Chapter 3 - Skill formation and the labour market
This inquiry aims to determine whether the current skill formation
policy framework is providing the type of skill mix necessary to secure a
prosperous future for all Australians. There are two main issues discussed in
this chapter. The first is whether the current policy is effectively promoting
the development of both high level skills and intermediate skills. The second
is the nexus between labour market and skill formation, with particular focus
on New Apprenticeships program and the Job Network.
Over the last two decades, skill formation theory has been
dominated by the idea that a ‘new economy’, or more recently ‘knowledge
economy’, will be necessary to achieve national objectives of prosperity and
economic competitiveness in the global trading environment of the 21st
century. Ideas of the ‘new economy’ as formulated in the 1980s were based on
the view that high technical skills in the workforce would increase capacity to
manufacture value added products. Recent discussion of the ‘knowledge economy’
has focused on meeting the needs of innovation and emerging industries,
bringing a new dimension to the understanding of skill acquisition.
At the same time, in
most developed countries the knowledge economy has been associated with high
employment growth in both high skill, high pay jobs and in low skill, low pay
jobs, with much slower growth, or even a decline, in the number of jobs at the
intermediate skill and income level. This phenomenon is referred to as a
‘hollowing out’ of the skills base or the development of the ‘hour glass
workforce’ and is commonly associated with rising income disparities and other
inequality, a significant public policy concern in many countries. In Australia this has manifested in the growth of a
large casual and ‘contingent’ workforce, increasingly locked out of
opportunities for skill formation, career progression and economic security.
While the committee
strongly supports the need to develop the high skills industries and
occupations that will enable Australia to remain competitive, it also believes
that there is a need to ensure that the benefits of the new economy, and access
to satisfying well paid jobs, are spread more broadly throughout the community
than they are currently. This is likely to require greater attention to the
complex interplay between the supply and demand for skills and between policies
for industry development, the labour market, employment assistance and
education. This chapter outlines some of the main aspects of labour market
policy which affect the development of the skills base.
In this context, the
committee observes that current skills formation policy in Australia has been
criticised as focusing solely on measures to improve the responsiveness of the
system for the supply of skills to current employer demand, with little
attention on measures to stimulate demand despite the evidence, discussed in
this chapter, that current labour market and economic frameworks are acting as
a brake on demand in some industries. This could be characterised as a ‘hollow’
policy focus which actively targets some aspects of higher level skills
formation, in emerging industries or IT related areas for example, but then
simply allows the remainder of skills formation effort to be determined by
employer demand. This policy stance is particularly evident in the promotion of
the New Apprenticeships scheme, driven largely by Commonwealth incentives
provided without apparent relation to the value of the skills being developed
for the economy or individuals or the cost to the employer and individual.
The characteristics of this scheme are described later in the chapter.
It suffices to say here that the evidence received suggests that many New
Apprenticeships are being directed at filling job vacancies at the lower end of
the skills spectrum, meaning the system may function mostly as a labour market
program, rather than as a training program. While not denying that much
employment growth and employer demand for training is at the lower end of the
skills spectrum, the committee considers that the government should review
carefully the return on this significant investment in terms of national skill
formation, given other priorities.
Training policy trends and the ‘knowledge economy’
In the mid 1980s the Labor government aimed to revitalise Australian
industry by implementing a ‘workplace reform led recovery’; a high skill future
to be achieved through synchronised reform of labour market and skill
Award restructuring complemented the new National Training Reform Agenda. The
key elements of this were:
- the development of competency standards by industry and
associated curriculum development to reflect competency outcomes;
- development of an Australian Standards Framework for vocational
education and training credentials;
- establishment of a National Training Board (NTB);
- agreement on a National Framework for the Recognition of Training
- several reports on the training implications of industrial
relations changes, young people’s participation in post-school education and
training, and the need for curricula to take into account a number of general
or core competencies; and
- establishment of the Australian Vocational Certificate Training
System (AVCTS) to merge traineeships and apprenticeships and provide pathways
in the transition from school to work.
The aim of these arrangements was to achieve improved efficiency for
industry and career opportunities for all workers. By the mid 1990s, under
recession and with employer lobbying, several adjustments were made. There was
a move towards a demand led skill formation model, with a new emphasis on
establishing a national training market responsive to employer needs. Enterprise
bargaining was introduced allowing workplace flexibility. This broke down
industry wide agreements which had been the basis of training and career
guarantees under the original scheme.
