Quantifying demand for training in the primary sector · PDF fileQuantifying demand for...
37
Quantifying demand for training in the primary sector Presentation to NZVETRF 21 October 2014
Transcript of Quantifying demand for training in the primary sector · PDF fileQuantifying demand for...
Quantifying demand for training in the primary sector Presentation to NZVETRF
21 October 2014
Overview of this discussion
2
• Present an approach for forecasting demand for industry training
• Describe how the approach can be extended to measure returns to training investment
• Discuss findings and implications for the primary sector
• Discuss similar work in other sectors?
3
Industry context
Sources of demand
Modelling approach
Results
Return on investment
Summary
About the workforce in pastoral farming
4
• 37,000 dairy farmers and 16,000 beef & sheep farmers
• Mostly family-owned small businesses
• No mandated training pathways
• Low levels of formal qualifications
• Capital intensive (so skills are “geared”)
Industry standard roles and ideal skills
5
Farm assistant
Herd manager
Assistant manager
Farm manager
Owner or business mgr
Basic farm skills e.g. • NCA L2
General farm skills e.g. • NCA L3
Advanced farm skills e.g. • NCA L4
Production mgt. skills e.g. • NC in Prod. Mgt.
Business mgt. skills e.g. • Dip. AgBus Mgt • BAgSci • BCom
Combined for analysis purposes
Top and bottom heavy workforce
6
12,500
7,400
3,300
4,900
9,500
Farm assistant Herd manager Assistant manager Farm manager Business manager
Employees in the dairy farming workforce
Top heavy workforce
7
2,000 1,000
300 200
12,500
Farmhand Stockman Stock manager Farm manager Business manager
Employees in the beef & lamb workforce
Industry stakeholders
8
Questions to be addressed
9
• What should training targets be?
• How much should be invested in training (for both demand creation and delivery)?
• What are the priorities for investment?
• What is the economic case for investment in training?
10
Industry context
Sources of demand
Modelling approach
Results
Return on investment
Summary
Sources of demand for training
11
Changing roles
Replacement demand
Expansion of the workforce
Skills growth
Analytical attention to sources of demand
12
Changing roles Replacement demand
Expansion of the workforce Skills growth
• Lots of qualitative and quantitative work
• Examples: ‒ People Powered
(MPI) ‒ Futures Research
(AgITO)
• Mainly qualitative work
• Examples: ‒ Land-based
review (TEC) ‒ Dairy Farm
Labour Productivity (DairyNZ)
• Lots of qualitative and some quantitative work
• Examples: ‒ People Powered
(MPI) ‒ Futures Research
(AgITO)
• Some quantitative work (uniform rate, equilibrium)
• Examples: ‒ Future
capability (MPI) ‒ Matching tool
(ITF)
Quantitative analytical effort vs important to the sector
13
Changing roles Replacement demand
Expansion of the workforce Skills growth
Quantitative effort
Importance to the primary sector
14
Industry context
Sources of demand
Modelling approach
Results
Return on investment
Summary
Two complicating factors
15
• Skills growth and replacement demand interact
• Replacement rate is not uniform
Replacement demand
Replacement demand
Skills growth
Modelling approach
16
• Use an agent-based model (Inchworm) to simulate every worker individually
• For each worker characterise events such as: ‒ Recruitment ‒ Promotion ‒ Migration ‒ Changing team ‒ Leaving industry ‒ Being trained
• Create a database of virtual workers
Advantages of this approach
17
• Manage complexity ‒ Non-uniform replacement rate ‒ Sources of demand interaction ‒ …
• Explore ‘what-if’ & non-equilibrium scenarios over time:
‒ How are skill levels changing at current training volumes? ‒ How fast does training need to grow to meet an industry target? ‒ What is the impact of a campaign of training?
18
Industry context
Sources of demand
Modelling approach
Results
Return on investment
Summary
Interpreting results (1/3)
19
0
500
1000
1500
2000
2500
3000
3500
2014 2018 2022 2026 2030
ITO qualifications awarded
0%10%20%30%40%50%60%70%80%90%
100%
2014 2018 2022 2026 2030
Workforce qualification level Business / farm management
Herd management
Assistant management
Farm assistance
None
Interpreting results (2/3)
20
0
500
1000
1500
2000
2500
3000
3500
2014 2018 2022 2026 2030
ITO qualifications awarded
0%10%20%30%40%50%60%70%80%90%
100%
2014 2018 2022 2026 2030
Workforce qualification level Business / farm management
Herd management
Assistant management
Farm assistance
None
Interpreting results (3/3)
21
0
500
1000
1500
2000
2500
3000
3500
2014 2018 2022 2026 2030
ITO training over time
Farm assistant
2014 2030
Business / farm management
Herd management
Assistant management
Farm assistance
None
Herd manager
Asst. manager Bus/farm manager
2014 2030
2014 2030 2014 2030
Business as usual isn’t enough (Dairy farming)
22
0
500
1000
1500
2000
2500
3000
2014 2018 2022 2026 2030
ITO training over time
Farm assistant
2014 2030
Business / farm management
Herd management
Assistant management
Farm assistance
None
Herd manager
Asst. manager Bus/farm manager
2014 2030
2014 2030 2014 2030
~50% ~50%
~40% ~20%
Even with strong training growth we’re in it for the long haul (Dairy farming)
23
0
1000
2000
3000
4000
5000
6000
2014 2018 2022 2026 2030
ITO training over time
Farm assistant
2014 2030
Business / farm management
Herd management
Assistant management
Farm assistance
None
Herd manager
Asst. manager Bus/farm manager
2014 2030
2014 2030 2014 2030
~60% >60%
>60% >60%
We’re not even close (Sheep and beef farming)
24
0100200300400500600700800900
1000
2014 2018 2022 2026 2030
ITO training over time
Farm assistant
2014 2030
Business / farm management
Herd management
Assistant management
Farm assistance
None
Herd manager
Asst. manager Bus/farm manager
2014 2030
2014 2030 2014 2030
We’re not even close (Sheep and beef farming)
25
0
500
1000
1500
2000
2500
2014
2016
2018
2020
2022
2024
2026
2028
2030
ITO training
0%
20%
40%
60%
80%
100%FA
0%
20%
40%
60%
80%
100%HM
0%
20%
40%
60%
80%
100%AM
0%
20%
40%
60%
80%
100%FM / BM
2014 2030 2014 2030
2014 2030 2014 2030
FBMT
HMT
AMT
FAT
None
50%
40% 35%
50%
26
Industry context
Sources of demand
Modelling approach
Results
Return on investment
Summary
What is it worth?
