Renovating Australia's apprenticeship scheme

Drastic changes are required to boost the apprenticeship completion rate, and that may mean the government has to redirect funds away from corporations to apprentices and the not-for-profit sector.

The ACTU is escalating a push, through its case with Fair Work Australia, to improve the wages of apprentices, many of whom are paid below the poverty line. There is a case for this and it is long overdue, but the government also has a responsibility to increase and rearrange its financial commitment.

Considerable changes need to be made for this system of gaining skills and qualifications to provide a vastly improved foundation for the labour market and the economy with a flow-on benefit to the wider society.

Since 1996, when the Howard government came to power and embarked on the "New Apprenticeship System”, beneficial changes have been mooted and the same has occurred under the Rudd government and the Gillard government. But the beneficial changes spruiked by politicians have not occurred.

This is the time for radical policy changes.

Apprenticeships, particularly in skilled traditional trades including the traineeship variety in division two nursing, personal care, and information technology, are of crucial importance to Australia. Around 1.2 million workers are employed within the technical and trade sector, which represents more than 13 per cent of all workers.

Without fitters and turners, bakers, carpenters, boilermakers, electricians, plumbers and gasfitters, air conditioning and refrigeration mechanics, division two nurses, locksmiths, mechanics (including electronic and diesel) and printers – to name a sample – not a lot happens. These vocational fields all represent skill shortages.

Given the attrition rate – apprentices who do not complete their training – Australian society has a real problem. The final report for Apprenticeships for the 21st Century states: "there is projected to be a shortfall of 36000 tradespeople in the resources sector by 2015”.

This is nothing new. Many of the above vocational areas have been in shortage for decades, as shown by the Senate Inquiry in 2003. But the problem persists.

The report identifies the problem succinctly. "Completion rates for Australian Apprenticeships are unacceptably low (about 48 per cent). This represents a significant economic cost, given the time and resources provided for both on-the-job and off-the-job training. There are a range of issues that commonly emerge from the research about reasons for non-completion, including workplace or employer issues, lack of support, low wages and not liking the work”, as well as literacy and numeracy concerns. I do not have an issue with the accuracy of the problems identified in the report.

However, the solutions I propose should be seen as quite radical.

I propose that large companies (500 plus) and the corporations no longer receive financial incentives for recruiting apprentices and trainees. Along these lines, I propose that grants are paid to apprentices that are tax-free when they reach milestones in their training and these grants are all significantly boosted, particularly for older apprentices.

The report isolates reasons why people do not complete traineeships and my view is that the salary is a major problem. I consider that financial incentives should be boosted and provided to small to medium and large organisations only (all under 500 staff). When for-profit companies receive financial incentives for apprentices they pay tax on the money received. I believe these taxes should be removed. It is pure folly.

The report called for a boost in wages. In my experience, the negotiations and howls will see this as a slow burner. But sharing the burden between the federal government and employers may prick up the ears of the Fair Work Australia commissioners. The problem needs decisive action from the federal government. The situation is now worse than it has been in the last 15 years, so major change is needed.

Group training companies employ and outsource their apprentices to industry. They are generally not-for-profit organisations and not so well known. The work they do – hiring out apprentices to industry – is invaluable to the economy, but they do so with poor incentives from government that certainly do not keep pace with inflation. A significant boost is due in this direction as well.

Major government contracts let to tender should have mandated conditions that require a certain ratio of apprentices on major works.

The apprenticeship pathway is extremely valuable. Qualifications and employment increase the health and wellbeing of those fortunate enough to have made this vital link. Apprentices are predominantly adults – it is an adult training program and significant shifts are needed.

The government needs to recognise that it is not a cost, but an investment in infrastructure. The economic modelling would prove that the return on investment to government would be sound when people obtain VET qualifications and pay increased taxes with a flow-on effect to reduced costs in health and welfare as more people are gainfully employed.

So, where to from here?

Can the Federal Government lead and implement big picture solutions? I have tried many times to get the ear of senior bureaucrats and ministerial advisers, but with limited outcomes. I have even written to the minister for tertiary education last year asking for a meeting. The odd thing is that tradespeople work with improved technology all the time, but the technology and machinery underpinning government and related policies somehow lag well behind.

This is a disturbing circumstance as apprenticeships have amazing potential to build our Australian society and provide a dignified education pathway for quality employment, to thwart those educationalists and people who are misinformed and consider that all roads must lead to higher education. Those people are likely to have a different view of the trade pathway when a refrigeration mechanic arrives to repair the fridge, charges money for a call out and proceeds to indulge in critical thinking of a high order and fixes the problem. Respect has many dimensions.

Alan Montague is a media commentator, lecturer at RMIT and researcher on skill shortages, apprenticeships and traineeships, education policy, ageing and aged care.

This story first appeared on The Conversation. Reproduced with permission.


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