Building the skills of our workforce, wider AI adoption, innovation and skilled migration are all priorities for boosting productivity in 2026.
In its final webinar of the year, Australian Industry Group’s Centre for Education and Training (CET) explored skills and training highlights of 2025 and what’s in store for next year.
CET Executive Director Caroline Smith welcomed panellists:
“There’s been a significant shift in mindset this year in how our education and training systems can best meet industry needs, but there are still potholes to navigate as we head into 2026,” Mr Willox said.
“Throughout this year, it was recognised that our economy was not going swimmingly, that we needed to do more: what got us here won't get us there.
“We’ve got to shake things up and make some changes.”
The Centre’s guiding principle has always been to work with and for industry to contribute to an education and training system that delivers the human capital Australia needs to reach its potential.
Its first webinar of the year in February focused on the World Economic Forum's (WEF) Future of Jobs report for 2025 that had just been released at the time.
The Centre was the Australian survey partner for the report.
“The report’s findings around global changes in the employment landscape, upskilling and reskilling challenges and factors including digital transformation have shaped and informed much of the Centre’s work this year,” Dr Smith said.
“Since then, we've held webinars on the impact of skills and workforce shortages, apprenticeships, innovation in the education and training system, careers advice and more.”
WEF’s Future of Jobs report for 2025 indicated seven in 10 workers in Australia would need to upskill or reskill over the next five years.
It revealed the types of skills being sought by employers across the labour market included technical skills such as digital, AI and big data and generalist skills, such as analytical thinking, creativity and leadership.
Apprenticeships have also been a big focus for 2025.
Dr Smith and the team released a major report in June that focused on the employer perspective on apprenticeships in Australia.
It showed employers value apprenticeships, with eight in 10 of those surveyed rating apprenticeships as important or very important to their business.
However, it also revealed 96% of employers had experienced barriers in employing apprentices and trainees.
“Hiring apprentices and trainees is getting more costly and complex at a time when we need employers employing apprentices more than ever,” Mr Hall said.
In the report, the Centre made a number of recommendations focused on strengthening the apprenticeship system from the perspective of employers.
Apprentice incentives are used in many ways to offset the reduced productivity and costs of employing apprentices.
They are also used to fund roles such as apprentice supervisors, masters and coordinators that contribute to improved completion rates.
In the report’s survey, employers were asked how the reduction or removal of incentives would impact their employment of apprentices.
About half indicated their employment of apprentices would reduce if financial incentives were no longer available.
“This will be an important topic going into 2026,” Mr Hall said.
In the lead-up to Treasurer Jim Chalmers’ Economic Reform Roundtable in August, the Centre released its People powering productivity report, which focused on the role of skills and training as a driver of productivity when applied in the workplace.
The report concluded a sharp focus is needed to align policy investment settings with productivity as a national priority and better connect education and training with the workplace.
The Centre’s final major piece of research for the year focused on lifelong learning in the workplace.
Its analysis of data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey revealed rates of work-related training have rebounded significantly following pandemic-related disruption and are now above the long-term average.
The report revealed the vast majority of work-related training is fully sponsored by employers and undertaken in paid work time.
It showed those who had completed work-related training in the previous year enjoyed higher incomes and were less likely to have changed employers in the year that followed their work-related training.
“As a country, there's an opportunity to have a long, hard look at how we encourage and enable skills development in all its forms in the workplace context and look at that deep connection between education and training and work,” Mr Hall said.
“Institutional delivery will always be an important part of the system, but there is an opportunity to strengthen the connection between education and training in the workplace to drive productivity and meet industry skills needs.
“It’s not just about employers or government, it's around everyone recognising lifelong learning in the workplace context is a national priority.”
“Education, skills and training are central to robust productivity outcomes,” Mr Willox said.
“They're the platform for a lot of those good outcomes that we're looking for to drive productivity at a time of enormous change in the economy locally and internationally.”
Mr Willox, who attended the Economic Roundtable, said there was a clear focus on education, skills and training at the three-day meeting in Canberra.
