Apprentice model is costly but unreformed

This article is taken from “The Australian” website

AS we head into the major recruiting season for apprentices, it is difficult to comprehend the barriers that are being erected against the delivery of the skilled labour that our businesses need.

First, the Fair Work Commission handed a hefty pay increase to first- and second-year apprentices commencing January 1, 2014, and fully phased in by 2015. In the manufacturing sector, many first-year apprentices will receive an additional $58 a week. Many first-year hairdressing apprentices will receive a $145 lift in pay each week. These increases are considerable and abrupt.

On top of this we have seen the steady increase in TAFE or training fees across all jurisdictions. In Victoria, fees in the deregulated training market have gone from an average of $500 in 2010 to at least double, often triple by 2013.

As well, some training providers have also reduced the number of delivery hours that they intend to provide for some trade qualifications in 2014. NSW is currently considering recommendations from their Independent Pricing and Regulatory Tribunal review with the option of apprentice fees increasing from an annual fee of $478 to $3000 for the qualification over a period as short as a year; with a recommendation of increasing the fee by $1000 each year until it equals 40 per cent of the cost of the training.

This will lead to a substantial increase for some apprentice qualifications. For example, the uncapped fee would be approximately $4500 for a certificate III in carpentry and joinery and about $5700 for a certificate IV in electrical-instrumentation. This would represent a fee increase of about $3000 to $4000. IPART has recommended that fee arrangements for these students transition to the 40 per cent cost over several years, with capping per qualification to be $3000 in the first year of implementation, with the cap increased $1000 per annum until the 40 per cent target is reached.

These two factors have suddenly increased the cost to the employer by many thousands of dollars per annum. This will occur in the context of a soft economy and a persistently high dollar – a time when support for employers should be maintained rather than head the other way.

The problems are easy to identify. The real challenge is to find sustainable solutions and to achieve genuine reform. There is no doubt that we need to increase the volume of people entering apprenticeships mirrored by increased participation by employers in taking on more apprentices. We need to lift completion rates that languish at unacceptable levels.

And we need to make the learning journey towards becoming a qualified tradesperson dynamic, engaging, stimulating and relevant.

This can best be achieved by re-empowering the central relationship within the apprenticeship system – that of the employer and the apprentice. An apprenticeship is about the job: its core-value proposition is “learning through working”. This is the relationship that needs to be serviced by the training provider. Training providers need to see the apprentice and the employer as their primary customer, not the state training authority.

The morass of complex rules, regulations and administrative requirements that both exist and vary across all jurisdictions need to be clarified and streamlined. While this is not a problem limited to companies in border town regions like Albury-Wodonga, their endless tales of cross-border differences and barriers continue to astound. A genuine, efficient and clearly understood national approach is long overdue.

Much debate continues around the role and importance of Commonwealth Employer Incentives. The Kickstart Incentive payments in specified trades worked very well during the GFC in placing a floor underneath apprenticeship commencements at an economically challenging time. Its temporary reintroduction earlier this year was less successful. In the case of the engineering trades, this was due to a matter of timing – it was too late. An immediate reintroduction of the Kickstart Incentive in key trades is an urgent and immediate step our new government should take to ensure we continue to develop the trade skills required now and in the future.

Innes Willox is chief executive of the Australian Industry Group

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