At the same time, and continuing now, corporatisation and privatisation of
public utilities wound back training and employing of very large numbers of
personnel. The outsourcing of the core business activities by new corporations
has virtually brought an end to public utility training programs which
benefited private industry through the mobility of skilled labour.
A later development was the establishment of a cooperative federal
system for vocational education and training, with the establishment of the
Australian National Training Authority (ANTA) to oversee the allocation of
Commonwealth government resources to the publicly funded VET sector and
administer national programs. From 1996, the National Training Framework (NTF)
replaced the National Framework for the Recognition of Training (NFROT) and
Australian Qualifications Framework. Two elements of the NTA are the National
Training Packages and the new Australian Recognition Framework (ARF) which
guides the states and territories in their regulation of the Vocational and
Education Training (VET) system. ‘User Choice’ was introduced to enable
competition with TAFE colleges from Registered Training Organisations (RTOs).
This was strongly supported by business because it assumed increased employer
control over training, although evidence to the committee has indicated that
the role of User Choice is still a matter of contention.
User Choice operated in conjunction with the New Apprenticeship system,
whereby the New Apprentice enters a contract with the employer who chooses an
RTO to deliver training. This arrangement has opened up more opportunities for
government supported training for both new, and following 1998, existing
workers having expanded the range of occupations for which employees can
attract an incentive or subsidy payment.
While lauded as very successful in terms of the numbers of trainees processed,
the committee noted extensive evidence of the failure of the system to deliver
middle and higher order skills training, discussed later in this report.
Australia’s skill formation policies are now trained on building
a ‘knowledge economy’, providing industry with sufficient highly skilled people
to meet emerging needs, and also to raise skills in existing industries. As
DEWR notes in its submission:
Skill development in Australia is vital to Australia’s
long-term economic and employment growth. Ongoing enhancement of Australia’s
skill base is essential to achieve further productivity gains and help
Australian industry to compete effectively in a highly competitive world
marketplace. In particular, Australia must develop high level skills to meet
the needs of new technology industries where growth is expected to be
strongest, as well as enhancing skills to encourage further growth in existing
Developing the capacity for innovation has implications for
schooling, IT development and its take up by industry and the community, and
for the stimulation of investment in emerging technology.
In facilitating this policy ANTA has set innovation targets for the states and
territories. DEST has also introduced innovation incentives for New
Apprenticeships. These provide additional incentives to employers for taking on
New Apprentices in the IT and innovation industries.
Through such polices as ‘Backing Australia’s Ability’ (2001) the Government has
attempted to strengthen the critical relationship between research and
development leading to the creation of more knowledge jobs.
ANTA sees stimulus of the knowledge economy as a key objective,
transforming learning and training. The ANTA’s Phase 1 report review of
training packages notes that there is a shift to knowledge work in diverse
areas of the economy and that knowledge work, which is more context specific,
puts new demands on the workplace and the individual to engage in the training
process. It advocates a focus on generic or employability skills to support
technical application in new and emerging industries, with implications for VET
pedagogy. The report also notes that technical skills, being quickly dated, are
less valued in the knowledge economy.
When considered against evidence to the inquiry, which reports endemic
skill shortages in middle skill training areas, the committee had reservations
about ANTA’s full focus on higher skills, if commitment to full skill
development in technical areas in existing industries is not also carried. At
the same time, in consideration of the failures of current training policy, the
committee also considers that policy focus must not use employer demand as the
main or only determinant for investment of public funded training, as this will
not result in the sustainable and diverse skills base needed to build
investment in higher value skills.
A hollowing of skills or meeting job demand?
The committee notes evidence of a skills imbalance that results partly
from a failure of training policy, and partly because of labour market trends
and influences. A number of submissions refer to reports on the national skills
profile which attempt to determine progress in skills development. One criteria
used by the Australian Bureau of Statistics (ABS) to demonstrate progress
towards the ‘knowledge society’ is the number of people of working age with
university degrees, or in employment and holding degrees.
In its submission the Department of Education and Workplace Relations (DEWR)
reported that a shift to a higher skilled workforce over the last decade is
indicated by the number of people with bachelor or higher degrees in employment.
