The PM’s recent announcement of Scott Cam as the first National Careers Ambassador has sparked much furore within the VET sector. This initiative comes off the back of the coalition’s governments’ establishment of a National Career Institute in July.
There’s a concern that Australia’s economy will be held back by looming skill shortages as apprenticeship numbers continue to slide.
The number of Australians completing apprenticeships has halved in the past five years.
Duration: 4min 40sec
Monique Juratovac, apprentice bricklayer
Dr Alan Montague, program director, Masters of Human Resource Management, RMIT
Megan Lilly, head of workforce development, Australian Industry Group
Gary Workman, executive director, Global Apprenticeship Network Australia
Loris Moriconi, manager, ABN Training Western Australia
FREE COURSE: TAFE is offering late stage apprentices and early trades people the chance to upskill for free from now until December. HVIA
Heavy Vehicle Industry Australia (HVIA) is one of four peak automotive industry bodies that have partnered to offer the Automotive Industry Ambassador Program for late stage apprentices and early trades people.
The free short course will provide leadership and communication skills to attendees.
The five-part workshop will commence on Wednesday, October 9 and will continue every second Wednesday until December.
The program will be delivered by TAFE Queensland SkillsTech to late stage apprentices and early trades people employed by member companies of the Heavy Vehicle Industry Association, The Construction & Mining Equipment Industry Group, MTA Queensland and the Institute of Automotive Mechanical Engineers.
Seats are limited to a maximum of two late stage apprentices/early tradespeople per member company.
Nominations must be received by TAFE Queensland SkillsTech by Friday, October 4. You can download the nomination form here.
The five-day program promises to provide apprentices with the skills to:
Communicate effectively with clients and colleagues
Manage small teams
Implement more efficient and effective workplace processes
The units of competency are:
BSBLDR403 – Lead team effectiveness
BSBLDR402 – Lead effective workplace relationships
BSBSMGT402 – Implement operational plan
BSBLDR401 – Communicate effectively as a workplace leader
Australia is down 150,000 apprentices and will need to keep relying on international workers to fill the looming skills shortage, with WA still recovering from the 30 per cent drop in trainees ahead of the next looming boom.
For the first time since 2001, more Australians are dropping out of apprenticeships and traineeships than finishing them, with completions at their lowest rate since the Howard government.
Opposition Leader Anthony Albanese yesterday raised the alarm of a “skills crisis” only worsening in communities across Australia, slamming the Federal Government for issuing 500,000 temporary visas for overseas workers that he said should be filled domestically.
WA has lost more than 12,500 apprentices since 2013, representing a 30 per cent drop to 27,957 recorded late last year.
Computer and information systems managers (46,800+)
Sales managers (20,600+)
Management analysts (118,300+)
Systems developers (42,600+)
Medical and health services managers (71,600+)
“Many of America’s fastest-growing jobs, such as personal-care aides and fast-food workers, pay the lowest wages in the nation, while the highest-compensated professions, like doctors and lawyers, have few openings a year,” writes Soo Oh of WSJ.
“Registered nurses and software developers hit the sweet spot, pairing relatively high wages with robust demand – making them among the most promising careers in our analysis.”
Education Minister Dan Tehan wants companies to offer degree-level apprenticeships in an aggressive push to shake up the university sector and get more value out of the $36 billion a year government spends on higher education.
He will tell university vice-chancellors and business people on Monday there is no reason why a company could not offer a qualification equivalent to a Masters degree.
The minister will tell chief executives and vice-chancellors they need to work closer to ensure graduates are employable. This means more work-integrated courses, advanced apprenticeships and a surge in micro-credentials, most of which would be decided by what companies want, not what universities want to offer.
“The Morrison government has set a target of creating another 1.25 million jobs over the next five years, including 250,000 new jobs for young Australians.
“Ensuring university graduates have the skills that business demand will help achieve that goal.”
Mr Tehan said manufacturer Siemens sets an example for the two sectors to follow.
