Skills shortages may be easing, but Australia's VET sector faces growing pressure to deliver flexible, industry-relevant training and stronger workforce outcomes.
Jobs and Skills Australia (JSA) has released its 2026 Jobs and Skills Report, Pathways to Success, providing important insights into Australia's changing labour market, workforce shortages and future skills requirements.
The report highlights how artificial intelligence, technological change, population ageing and evolving industry demands are reshaping Australia's workforce.
For Registered Training Organisations (RTOs), the findings reinforce the importance of delivering training that responds to industry needs, supports workforce participation and provides meaningful employment and career progression opportunities.
Key Findings from the Report
The report identifies several significant trends influencing Australia's workforce and training needs.
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Skills shortages are declining: The proportion of occupations experiencing shortages fell from 36% in 2023 to 29% in 2025.
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Shortages remain a challenge: Almost three in ten occupations were still experiencing skills shortages in 2025.
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Existing skills are underutilised: Approximately 33% of women and 27% of men work in occupations below their assessed skill potential.
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Employer expectations are changing: References to critical thinking and problem-solving in construction trade job advertisements have more than tripled over the past decade.
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Workforce participation remains strong: Australia's labour market continues to demonstrate resilience, with participation around record highs.
These findings highlight an important challenge: Australia does not simply need more skilled workers. It needs to make better use of existing skills while ensuring training responds to changing workforce requirements.
Skills Shortages: Where Are the Challenges?
Although workforce shortages are easing overall, persistent challenges remain across several priority industries.
JSA's accompanying 2026 Occupation Shortage List identifies ongoing shortages in areas including:
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Construction and building trades.
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Engineering and electrotechnology.
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Health and healthcare services.
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Early childhood education.
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Telecommunications and technical occupations.
The latest occupation shortage analysis, released on 21 October 2026, also indicates that shortages have eased further, with 27% of assessed occupations experiencing national shortages in 2026.
Importantly, shortages are not always caused by insufficient training places.
JSA identifies several contributing factors, including difficulties attracting suitable applicants, retaining experienced workers and developing adequate workforce pipelines.
For RTOs, this reinforces the need to understand the specific workforce challenges facing the industries they support.
Artificial Intelligence Is Changing Workforce Skills
Artificial intelligence is becoming an increasingly important influence on Australia's labour market.
The report identifies AI and technological change as major factors shaping future jobs, workforce capabilities and career pathways.
While technical expertise remains essential, workers will increasingly need transferable capabilities such as digital literacy, critical thinking, adaptability and problem-solving.
What does this mean for RTOs?
Training providers should consider how emerging technologies are changing workplace practices and whether their training and assessment approaches remain aligned with industry expectations.
This may include reviewing digital capability requirements, engaging with employers and strengthening opportunities for learners to develop transferable workplace skills.
Greater Importance Placed on Recognition of Prior Learning
Another significant theme is the need to better recognise and utilise skills that workers already possess.
The report highlights the importance of improving skills recognition, career mobility and pathways between vocational education, higher education and employment.
Recognition of Prior Learning (RPL) and credit recognition can help experienced workers obtain formal recognition of existing competencies without unnecessarily repeating learning.
For RTOs, this creates opportunities to review RPL processes and ensure they are accessible, transparent, rigorous and supported by appropriate assessment evidence.
Effective RPL arrangements can support workforce participation while maintaining the integrity of nationally recognised qualifications.
Industry Engagement and Training Relevance
The report reinforces the importance of stronger connections between education providers, employers and industry.
As workforce requirements evolve, RTOs need to ensure training remains relevant to actual workplace practices.
This includes:
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Maintaining meaningful industry engagement.
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Monitoring changing occupational skills requirements.
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Supporting trainers and assessors to maintain vocational and industry currency.
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Reviewing training and assessment strategies against workforce expectations.
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Identifying opportunities for flexible delivery and workforce upskilling.
Industry engagement should be an ongoing process that informs training decisions, rather than simply a documentation exercise.
The VET Workforce Is Also Under Pressure
Importantly, the report acknowledges challenges affecting the VET workforce itself.
Workforce capacity, trainer and assessor availability, and barriers to participation can influence the sector's ability to respond to Australia's changing skills needs.
RTOs should consider how they attract, retain and professionally develop trainers and assessors, particularly in industries already experiencing workforce shortages.
Investment in professional development and industry currency will remain important to maintaining training quality and organisational capability.
What Should RTOs Do Now?
While the Jobs and Skills Report does not introduce new regulatory obligations, it provides valuable evidence to support strategic planning and continuous improvement.
CAQA recommends that RTOs:
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Review industry demand: Consider current workforce shortages and emerging skills needs when reviewing training scope and delivery priorities.
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Strengthen industry consultation: Ensure employer feedback actively informs training and assessment practices.
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Review RPL opportunities: Assess whether existing processes effectively recognise workplace experience and prior learning.
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Support trainer development: Prioritise professional development, industry currency and emerging workforce capabilities.
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Consider AI and digital skills: Identify how technological change may influence training delivery and assessment.
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Focus on learner outcomes: Review how training supports employment, career progression and further education pathways.
CAQA's Perspective
The 2026 Jobs and Skills Report sends an important message to Australia's vocational education and training sector.
The future of VET is not simply about delivering more qualifications. It is about ensuring training develops, recognises and strengthens the capabilities Australia's workforce actually needs.
For RTOs, this means taking a proactive approach to industry consultation, training relevance, assessment quality and continuous improvement.
Providers that understand changing workforce demands and respond with flexible, high-quality training will be better positioned to support learners, employers and industry.
At CAQA, we support RTOs through compliance consulting, training and assessment resource development, validation, professional development and quality assurance services.
As Australia's skills landscape continues to evolve, ensuring training remains relevant, responsive and industry-focused will be essential.
Read the full Jobs and Skills Report 2026:
https://www.jobsandskills.gov.
Sources: Jobs and Skills Australia, Pathways to Success – Jobs and Skills Report 2026 (12 October 2026), and 2026 Occupation Shortage List findings (21 October 2026).
CAQA Group | Supporting Quality, Compliance and Excellence in VET