27
0
1000
2000
3000
4000
5000
6000
2014 2018 2022 2026 2030
ITO training over time
Farm assistant
2014 2030
Herd manager
Asst. manager Bus/farm manager
2014 2030
2014 2030 2014 2030
$ ?
Profit variation in dairy farming
28
Operating profit/ha
Operating Profit per ha – Owner operators
Mean $2,112
Standard deviation $1,162
Profit variation caused by variation in farm team skills
29
Operating profit/ha
Operating Profit per ha – Owner operators
𝜎𝜎 = $1,162
𝜎𝜎 = ~$900
Modelling farm team skills
30
Intrinsic ability
+ Experience
+ Training
Individual skill
Individual A skill
+ Individual B skill
+ …
Farm team skill Variation in farm team skills
Equating distributions
31
Profit variation caused by farm team skills ($/ha)
Variation in farm team skills (composed of experience, training &
intrinsic ability)
Equating the two bell curves allows us to express the value of training in terms of $ per hectare
Training can add an extra $1b to the bottom line of the dairy farming industry
32
0
1000
2000
3000
4000
5000
6000
2014 2018 2022 2026 2030
ITO training over time
Farm assistant
2014 2030
Herd manager
Asst. manager Bus/farm manager
2014 2030
2014 2030 2014 2030
$1,077
$445
2010 2015 2020 2025
Increase in industry profit ($m)
Strong traininggrowthCurrenttrajectory
33
Industry context
Sources of demand
Modelling approach
Results
Return on investment
Summary
Summary
34
• The Primary ITO, DairyNZ & Scarlatti have used an agent-based tool (Inchworm) to model demand in the primary sector
• Agent based demand modelling provides insights about non-equilibrium changes in qualifications levels given demand from: ‒ Industry growth ‒ Replacement ‒ Changing roles ‒ Skills growth
• Extending the modelling to measure variation in skills within a workforce provides a way to quantify the returns from training.
35
BACK-UP SLIDES
36
Example of a virtual worker
Key dates Born in 1985, first full year in industry was 2005
Recruited from Non-primary sector New Zealand workforce
End of year 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Industry tenure 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Age 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39
Region Canterbury Waikato
Role Farm assistant Herd Manager Farm / business manager
Qualification None Herd management
Which might mean a life story… Person A grew up the Canterbury region. He left school with NCEA Level 2 at the end of Year 12, and went to work in the hospitality industry. At the age of 19, he decides to give the dairy industry a go, and gets a job as a farm assistant in 2004. After working at the farm for 3 years, he decides to see more of the country and moves to the Waikato region. In 2011 he gets promoted to herd manager, and after a couple of years decides to upskill, successfully completing a herd management in 2013. With his new skills, and after receiving some money through inheritance, he talks to the bank and buys out his retiring employers’ stake in the farm, becoming a farm / business manager at the age of 29 years old.
Characterising replacement rate
37
Age Tenure 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65+
1 50% 50% 35% 35% 20% 20% 20% 20% 20% 35% 90% 2 35% 35% 20% 20% 20% 20% 20% 20% 20% 35% 90%
3-5 20% 20% 15% 15% 15% 15% 15% 15% 20% 35% 90% 6-10 10% 10% 10% 5% 5% 5% 5% 2% 2% 90%
10-20 10% 5% 5% 5% 5% 5% 2% 2% 90% 21+ 5% 5% 5% 5% 5% 2% 2% 90%
0%10%20%30%40%50%
0-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10Industry tenure (years)
15-24 year old workers
0%5%
10%15%20%25%
0-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10Industry tenure (years)
45-54 year old workers
Probability of a worker leaving the workforce in the next 12 months as a function of age and industry experience
![Estimating primary demand for substitutable products from ......Classical economic theory on substitution efiects (e.g., see Nicholson [25]) provides techniques for estimating demand](https://static.fdocuments.us/doc/165x107/607bef51321beb4e8c360def/estimating-primary-demand-for-substitutable-products-from-classical-economic.jpg)