In the UK the company works with universities to offer bachelor and masters degrees in automation technology, cloud-based computing, protocols for the internet of things and computer analysis of human behaviour.
In Australia Siemens has invested $135 million in a “factory of the future” at Swinburne in Melbourne, which this year made the company’s CEO in Australia, Jeff Connolly, an adjunct professor.
“Ensuring university graduates have the skills that business demand will help achieve that goal.”
— Federal Education Minister, Dan Tehan
Monday’s meeting coincides with a report showing if universities raised the completion rate of students and turned around the long-term fall in wage premiums for graduates there would be a $3.1 billion productivity boost to the economy by 2030.
Consultants EY said a third of all university students do not complete their degrees. Catherine Friday, managing partner, Oceania Government Practice at the firm, said of the 1 million university enrolments in 2017, more than 357,000 will not have graduated in nine years.
This is eating into the GDP contribution of the sector and comes despite the Labor government’s demand-driven system, which was meant to boost enrolments of low socio economic and regional students.
According to a recent Productivity Commission report the demand-driven system failed to help the very groups being targeted, which have lower enrolment and graduation rates and lower salaries in subsequent work.
Wage premium drop
Graduates have become less attractive to businesses, which is showing up in a dramatic fall in their wage premium: in 2011, for every $100 earned by a non-graduate aged 20-24, a graduate would earn $162.
But between 2011 and 2016, the wage premium has fallen 62 per cent to 52 per cent.
“The gap between the skills graduates have and the skills business wants is widening,” Ms Friday said.
“What they don’t have is digital design skills, customer-centred thinking and data analytics. These should be available to every student at university. And if the university can’t offer them, the university has to make them transferable.”
She said a university student should be able to study skills at a vocation training provider and add them to their degree, something which is impossible at the moment because of demarcation between university and the training sector.
Last Friday Mr Tehan asked ministers at the newly revamped Skills Council to tackle demarcation between vocational training and universities, which he said is holding their sector back.
Ms Friday said universities needed more granular data about what skills are in short supply. The Department of Employment’s Vacancy Report listed shortages in broad groups but students needed specific data, available in real time.
This could be included in the Quality Indicators for Learning and Teaching (QILT) website which the government wants revamped as part of the Wellings Review of universities.
“We need to put more data in the hands of students so when they are making decisions they are more well informed.
“Most of them are taking the best steps they can but they don’t have an accurate picture of the labor market.”
Last year about 24 per cent of graduates with jobs said they were working outside their area of expertise and 17 per cent said they had jobs that didn’t fully utilise their skills.
Wollongong University Vice Chancellor Paul Wellings has been put in charge of an advisory group which will connect the sector to the federal government.
Professor Wellings defended Australia’s universities, saying they have an “outstanding” track-record in evaluations of graduate employability, but agreed it should be possible to accelerate the link between business needs and the output of faculties.
“The rate of change in technology and the range of skills required in the modern workplace mean the businesses and universities need to be more closely aligned and collaborative. This will help drive the economy.”
The professional association for Australia’s technology sector, ACS, has launched a report highlighting skills shortages in the technology sector, with an additional 100,000 workers reportedly needed by 2024.
The 2019 ACS Australia’s Digital Pulse report outlines a number of policy priorities for recommended implementation to assist the growth of Australia’s digital economy and meet the demands of a successful workforce.
Prepared by Deloitte Access Economics, the report reveals there are inhibitors to the supply of talented technology professionals to meet Australia’s growth ambitions and provides an economic evidence base of the policy levers that may best remove these barriers.
“Meeting the voracious demands for more technology workers and increased investments from Australia’s businesses will be a huge challenge,” said ACS President Yohan Ramasundara.
“Australia’s future prosperity in an increasingly digitised world will depend upon ongoing investment in emerging technologies and further development in the digital skills required to build, deploy and apply them.
“While university completions in technology degrees have risen slightly, there was a significant decline of 11,875 technology subject enrolments between 2016 and 2017 in the VET sector. For Australia to be a competitive player in the world economy, our policymakers, businesses, workers and communities need to work better together to address the challenges of technology-related skills, investment and collaboration.”