At the same time, however, DEWR highlighted two other significant features of
the employment landscape:
- there has been little growth in employed persons with skilled
vocational qualifications (primarily trades skills) or with an undergraduate or
associate diploma; and
- the strong growth in employed persons with basic vocational
qualifications reflects the growth in VET, especially growth in New Apprenticeships
and the shift into a broader range of occupations.
At hearings in Darwin, NCVER told the committee that the combination of
these features represents a ‘hollowing out’ of the skill profile. Referring to
findings in his study Pathways to Knowledge Work, Mr Mark Cully
explained how labour force polarisation meant no growth in middle skilled jobs,
and a decline in employment in almost all trades: toolmakers, welders, panel
beaters, carpenters, bricklayers, printers, painters over the period 1986 to
2001. Meanwhile job growth occurred at the higher skill and lower skill ends up
by a total of 1.5 million with some 700,000 jobs at the low skilled end.
As a result, Australia had achieved only a very small real rise in the level of
skill required for jobs overall, rating at only two per cent on the ‘cognitive
NCVER provided tables showing how polarisation looks as a spread of occupation
and skill level deviation. Table 1 depicts occupational change. Table
2 shows its correlation to ASCO major groups.
Table 1: Change in the
occupational composition of employment 1986–2001
of employment 2001 Census (%)
of employment 1986 Census (%)
in share of employment (after rounding)
in employment (‘000s)
Source: Cully (2003, p. 19)
Table 2: ASCO major
groups, skill level and typical education and experience
degree or higher, or at leat five years relevant experience
diploma, or at least 3 years relevant experience
clerical and sales
Certificate III or IV, or at least 3 years relevant experience
Certificate II, or at least 1 year relevant experience
schooling or AQF Certificate I
Australian Qualifications Framework Source: ABS (1997) cited in Cully (2003, p.
The ‘hollowing’ out the labour force is a widely reported
phenomenon in countries undergoing a ‘knowledge’ revolution. A study in
Britain, which has a similar policy framework for skill formation, found that
over the period 1986 to 2001 there has been increased demand for higher
qualifications by British employers and that the level of work skills applied
in jobs has also increased. Underpinning these changes is a significant
increase in the use of advanced technology (IT) in the workplace, with some 70
per cent of employees using some form of computerised equipment. However, the
same study also revealed that there was significant underuse of employees
acquired skills within the work place, and a mismatch between the large number
of unskilled jobs available (6.5 million) and people without qualifications to
fill them (2.9 million). The conclusions drawn by the British study were that
competition and flatter structures have added pressure on employees to be more
highly skilled but the largest growth trend has been in low skilled jobs.
Australia’s similar experience is confirmed by the Productivity
Commission’s report on the ‘Productivity Surge’ in the 1990s. It noted, for
instance, that a high take-up rate of IT may have stimulated stronger
productivity in the 1990s, relative to other countries in the period.
Nevertheless, the report concluded that skill development could not be a major
cause of the productivity surge, as Australia’s skill composition change
(measured in terms of educational attainment) remained low compared with other
major OECD countries. Other studies also suggested that the
skills Australians have are not being productively utilised, as many are
overqualified for the work they are doing, and further that opportunities to
utilise higher level skills attained are not occurring.
The final picture is
not complementary to the present policy focus on high skill development, nor
its effectiveness. Instead, these findings challenge some fundamental
assumptions about high skill development as a means of achieving equitable
growth. As VET expert Ms Kaye Schofield comments in her submission:
The emerging version of the knowledge economy does not
advantage everyone equally. In fact, research tells us that increasingly the
workforce will look like an hourglass rather than a pyramid, with part of the
workforce employed in knowledge-intensive high-waged and relatively secure work
and another part comprising people with lower skill levels, churning through a
series of relatively low-paid and insecure jobs interspersed with periods of
unemployment. This is not a version of the knowledge-economy that we should
accept for Australia.
The committee accepts that there is evidence enough that skills formation
must be developed on a wide front. There are dangers in ‘picking winners’ and
it is claimed that governments are not very good at making labour market
predictions, despite the research capability that is at their disposal. There
are important warnings about skill formation policy which places an inordinate
focus on high skills at the expense of providing sufficient support for broad
based cross-sectoral skill training. Views expressed to the committee caution
that a large number of jobs will continue to be performed in traditional ways
and many will operate in much the same way as they did in the past, meaning the
shift to a knowledge economy could be more ambiguous than is sometimes
The committee therefore has reservations about the current policy
balance, given pressing skill shortages reported in the intermediate skill
area. While the committee highly commends initiatives to foster the knowledge
economy, and wholly supports the need to develop pathways for higher skill
development in all areas (as discussed later in this chapter), it is concerned
that the present focus does not place sufficient emphasis on enhancing skills
to encourage further growth in existing industries.
