Comment: The coalition government appears determined to dismantle many policies introduced by the previous Labour government—particularly those impacting workers. The latest example is the Education and Training (Vocational Education and Training System) Amendment Bill introduced earlier this month.
To understand its potential impact, and its pitfalls, it’s instructive to look back at former UK Prime Minister Tony Blair’s New Labour reforms two decades ago, which ultimately failed to deliver lasting benefits for workers or the economy.
In 1998, Tony Blair’s government launched the New Deal initiatives in the UK, promising to revitalise skills and foster economic growth through a more responsive, industry-led approach to vocational training. The policies emphasised expanding micro-credentials, creating flexible pathways, and strengthening employer partnerships. But, despite the lofty rhetoric, they ultimately failed to deliver genuine benefits for workers or the broader economy.
The focus on expanding qualifications often led to credential inflation—the devaluation of educational credentials over time—where micro-credentials proliferated without clear links to improved wages or job quality. Labour market demand was not adequately addressed, and many workers found themselves with qualifications that did not translate into better employment outcomes.
Key changes in the New Zealand bill
The government’s bill proposes a significant overhaul of the existing system within the next two years. Key elements include:
- shifting away from the centralised Te Pūkenga model toward a more regional, industry-led structure
- establishing a Federation of Polytechnics, with ‘anchor polytechnics’ for shared services
- creating industry skills boards, which will set skill standards, oversee assessments, advise on funding, and initially manage work-based training before shifting this to polytechnics and private providers
- potentially introducing industry levies to fund workforce initiatives
- Tertiary Education Commission and New Zealand Qualifications Authority oversight, with ministerial intervention, if needed.
The overarching goal is to make vocational education more responsive to local and industry needs, fostering regional decision making and greater industry involvement.
On the surface, these reforms aim to address longstanding criticisms of a centralised, one-size-fits-all approach to vocational education. By decentralising control and involving regional and industry voices, the government hopes to create a more responsive and locally relevant system. Yet, history suggests that without tackling deeper structural issues—worker power, funding, and real demand—these reforms risk superficiality.
Without addressing the fundamental issues of labour market demand and worker empowerment, the reforms could be little more than a reshuffling of titles and structures.
There are three main problems with the government’s approach.
1. Over-reliance on qualifications as a proxy for skills and power
The UK’s experience under Blair revealed that expanding qualifications without addressing underlying labour market issues can lead to credential inflation—more micro-credentials that do little to improve actual skills or economic power. Expanding micro-credentials and qualifications failed to translate into improved wages or job quality.
New Zealand’s focus on micro-credentials and industry standards may also lead to credential inflation if not carefully managed. It also risks devaluing genuine skills if these credentials do not align with actual labour market needs. Qualifications should be meaningful indicators of capability, not just boxes to tick.
2. Neglect of labour market demand and structural conditions
New Labour’s reforms emphasised basic skills but failed to tackle sector-specific shortages or improve employment quality. New Zealand’s reforms aim to be more locally responsive but must ensure they are rooted in real labour market demand. Otherwise, there’s a danger of creating a qualifications system full of micro-credentials that don’t translate into better jobs or wages.
3. Failure to acknowledge power dynamics and role of collective action
The Blair government’s policies largely overlooked the importance of workplace power and collective bargaining. Unless reforms here strengthen workers’ voices and collective bargaining beyond industry-led boards, gains in skills may not lead to improved wages or conditions.
There is also the elephant in the room: funding shortfalls. Chronic underfunding is a persistent obstacle in upgrading vocational training. Without adequate investment—covering modern facilities, fair pay for trainers and educators, and accessible programmes—these reforms are unlikely to succeed. Underfunding undermines quality and relevance, resulting in a system that’s more about appearances than genuine transformation.
Lessons we need to learn
The UK’s experience demonstrates that simply expanding micro-credentials and decentralising governance is insufficient. Without prioritising meaningful employment outcomes, empowering workers through collective voice, and, critically, sustained investment, such reforms risk worsening credential inflation and delivering only superficial progress.
To truly reform vocational education, policymakers must invest strategically, align training with labour market needs, and strengthen worker representation. However, even well-designed policies will fail without adequate funding, leaving a system that looks good on paper but delivers little in practice. Lasting change depends on structural reforms, long-term investment, and genuine worker empowerment to create a vocational education system that benefits both workers and the economy.
This article was originally published on Newsroom.
Stephen Blumenfeld is a senior lecturer in the School of Management at Te Herenga Waka—Victoria University of Wellington.