SMEs report high turnover of apprentices

A six-month government review into Australian apprentices reveals a high attrition rate among small businesses, prompting calls to impose a levy on businesses to ensure adequate training.

The report, titled A Shared Responsibility: Apprenticeships for the 21^st Century, was led by BAE Systems Australia chief Jim McDowell, and found the average completion rate for trade apprentices is 45.6%.

According to the report, SME employers represent approximately 75% of employers of trade apprentices, yet reported an average completion rate of 32%.

The report states employees do not invest enough in training, and unsupportive employers and low wages are to blame for the low levels of completion among apprentices.

“A small proportion of employers are achieving excellent completion outcomes and the majority are achieving poor outcomes,” the report says.

“We are concerned that the current rate and patterns of investment in training by employers will not address skills shortages.”

The report calls for a levy to be imposed on businesses to ensure adequate training takes place, stating SMEs also need to establish a “culture of staff development”.

The National Electrical and Communication Association says even though its members are “heavily invested” in training apprentices, boosting government incentives would help to increase numbers.

However, the association rejected a recommendation to fast-track or reduce the four-year apprenticeship timeframe because it would reduce the quality of the workforce.

Australian Industry Group chief executive Heather Ridout says the government was “sensible” to rule out the report’s recommendation of an employer contribution scheme.

“A levy has been tried in the past and has been shown to be blunt, punitive and, in our view, ineffective and would do nothing to increase apprenticeship numbers,” Ridout says.

“[However], we strongly support the long overdue implementation of competency-based progression, which enables an apprentice to complete their apprenticeship earlier if they have acquired the necessary skills and can demonstrate this. We have also advocated a review of employer incentive payments.”

“Future apprenticeship arrangements need to meet the needs of both employers and increasingly diverse individuals seeking skilled employment… [They] must also meet the needs of our continually evolving economy and the subsequent range of occupations.”

RMIT University lecturer Dr Alan Montague, an expert on skills shortages in trades, agrees with the claim that low wages are to blame for the high attrition rates among Australian apprentices.

“Putting in place higher salaries for apprentices will increase completions… There [also] needs to be much more focus on the recognition of prior learning and fast-tracking,” he says.

Montague believes wage subsidies should be diverted from the corporate sector and given to apprentices – tax free – with direct subsidies increasing “as they achieve key milestones.”

“Above all, what is urgently needed is the development of one national body to administer all aspects of employment and training for apprentices,” he says.

Meanwhile, the Australian Manufacturing Workers Union is urging the government to redirect $1.2 billion in training subsidies to “traditional trades”.

AMWU national secretary Dave Oliver claims taxpayers are footing the bill for subsidies to fast food outlets and other retailers so employers can teach basic skills such as using cash registers.

Oliver says employers should be providing this kind of training without government assistance, stating there needs to be a distinction between labour market programs and training programs.

Peter Anderson, chief executive of the Australian Chamber of Commerce and Industry, has labelled the recommendation a “backward step”.