Employment trends as a basis for VET planning and funding
Of particular interest is the relationship between occupational
analysis, the prediction of training needs and the allocation or targeting of
training funds. ANTA uses occupational analysis conducted by the Centre of
Policy Studies at Monash University (which also provides assistance to DEWR and
other clients) and also contracts forecasting studies of occupational change to
determine future training needs.
Funding allocations are closely aligned with these projections, as noted in its
report to MINCO:
The overall movement across industry across industry
training can be an important indicator of the responsiveness of the VET system,
and evidence of whether it is demand or supply driven. The dynamic nature of
the Australian labour market, and the need to respond flexibly to emerging
labour market needs, can be illustrated by difference in the projected rate of
employment growth in different industries and occupations in the period ahead.
Accordingly, ANTA’s Draft National Strategy for VET 2004–10 Shaping
Our Future predicts a decline in requirements for middle skill training, in
areas where high skill shortages are reported, and a corresponding shift away
from funding for these. ANTA reports an intended $3.5 billion budget to be
spent on VET, with an equivalent amount by business and advises:
Manufacturing industries will face strong international
competition and are expected to employ a smaller percentage of all workers. The
number of jobs in construction, agriculture and mining is also expected to
These factors are causing a sea change in skill
requirements, as demand for the traditional skills required to work the land,
to work manually and to extract resources is overshadowed by demands for skills
to create, organise and apply knowledge - and to work with others to do so.
While analysis of employment growth is a standard approach to
forecasting skill needs, some questions are raised given current deficiencies
in forecasting methods. As discussed in the previous chapter on skills
shortages, prediction of occupational change and of skills forecasting is
complex and in need of adjustment to better reflect sectoral, specialist and
regional needs. The committee sees one obvious deficiency in the outdated
nature of the current occupational classification system that underpins labour
market and occupational shortage information.
In the influential report Training to Compete: the Training Needs of
Industry, for example, it was noted that one of the main effects of
globalisation on the manufacturing sector was the blurring of the distinction
between manufacturing and services, with 43 per cent of the sector shifting
their focus to a greater service orientation while maintaining their
As a DEWR source advised, the shift to services and contracting out aspects of
a manufacturing business was not delineated in present occupational profiles,
and hence tended to over-state the decline in the manufacturing sector.
DEWR is working on a revision of the ASCO codes, but at present it is possible
for occupational growth to be poorly distinguished in some sectors because the
categories no longer fit.
Moreover, forecasting of VET needs conducted by the Centre for Economics
of Education and Training (CEET) for the Victorian Office of Technical
Education and Training in March 2002, shows that another take on the data can
yield a significantly different view about where training policy should place
its emphasis. Table 3 provides data on job growth correlated with
the qualifications required for the listed occupations.
Table 3: Net Job Openings by Major
Occupation Groups and Qualification Victoria,
Minimum numbers expected with qualifications*
All net job openings (‘000)
Tradespersons & Related
Advanced Clerical &
Intermediate Clerical, Sales & Service Workers
& Transport Workers
Elementary Clerical, Sales
& Service Workers
Labourers & Related
*The minimum numbers expected with qualifications were
estimated by applying the proportions employed in 2000 with qualifications to
net job openings.
While the table refers to outcomes in Victoria, the findings apply more
generally. The table shows that 38 per cent of job openings for new entrants
with VET qualifications are likely to be for associate professionals or
tradespersons and related workers. Of all job openings for new entrants at
skill level 3 or below, less those in the tradespersons and related workers
occupations, only 18 per cent are likely to require VET qualifications. This is
substantially less than the 61 per cent with VET qualifications for
tradespersons and related workers.
Comparing these findings against DEWR’s occupation growth based
analysis, this table suggests that the employment areas which most require VET
– tradespersons and related workers and associate professionals – are those
which have not been targeted by ANTA in its policy and funding equations. By
contrast, for those positions for which VET is least necessary, or requiring
low skill qualifications, ANTA policy such as New Apprenticeships is
stimulating demand, as DEWR notes.
