Research shows industry training link to more earnings
1 May 2012
A Department of Labour study into the earnings benefits of industry training shows that, on average, trainees who gained level 2 to 5 qualifications earned more as a result.
The research,Labour Market Returns to Industry Training, examined the earnings growth of those who participated in industry training and gained new qualifications between 2003 and 2008, compared with those who did no training.
Most trainees who completed a qualification gained a certificate at level 2 to 4 on the New Zealand Qualifications Framework. Levels 1 to 3 are roughly equivalent to school-level qualifications and level 4 to post-school vocational or trades qualifications.
Vasantha Krishnan, General Manager of the Department’s Labour and Immigration Research Centre, says that those who didn’t complete a qualification and those who gained a level 1 qualification didn’t earn any more compared to those who did no training.
“Beyond that, gains generally increased as the level of the qualification increased – level 2 by an average of 3 percent, level 3 qualifications by 5 percent, level 4 by 7 percent, level 5 and above by 5 percent,” Ms Krishnan says.
Both men and women benefited from gaining qualifications at level 2 and above, as did all age groups on average.
In terms of annual earnings, gaining a level 2 certificate improved the average earnings of women by about $800 in the year after completing training (from $32,100 to $32,900), gaining a level 3 certificate improved earnings by $1,150 per year (from $38,000 to $39,150), while gaining a level 4 certificate improved earnings by $1,500 per year (from $43,500 to $45,000).
Gaining a level 2 certificate improved the average earnings of men by about $600 per year (from $47,600 to $48,200), gaining a level 3 certificate improved their earnings by $1,250 per year (from $54,650 to 55,900), while gaining a level 4 certificate improved their earnings by $2,600 per year (from $54,300 to $56,900).
Among those who gained level 4 qualifications, those aged 20–24 years when they started training benefitted the most, while those aged over 44 benefitted the least. Those who gained qualifications in some fields – such as engineering, architecture and building, and health – experienced larger improvements in earnings than those who gained qualifications in other fields.
There was less variation in earnings benefits by age or field of study for those who gained level 2 or 3 qualifications.
Ms Krishnan says trainees who completed qualifications were also slightly more likely to be employed three years after completing training.
The research will inform a current joint-agency review of industry training that the Department is contributing to. The findings are also relevant to those considering undertaking further education or training to improve their earnings prospects.
The full report is available on the Department of Labour's website online.