“There was recognition that we need to do more at all levels: from the fundamentals such as language learning and literacy, right through to ensuring the education sector is preparing people for the workplace and people are able to continuously learn while working.”
Mr Willox said the Productivity Commission’s final report from their inquiry into building a skilled and adaptable workforce, would be important in setting government policy and the national discussion around how to improve our efforts.
“Unless you have the ability to train and skill the workforce, you're going to struggle on the productivity front,” he said.
“The conversation around AI at a national level has changed shape since the lead-up to the Roundtable,” Mr Willox said.
“The Federal Government has released its own paper on how the public sector will deal with artificial intelligence.
“There’s an effort to develop a culture of embracing artificial intelligence, and each department will have its own Chief Technology Officer or Chief AI Officer to help drive this forward.
“Since the Roundtable, I've been involved in several discussions with the Federal Government and union leaders around AI in the workplace and how that should be tackled and approached.
“There is a very clear sense now that we have to be on the AI train. We can't avoid it, nor should we. But how do we best embrace it?
“Looking ahead, much focus will be around how it is introduced, not whether it's introduced.”
In a recent report, Australian Industry Group shared six case studies featuring members and how they use AI in the workplace.
“It was interesting to see there is no one way that artificial intelligence is being used within a workplace,” Mr Willox said.
“It's being used in different ways in different organisations and, in many cases, in different ways in the same organisation.
“For example, it's not being used in the same way for sales and marketing as it is for training and customer responses.
“One major advance is that AI is being used increasingly around safety within workplaces. We're seeing big upticks in improved safety outcomes as a result of the introduction of AI.”
“It’s emerging there is greater use of AI within companies than managers might realise,” Mr Willox said.
“A lot of it is bottom-up rather than top-down.
“We'll need to lift management capability, awareness and use of artificial intelligence to help drive businesses forward.
“There still seems to be a sense from some people that AI is something that happens to others when, really, it’s going to impact everyone and is already impacting everyone.”
“Skilled migration is back on the agenda and front of mind for a variety of reasons,” Mr Willox said.
“One is the labour and skill shortage that businesses are facing in our tight labour market — not just technical skills such as those relating to AI but broader skills right across the workforce.
“The second reason is that in the broader community, there is concern around housing: construction, availability and affordability.
“Every role needed to build a house is on the Government’s Occupation Shortage List.
“Along with training our own people through apprenticeships and the like, skilled migration can help fill that gap.
“This demand for labour also applies to energy transformation, national security, defence and local events such as the Brisbane 2032 Olympic and Paralympic Games.
“We're going to have enormous pressure on skills, both at national and local levels, so we've got to get the balance right.
“Australian Industry Group has made it very clear to government that skilled migration is as crucial, if not more crucial, than ever across our economy.
“The system needs to be responsive to skilled migration, but we also need to redouble our efforts around training and getting our education parameters right: everything from what is taught, how it's taught and when it's taught.
“All of that is going to be crucial to us filling these skills gaps.”
“You’re not going to get productivity uplift if you don't have a clear focus on innovation in all its forms: innovation of process, innovation of leadership, innovation of management and innovation of training,” Mr Willox said.
“A strong skills future is going to be based around being more innovation focused.
“It’s clear there is the will for Australia to enhance our focus on innovation and commercialisation of product and activities, but we also need to ensure we continue to be relentlessly focused on productivity and innovation at the workplace.
“The Centre is nudging the conversation forward so businesses can learn from each other. Everyone gets it and understands it; it’s the doing it that's the hard part.
“The thing about policymaking is that policies take a long time to make, even longer to implement and yet even longer to show impact.
“There is a lot of work going on behind the scenes. Some of it will move faster than other work, some of it will run into roadblocks and dead ends and some of it will lead to strong outcomes.
“We’ve just got to hold the reins and ride the horse for the journey.”
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Wendy Larter is Communications Manager at Australian Industry Group.
A former journalist for newspapers and magazines including The Courier-Mail in Brisbane and Metro, the News of the World, The Times and Elle in the UK, she is passionate about giving businesses a voice.
