low-skilled Australians work in skilled occupations, such as professionals and technicians. This may be because they have other skills not measured in the Survey but required in these occupations (e.g. skills in art, strong soft skills). However, such a large number of low-skilled adults in occupations requiring a high level of basic skills could also be a sign of mismatch.

Low-skilled adults earn less

Wages are strongly associated with basic skills. On average across OECD countries that participated in the survey, the median hourly wage of salaried employees with high numeracy skills (Level 4 or 5) is around 60% higher than that of workers with low numeracy skills. The same is valid for literacy skills. In Australia, this difference is even higher than in most other participating countries, and highly skilled adults earn more than those with low-skill levels. This association remains strong even when other factors, such as age, gender, immigrant status and job experience, are taken into account (OECD, 2016: 126).

Low-skilled adults are less likely to participate in adult education and training

Adults in Australia, including those with low skills, are more likely to continue in education and training after leaving formal education than their peers in other countries. However, in Australia, adults with low basic skills participate less often in adult education and training than highly proficient adults. The gap in participation rates between low and highly skilled adults is 27 percentage points (35% and 61% among low and highly skilled respectively), which is above the OECD average. Part of this difference can be explained by the job characteristics of low-skilled individuals. For example, low-skilled adults are typically in jobs that provide fewer training opportunities (Grotlüschen et al., 2016).

Those with low skills report low levels of well-being

The Survey of Adult Skills collected information on four dimensions of well-being: the level of trust in others, political efficacy or the sense of influence on the political process, volunteering, and self-assessed health status. People with low levels of skills have poorer health, trust others less and are less likely to engage in community life and democratic processes than highly-skilled adults. Skill levels have a significant positive relationship with all four dimensions of well-being, even when other factors, such as gender, age, immigration background, socio-economic background and education, are taken into account. In Australia, more than in many other countries, more adults with low numeracy skills report that they do not trust others and do not participate in volunteer activities compared to highly numerate adults (Level 4/5). Highly skilled Australians, as New Zealanders and Norwegians, report much higher levels of political efficacy than their low-skilled peers. There is also an association between low skills and health in Australia, but it is slightly weaker than in many other countries. (See Figure 1.6 for an association with numeracy skills and Figure A A.1 in Annex A for an association with literacy skills).

References

Acemoglu, D. and D. Autor (2011), “Chapter 12 - Skills, tasks and technologies: Implications for employment and earnings”, in Handbook of Labor Economics, Card, D. and O. Ashenfelter (eds.), 4, Part B:1043–1171, Elsevier, www.sciencedirect.com/science/article/pii/S0169721811024105.

Australian Government, Department of Education and Training (2017), Inspiring all Australians in digital literacy and STEM, www.education.gov.au/inspiring-all-australians-digital-literacy-and-stem (accessed 3 April 2017).

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Bostock, S. and A. Steptoe (2012), “Association between low functional health literacy and mortality in older adults: Longitudinal cohort study”, BMJ, Vol. 344, https://doi.org/10.1136/bmj.e1602.

Grotlüschen, A., et al. (2016), “Adults with low proficiency in literacy or numeracy”, OECD Education Working Papers, No. 131, OECD Publishing, Paris, https://doi.org/10.1787/5jm0v44bnmnx-en.

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Musset, P. (2015), Building Skills for All: A Review of Finland, www.oecd.org/education/skills-beyond-school/Building-Skills-For-All-A-Review-of-Finland.pdf.

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Vignoles, A., A. De Coulon and O. Marcenaro-Gutierrez (2010), “The value of basic skills in the British labour market.” Oxford Economic Papers, July, https://doi.org/10.1093/oep/gpq012.

← 1. The statistical data for Israel are supplied by and are under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.