Training pays

You might have assumed that vocational qualifications pay off in higher incomes - and you'd be right.
 
Researchers have measured the financial return a person would earn from undertaking training and confirmed that it represents a sound investment.

For every $100 a student invests in training (including fees and forgone income) the payback generally exceeds $20 a year for the student's working life.
 
That's the finding of the National Centre for Vocational Education and Training (NCVER), published in their report Private Returns to Vocational Education and Training Qualifications.

NCVER finds that the average 20% rate of return from gaining vocational qualifications is greater for higher level vocational courses, such as diplomas and certificate III and IV qualifications (The research doesn't deal with university degrees).

The payback is also greater for students who are studying part-time, but that's largely because they are forgoing less income than full-time students.
 
Most vocational education and training students are winning these higher returns because three in four are enrolled part-time.

Males benefit from their training investment slightly more than females, on average, which is partly explained by their concentration in higher paid occupations, such as the construction trades, and partly by lower female employment levels.

While age plays little part in the financial return a student will receive from vocational courses, their highest level of schooling does shape future returns.

The research, undertaken for NCVER by researchers from Monash University's Centre for the Economics of Education and Training, finds that rates of return are mostly slightly higher for those whose highest level of schooling is year 10, rather than year 12, especially among females.

The returns from training are not due solely to the higher wages earned by people with a qualification compared to unqualified workers: the greater likelihood of working full-time - and just working - explains some of the premium.

NCVER managing director Tom Karmel says the report raises as many questions as it answers.
 
Future research questions to consider include: What are the rates of return for each field of study? What are the returns from part-completing qualifications? If tuition fees are raised, how much does this reduce the returns from training?

Published: 26 July 2008