The report also explores how digital technologies can further power Australia’s economic growth, with the contribution of digital to GDP expected to grow 40 per cent between 2018 and 2023.
Deloitte Access Economics Partner John O’Mahony said that the economic benefits of digital technologies to productivity and GDP only provide one perspective on how these technologies have led to improved living standards across the Australian population.
“There are also a range of other types of gain, such as better access to and quality of healthcare and education services, as well as non-monetary benefits such as increased choice and lower travel times,” said O’Mahony.
The number of young Australians taking on apprenticeships and traineeships has hit its lowest point in two decades, as the nation lags behind other OECD countries on employment.
The number of young people pulling out of traineeships and apprenticeships exceeded the number of people completing them in 2017-18. Picture: Nic Walker
An Australian Institute of Health and Welfare study, released on Wednesday, found in the 12 months to June 2018, 161,700 people started apprenticeships and traineeships, compared with a peak of 377,000 in 2012. The figures are the lowest since 1998.
For the first time since 2001, the number of people dropping out of programs outdid the number completing them; more than 57 per cent of those who signed up, or nearly 93,000 people.
“In 2009, commencements and completions began to increase alongside the Apprentice Kickstart initiative to address skills shortages in Australia, with a peak around 2012,” the report said.
“This was followed by a sharp decline around 2012 to 2013 … [which] coincided with Australian government changes to incentive payments for qualifications not on the National Skills Needs List.”
The report found youth unemployment rates in Australia trail just behind the OECD average at nearly 12 per cent, seeing it rank 18th out of 36 countries.
Nearly one in nine young Australians, or 11 per cent, are not in education, employment or training; 2 percentage points below the OECD average, but 12th-lowest of the countries.
Of all people aged between 15 and 64, 74 per cent were employed in 2018 – “the highest annual employment rate recorded in Australia”, according to institute of health and welfare spokesman Dinesh Indraharan. “In July 2019 the female and total employment rates remain at record levels,” he said.
The figure puts Australia’s employment-to-population ratio 14th out of 36 OECD countries. An Australian Bureau of Statistics report found the number of filled jobs in Australia grew by more than 2 per cent in the last financial year.
As of December 2018, about 9 per cent of workers were underemployed, or not doing as many hours as they would like. This affected more women than men, and had been trending upward for both since the late 1970s.
About 70 per cent of Australians made redundant found work within a year, and 80 per cent within two years. Women, older people, less-educated, part-time and casual workers had significantly less success trying to re-enter the workforce in two years, the report found.
One in nine families with children had no one in the family who was employed.
Generally, people with higher levels of education had more opportunities in their working life.
“Between 2008 and 2018 the proportion of students staying in school until year 12 rose from 69 per cent to 81 per cent for males and from 80 per cent to 89 per cent for females,” Mr Indraharan said.
“In 2018, 65 per cent of Australians aged [between] 25 and 64 had a non-school qualification at Certificate III level or above. This is up from 55 per cent in 2009.”
In contrast, Australia had one of the highest proportions of people working long hours, or more than 50 hours a week, in the OECD. It ranked 8th out of 35 countries with a proportion of about 13 per cent, but the figure represented a decline from 16 per cent in the previous financial year.
Males were more likely to work, and prefer, long hours.
The report found nearly 11 per cent of jobs in Australia are at high-risk of automation, while a further 25 per cent could change substantially in the way work is done.
The past few years have been good ones for the U.S. economy, with year-over-year expansion, record low unemployment, healthy profits and stock market prices exceeding expectations. But all this good news masks a nagging concern for employers: a shortage of skilled labor, particularly “middle-skilled,” the type generally developed through two or more years of post-high school education or on-the-job training. And that shortage could put the lid on an expanding economy.