The committee remains concerned that, in the longer term, the apparent
weighting of training objectives and the funding allocations that support them
on the basis of projected employment growth could reduce the diversity of the
skill base and limit opportunities to build traditional strengths into new
ones. In this regard, the committee refers back to recommendations made in
Chapter 2 to improve on current forecasting methods so they better reflect
industry and community needs.
Labour market change and skill shortages
The nexus between the labour market and the training system in meeting
current and future skill needs is one of perennial complexity according to the
This section examines some important points of connection between the labour
market and the training system.
Discussion of the behaviour of the labour market invites supply versus
demand explanations for the causes of skills shortages. Supply side arguments
suggest that shortages can be caused by inflexibilities in the training system,
and that market failure can be remedied by improved information systems and
training and delivery mechanisms. Demand side arguments follow from
consideration of the structural changes in the economy, which in recent times
have seen reductions in average size of firms and the growth in part-time and
casual employment. This approach assumes that the economy will adjust to change
in the long term, with wages and prices reaching a market equilibrium.
It is also claimed that from a demand side perspective, such pressures reduce
the capacity of employers to train employees in the skills required.
Inevitably, the industry ‘downsizing’ mentality is rarely coincidental with a
consciousness of the need to train new staff or retrain existing staff.
The committee recognises the problem of making training policy within
these conceptual frameworks and in the midst of social change and structural
It noted the interplay of these approaches when, at hearings in Canberra the
Department of Education, Science and Training (DEST) told the committee that
addressing skills shortages is not just a training or supply issue, as had been
acknowledged by the National Skills Initiative. DEST reported the vocational
education and training sector’s significant achievement, with the number of
students having nearly doubled over the decade to 1.7 million, or around 13 per
cent of the workforce. On the incidence and causes of skills shortages the
committee was told:
Skill shortages can exist at most stages of the business
cycle in skilled occupations and can be a sign of a thriving economy. For
example, skill gaps arise in new industries and in sectors of more traditional
industries that are changing rapidly to meet new consumer and technological
demands. The cyclical nature of employment in some industries contributes to
skill shortages because qualified workers leave the industry in periods of
downturn and some do not return. At the same time training levels fall, leading
to shortages when demand picks up later. The causes of skill shortages are
complex. Education and training are part of the solution, but they cannot solve
the problem by themselves. I think a number of witnesses to the inquiry have
made the point that it is a very complex issue.
The committee agrees that achieving the right balance between training
and the labour market policy is difficult and commends the industry-targeted
approach adopted under the National Industry Skills Initiative (NISI).
The committee notes that when the NISI commenced in 1999, the causes of skill
shortages in traditional trades areas were put down to difficulties in
adjusting to increased global competitiveness, which posed challenges to
industry to adapt its employment and training approaches to meet new labour
One of the key drivers of skill shortages identified by NISI was the cyclic
nature of business, notable in construction and building. At the same time it
was acknowledged that cyclic factors appeared less significant in areas of
persistent and long term skill shortages: automotive/vehicle trades, electrical
and metal trades, with the last two experiencing entrenched shortages over the
last twenty and five years respectively.
The NISI consultations arrived at a range of industry specific and more
generic recommendations to address skill shortages. These included: closer
industry collaboration on issues of interest; improving data collection
methodologies; improved career information products; studies on employer
engagement in New Apprenticeships; more flexible training delivery
arrangements; and more industry government involvement on identifying skills
needs and training related issues.
Stephen Saunders notes in his NCVER study that these initiatives are designed
to negotiate the demands for more information under a mixed or semi-competitive
VET funding model. The model provides for shared training costs between
government, individuals and employers but, as Saunders observes, employers
appear to carry more significant costs in the case of apprentices.
In this respect, while upgrading information to stakeholders is undoubtedly
important, the committee believes these measures are unlikely to overcome
considerable cost and other disincentives to employers to take on apprentices.
Training to compete: barriers to participation
The committee heard much about the pressures that industry is facing
under the competitive forces identified by NISI. Industry submissions and company
owners at hearings told the committee about how their training levels had
dropped, or how association members were reluctant to take on trainees,
particularly traditional apprentices, in an environment which was increasingly
project driven or contract based. They reported how their capacity to maintain
or find appropriately trained trainees was limited by changes in the nature of
their industries, small and large. Some had downsized because of competitive
forces, others had outsourced aspects of their business or resorted to the use
of part-time, casual or labour hire to meet employment needs. The ageing
of the skilled workforce in many industries also contributed to fears that
industries could not remain viable unless a strategic and integrated approach
was taken to address their recruitment problems.
