The Australian economy is shifting toward increasing demand for service industries and higher-skill roles, according to a report released late in 2025 from the Federal Government agency Jobs and Skills Australia (JSA).

The higher education sector needs to better align training with job requirements if it is to support current and emerging industries, the report says. Some institutions, including the University of Wollongong (UoW) and Western Sydney University (WSU), are already leading the way.

A common language for skills and qualifications

Amongst the 5 recommendations to fill future labour market shortages, the JSA report suggests that shared language between the skills required by industry and the education offered by Australian universities and TAFEs could make it easier to compare job requirements with qualifications and identify gaps.

Higher education institutions working more closely with industry would go some way to establishing a shared taxonomy.

It’s the kind of message that the Australian Research Council Centre of Excellence for Renewable Fuels at UoW has taken on board as it integrates research, training and industry collaboration.

“Industry is embedded from the outset”, says Ty Christopher, Director of the Energy Futures Network at UoW, “with partners contributing funding, expertise and real-world challenges”.

Christopher says the arrangement also produces a useful feedback loop, with industry being delivered job-ready graduates with the exact skills they are looking for.

The centre is working on projects of national significance, such as figuring out how to produce ‘green’ iron — with hydrogen instead of coal — at scale. It’s an area of research and development that the federal government has prioritised because of its importance to our largest trading partner, China.

Christopher says that such research has the potential to create “entirely new domestic industries”.

The value of life-long learning

The JSA report also suggests that diversifying the appeal of higher education to less traditionally represented groups is key to closing the gap between jobs and skills.

Beyond the typical 18-year-old high school leaver, higher education institutions need to find ways to appeal to people who might not have considered university.

At WSU, the administration has been trialling microcredentials to appeal to learners who might not have the time or resources to commit to a traditional undergraduate degree.

Brian Falzon, Executive Dean of the Faculty of Engineering, Computing and Science at WSU says that interest in STEM microcredentials has been strong and is continuing to grow, particularly in subject areas that are experiencing labour shortages and in areas where new technology is changing the nature of work.

The appeal of WSU’s microcredentials “is further strengthened by clear stackability into larger qualifications,” Falzon says.

The JSA report particularly zeroed in on the importance of upskilling Australians with AI skills, and Falzon says that microcredentials in digital skills are in high demand.

Because the topics were determined using a “structured, industry‑driven process”, the result has been “highly specific, immediately applicable skills”.

JSA Commissioner Barney Glover says that Australia’s long-term productivity will depend on how well the tertiary education system equips people with the right skills.

Glover says, “To build a truly inclusive workforce, we must invest in lifelong learning, upskilling and career mobility.”