LABOUR MARKET FORECASTING IN AUSTRALIA: THE SCIENCE OF THE ART

Since 1987 nearly 50 labour market forecasts have been undertaken in Australia to assist decisions relating to government policy and budget, investment and career planning. More than 20 of these forecasts have been disaggregated by age, occupation, industry or regional labour markets. One of the chief aims of disaggregated forecasts is to help policy makers avoid future shortages or surpluses of skilled labour. A survey encompassing government departments, private research institutes and banks was undertaken to overview recent labour market forecasting exercises in Australia. This paper, which attempts to summarize these efforts, also discusses the main advantages and disadvantages of each major type of forecasting technique. Methods employed have ranged from anticipatory surveys to data-intensive input-output models. Formal evaluation of labour market forecasts requires considerable resources and no known assessments have been conducted in Australia to date. It is unclear how significant disaggregated labour market forecasts have been in guiding the allocation of funds between competing education and training courses. Nevertheless, governments eager to avoid future shortages and surpluses of skilled labour, but less enthusiastic about forecasting, could aim to make the labour market more flexible and responsive instead. Like forecasting, however, the effectiveness of this approach has yet to be scrutinized.