TAFE teachers who provide second-chance education to young people and displaced workers say they are being cut off at the knees under plans to downgrade their skills and courses that change people's lives.

Leanne Kennelly, who teaches general education at the TAFE campus in Moruya, said teachers' hearts were breaking because they could no longer offer literacy and numeracy courses and the equivalent of year 10 to 12 school education.

"There are people now falling through the cracks because we have changed from being a second-chance education provider to a business model," she said.

"Do we become like America and just build maxi prisons for them all?"

"We should be in the community running these programs that really matter and make a difference. But it's just not happening because we are only looking at the bottom line now."

Ms Kennelly, who has 20 years' experience, said she and other teachers receive cries for help each week from young people, school principals and police. One young woman who recently stopped taking ICE wanted help with basic literacy.

"I've had police officers talking to me personally saying these kids are wandering the streets, what can we do?," she said.

"I have school principals calling and asking me 'why aren't we running year 10 programs anymore?'.

"When I ask, I am told it is not economically viable. It is heartbreaking."

The Baird government is negotiating a new enterprise agreement with TAFE teachers who say it will downgrade their skills to the new category of trainer. Basic courses that once prepared young people for further education and jobs have been axed and more difficult courses are often impossible to complete.

But with youth unemployment skyrocketing and entire industries being lost, the need for TAFE training is more important than ever, argues NSW Teachers Federation president Maurie Mulheron.

​While US President Barack Obama has pushed for a renewed focus on community colleges to address unemployment, Australian governments have cut TAFE courses, teachers and resources. Private operators who can deliver cheaper courses are competing against TAFE for limited government funding.

​"Never before have we [more] needed a flourishing TAFE system, which was once the envy of the world," Mr Mulheron said.

​"It's probably the worst EBA [enterprise bargaining agreement] proposal we've seen a state government present in terms of attacking existing working conditions including hours and leave."

Liz Ingram, an early childhood TAFE teacher in the New England area, said course quality would be downgraded with the introduction of "instructors", to be paid $20,000 less than qualified teachers.

NSW Greens MP John Kaye said it was an insult to teachers and the community to suggest that the education of the next generation of tradespeople "can be left to underqualified instructors".

"TAFE NSW management is pushing a reclassification of roles that would force many long-serving staff to choose between keeping their job at a reduced salary and accepting a redundancy," he said. "It will inevitably undermine the quality of teaching and learning, reduce opportunities for students from all backgrounds and make it even harder to recruit the next generation of TAFE teachers."

TAFE NSW managing director Pam Christie said TAFE NSW was focused on becoming "strong and more competitive".

"TAFE NSW faces unprecedented competition in the marketplace and we recognise our dedicated employees are a key advantage in meeting that challenge," she said.

"We want to improve their effectiveness in delivering training outcomes that students and enterprises will continue to choose in an open competitive marketplace.

"We will continue to bargain in good faith to reach agreement around how best to do that."

David Harris, the NSW Labor Party spokesman for regional development, skills and small business, said the reduction in quality of TAFE teachers would lead to "textbook teaching".

He said: "NSW has not learned the lessons from Victoria and South Australia" where similar TAFE reforms had failed.