The U.S. Department of Labor estimates that seven million job vacancies now exist in the American economy, confirmed by a near-universal complaint from business leaders, “We can’t find enough people who can do the job.” Of surveyed employers:
90% reported the skills shortage is negatively impacting productivity and employee satisfaction, and is exacerbating staff turnover.
A survey among U.S. manufacturers indicated that the positions most difficult to fill are often essential to their growth plans.
This bad situation is getting worse as experienced baby boomers drift off into retirement, which they are now doing at a rate of 10,000 per day!
To buy or build
How can employers get the skilled people they need when the supply/demand situation is so tilted against them? In some respects, it’s a typical buy-or-build choice. An employer can either “buy” skilled people direct from the labor market or “build” them by training personnel in-house to meet the unique needs of the business.
You might think the “buy” strategy is quicker. But American policy makers are just starting to focus on revitalizing career technical education (CTE) and boosting community college systems. It will take years before job-ready graduates come into the labor market. In the meantime, you’re competing in a very shallow pool for available talent.
So what can companies do to get the skilled employees they need more quickly? A growing number of U.S. firms are choosing to “build” with apprenticeships. For these forward-looking companies, training costs are investments and lengthy training periods are opportunities to develop required skills and organizational knowledge. There are other benefits. Apprenticeship training enhances subsequent innovation at the host firm, lowers long-term recruitment and training costs; and only a small percentage of apprentices will go elsewhere after they complete training.
With these benefits, it’s worth taking a closer look at apprenticeship.
What is an apprenticeship?
An apprenticeship is a work-based training program set up by an employer to train an individual for highly skilled work that meets industry standards andthe unique requirements of the sponsoring company.
Modern apprenticeships are characterized by:
customized, on-the-job training
wages that rise in step with increasing productivity; and
related technical classroom instruction.
Apprenticeships are also flexible, accommodating recent high school graduates, college graduates, military veterans and mid-career adults. Most modern apprenticeships vary in length from one to four years. Successful apprentices receive a nationally-recognized credential and, in many cases, college credits leading to an associate or bachelor’s degree. In 91% of cases, these newly-skilled individuals are offered and accept full-time jobs from their employers along with a pay hike.
Who uses apprenticeship?
Apprenticeships have long been associated with carpentry, plumbing, electrical work, machining, masonry and other hands-on trades. And that is where most apprenticeships are found today. However, a growing number of employers in finance, IT, hospitality, health care and other fields are turning to apprenticeship to close the skills gap that has left so many important positions unfilled. Some companies already invested in apprenticeship include Adobe, Mailchimp, Dartmouth-Hitchcock Medical Center, LinkedIn, JPMorgan Chase, Amazon, Dow Chemical Company, Salesforce Software, Interapt, Peterson Automotive Collection, CVS Health and Black Oak Casino Resort.
Adobe uses apprenticeships to fill its ongoing need for talented software developers, and has found it’s also a good way to diversify the workforce, purposely recruiting women and minorities for apprenticeship opportunities. And the company investment is paying off with 96% of program completers have stayed with Adobe.
CVS Health is using an apprenticeship program to tackle its pharmacy technician shortage. According to a company spokesperson, apprentice training brings people up to full productivity more quickly than alternatives. Low turnover is an added benefit. After one year on the job, turnover among apprentice-trained employees is only 15%, far below the 50+% common for entry-level personnel in a retail environment. Since the cost of recruiting and training a single CVS pharmacy technician is approximately $30,000, the company is reaping sizable cost savings. Some of these newly-skilled employees will enter management as they mature and gain experience. Others will continue their formal education and become licensed pharmacists. All to the benefit of CVS Health.
What’s the downside?
Of course, as any business person knows, benefits must be weighed against costs. For apprenticeships, there are three major areas of concern:
The cost of investment in training
The time required to bring a new employee up to the desired level of productivity
A possibility that competitors will “poach” employees in whom substantial time and money have been invested. No one wants to be a training ground for competitors.
In my next post, I’ll talk in more detail about the costs and benefits of apprenticeship, looking at the results of cost/benefit studies done in Europe, Australia and the United States.