A new collaborative report from PwC, Social Ventures Australia, the Global Apprenticeship Network and the Apprentice Employment Network identifies measures required to build an apprenticeship that works in the modern world and remedy Australia’s chronic skills shortages.
The ‘What Will It Take’ report finds that young people in Australia have seen their average incomes decline in real terms from 2008 to 2018.
Young people face a difficult labor market while at the same time, employers are reducing investment into training, signaling a loosening of the bond between employer and employee, which can, in turn, impact young people’s ability to progress and compete in the market.
It takes 4.7 years for a young person to move into full-time employment from education.
Despite ongoing skills shortages in areas that require vocational qualifications, many young Australians without degrees cannot find jobs that allow them to learn while they work.
The slow climb up the ladder of employment and earnings is resulting in long-term societal and economic impacts for young people and the wider Australian community.
In response, the report finds that, while many employers identify cost as a significant barrier to investing in young people, wage subsidies on their own are not enough.
The report finds that a combination of the following measures is needed to generate change.
Financial levers such as tax credits or rebates and training guarantee levies could be given consideration in the medium term as the evidence suggests they have a positive track record.
Possible ways forward include tailored subsidies for specific cohorts, investment via intermediaries and consideration of schemes to promote training investment by employers.
Revitalize existing support models for employers
There are many companies supporting employers to bring on young workers but they are not reaching many employers in sectors without strong existing apprenticeship pathways.
Some, like Group Training Organisations (GTOs), could play a greater role in building opportunities for young people. But they need greater support, and the system as a whole needs to be much easier to navigate for employers and young people alike.
Collaborative pre-employment models to share the risk
Pre-employment programs play a vital role in connecting employers and young people.
There are some highly effective and innovative models that could be expanded and extended to new industries. The intention is that they are directly linked to employers, and help ensure risk is shared and does not weigh too heavily on an individual employer.
Use the apprenticeship approach to suit industry needs
It is clear that work-based learning and work-integrated learning provide critical pathways for young people, particularly those who are from lower-income backgrounds.
Despite successful pilots of higher apprenticeships, these pathways are undeveloped.
Procurement and contracting to drive skills development
Where large government contracts are concerned, there is an opportunity to utilize the procurement process to encourage employers to consider opportunities for young people as well as disadvantaged groups through their supply chain management.
This approach is used by Commonwealth and State Governments in infrastructure projects. Application to emerging markets like clean energy and IT represents a big opportunity.
Past attempts to update the apprenticeship system and support businesses to establish training pipelines failed due to over-emphasizing some policies at the expense of others.
“Governments have tried a variety of different things in an attempt to fix our training system. But individual measures usually fall short,” said Gary Workman, the Chief Executive Officer of the Apprenticeship Employment Network.
“For instance, wage subsidies can act as a sugar hit by encouraging employers to hire apprentices, but without the right support to manage and retain the apprentice through to a completed qualification, they often crash back out of training.”
“This is a bad outcome for the employer, apprentice, and the productivity of the country.”
Dr. Lisa Fowkes, the Director for Employment at Social Ventures Australia emphasized the need for a national approach to the problem of declining youth incomes.
“Employers need more skilled workers. Yet employer spending on training has gone backward and young people are getting fewer opportunities to build their skills at work.”
“Young people from lower-income backgrounds are hardest hit.”
“They have fewer opportunities than their parents did to get into the labor market and grow their skills and incomes over time and cycle through insecure work.
“This important analysis shows that Government investments in training can help – but it can’t be training for training’s sake, it needs to be directed to ensuring that more employers step up and create quality job opportunities for young people that allow them to learn while they work.
“We can also build on the success that Governments’ have had in setting apprenticeship targets in large infrastructure projects.”
“The approach applies to sectors like IT and business services and governments need to apply the same sorts of targets for youth employment to their own recruitment.”
Suzi Hewlett, the Director of Skills for Australia at PwC also offered insights on the aspect.
“In compiling this report, we were focused on identifying actionable solutions. At PwC, we have seen the merits of establishing our own Higher Apprenticeship Program.”
“Employers broadening views about the talent pool they draw on to benefit their business offers benefits but we know that other employers lack the capacity to create similar alternative pathways and find themselves navigating a complex, and often costly, system.”
“That is why our research suggests that a combination of measures is needed for change.”