Throwing money at the apprenticeship system not the answer
The number of young people entering into an apprenticeship or traineeship has been declining for the past five years, with student numbers in 2016 reflecting just half (54 per cent) of that in 2012.
In a joint bid to reverse the imminent “tradies crisis” and halt the decline, three of Australia’s most prominent business groups are calling for urgent action to be taken.
The call has come from the Australian Chamber of Commerce and Industry, the Australian Industry Group and the Business Council of Australia.
Collectively, the organisations are urging the Federal Government to recommit to full funding - $1.75 billion over five years - of a new National Partnership Agreement enabling all governments to work together for the benefit of industry, young people and workers wanting to change industries.
The number of Australians undertaking apprenticeships have been steeply declining since 2012. In June 2016 there were 282,900 apprentices and trainees in training, down 45 per cent on the 515,000 in June 2012. Apprentices and trainees represent just 2.7 per cent of the total workforce, the lowest in a decade.
Queensland figures are much the same. Down from the 2012 peak of 152,500 apprentices and trainees, NCVER data reveals only 82,700 students are now in training. This represents the same national decline rate of 45 per cent.
However, a number of things need to be discussed in order to reach a solution that will actually work.
First, it is important to recognise that economic conditions play a large part in the fluctuation of apprenticeship and traineeship starts.
There must remain a focus on the bigger picture when looking at our apprenticeship system: slowing economic activity reduces the rate of creation of new jobs.
Most affected by the declining availability of jobs are indeed our youth, who are making the transition from education to work and account for a disproportionate share of job seekers.
The best way for a government to reduce youth unemployment is to keep economic growth as high as possible. Once the rate of economic growth becomes sufficient to generate a higher rate of job creation, it is young job seekers and subsequently apprentices who will benefit most as the largest share of job searchers.
From the graph below, it is clear to see that the largest decline in apprentices and trainees in training over the years are from those 24 years and younger, more specifically those aged between 15-19 years old.
Much of the commentary around why school leavers are not choosing to go into an apprenticeship or traineeship has been rightfully centred around cultural issues.
Earlier NCVER research has confirmed that the likelihood of undertaking an apprenticeship is influenced by an inclination to go to university.
However, higher education for every type of learner creates pressure, confusion then ultimately a high dropout rate from university in the first few months. Unfortunately, trades are often wrongly looked upon as the lesser option.
Recently, university student completion data released by the Federal Government revealed the university dropout rate is worsening with around one in three students failing to complete their studies within six years of enrolment. Three Queensland universities featured in the “worst universities by completion rate” (based on 2009 cohort).
Germany has long been the case study for an apprenticeship system that works, and much of it has to do with perception and the recognition of vocational training as vital to their economy.
About 60 per cent of German high school graduates choose vocational training over further academic education, and 90 per cent of apprentices successfully complete their training.
Queensland Government programs targeting the senior years of school should be designed to educate students on growth industries and the skills needed for jobs in the new economy. Apprenticeships have historically, and will remain, a major part of this.
But obviously, supply and demand must be balanced.
CCIQ believes that policies in relation to apprenticeships need to also heavily focus on making it easier for small businesses to hire an apprentice or trainee.
Findings of a CCIQ survey found that more than 50 per cent of businesses have indicated subsidies as well as more relevant qualifications would be the best incentive for them to get more involved in apprenticeships and traineeships.
Governments play a vital role in de-risking businesses when they take on apprentices or trainees through attractive incentives, reduced red tape and additional support for the apprentices and trainees. This has proven over the years to increase uptake.
Reducing red tape has consistently been a priority for small business. Many business owners believe the processes for hiring an apprentice have become too complex and/or time consuming, and will avoid it altogether.
Government needs to continually improve the efficiency of regulation, both by removing unnecessary and duplicative areas of compliance and make it easier for businesses to spend time growing their business and employing more people when that can occur.
CCIQ has received feedback over the years from businesses who say one of the biggest contributing factors to the decline in apprenticeship numbers was when the pay rates for first and second year apprentices increased.
The potential financial risk, after such changes, of taking on a first-year apprentice was also cited as a reason for low business take up. These changes are still clearly having effect to this day.
Furthermore, since 2011 a number of changes were made to federal and state incentives for both businesses and apprentices which says much about the decline since that time. These changes mean there will undoubtedly be barriers in getting businesses to re-consider putting on an apprentice.
CCIQ will be joining with the leading business groups in urging both State and Federal Government to act now and place Australia’s vocational education system at the forefront of their education and training policy making.
As the Federal Minister for Education and Training Simon Birmingham said: "Without a strong, consistent supply of apprentices, Australia’s economic performance would be placed at risk".