In their submission Associate Professor Clive Chappell and Mr Geoff Hawke
of University of Technology Sydney surveyed the scale of labour market change
in the metals and engineering, construction, finance, information technology,
cleaning and family support services industries which these pressures produced.
They drew on a New South Wales Board of Vocational Education and Training
report which found:
- there is a significant hollowing out of the labour force with
loss of blue collar positions, and expansion in professional and low skills
- today ‘standard’ employment (i.e. permanent, full-time) accounts
for only half of the employed workforce. There has been a significant increase
in casual and contract work. Permanent part-time workers which now constitute
10 per cent of the employed workforce;
- workplace flexibility has largely been achieved through
casualisation, out-sourcing and labour hire, with the Australian workforce now
having the most highly casualised workforce in the developed world;
- within standard work, there are problems of understaffing and
work intensification are evident in all of the six industries; and
- in the six industries studied, nearly all net employment growth
has been in part-time, casual, labour-hire and contract employment patterns.
Although there is a different mix between industries.
- traditional career pathways are breaking down in industries where
they were once common (eg. banking and finance).
This context provided the basis for these summary
- new models of work characterise the contemporary Australian
labour market. Standard employment based on a full-time permanent employment is
no longer the norm. Part-time, casual, contract and labour-hire employment
patterns are now central elements in Australia’s employment scene;
- these models of work are the product of changing forms of
competition across all sectors of the economy, brought on by the policies of
- the ‘enterprise’ as a ‘key’ category in understanding changes to
work is no longer useful. Today new forms of business organisation that include
networks of production, supply chains and outsourcing arrangements are in many
ways the ‘dynamos’ of changes to work; and
- while there are general trends in changes to work, there are
significant deviations from such trends in particular industries.
While globalisation and technology provides the setting for these
changes, as noted by NISI, the highly competitive scenario, the committee was
told, has been achieved by progressive deregulation of the labour market and by
economic rationalism. It was maintained that the labour market of today is a
very different one to that when the system was designed, and that the mix of
enterprise based training and incentives is ill suited to the competitive
deregulated conditions companies must operate within.
The prevailing view among a range of stakeholders was that there is a mismatch
between what the system is offering and what the majority of employers need to
address their skill requirements.
In this vein, Ms Kaye Schofield noted that while skills shortages are a
normal part of the business cycle, significant and persistent skill shortages
in the technical and trades areas show evidence of systemic weakness.
However, the shortages are not the fault of training system per se, as
the supply system is now relatively flexible and responsive to patterns
of demand. Instead, the failure is indicated by the low uptake of nationally
recognised training by employers, with the ABS finding that only 24 per cent of
employers did so in 2000-01.
She concluded that the shortages are a clear consequence of the more
competitive business environment and its products, in particular a reluctance
to train due to poaching.
Structural change and the training challenge
There are implications for training and skills momentum in the
industrial sector which has been subject to the pressures of competition and
change. Two major developments since the mid 1990s affecting training and the
availability of workplace skills can be identified:
- The first has been labour market deregulation, coinciding with
fierce corporate competition. This has seen huge reductions in corporate
workforces, a phenomenon also associated with the movement of investment into
industries associated with and using high technology, and characterised by low
employment. Technological efficiencies, and the pressure by corporation
shareholders to maximise investment returns, has created a highly volatile
labour market, especially at the middle and high order skill levels. The
pressure to reduce staff has lead to the expedient of labour hire and the
contracting out of even core functions of business.
- The second major development has been the privatisation and
corporatisation of large public utilities. Over most of the twentieth century,
public utilities saw their training responsibilities as extending beyond the
needs of the particular service they trained for. Since privatisation and
corporatisation these cadres of apprentices and skilled workers are not
available to industry at large.
It is generally acknowledged that the public sector and larger
corporations have together undertaken the bulk of the workforce training, if
only because the complexities of their operations demand it. Small and medium
firms have done less training because they are less able to afford it, and
because they often picked up trained people who are ex-corporate or public
In these circumstances, interest in training is inclined to wane. The
manufacturing sector has been particularly affected by these trends, given
traditions of training by large firms and public utilities. As the recent
Productivity Commission report Trends in Manufacturing (August 2003)
The exceptional feature of the changing size distribution of
manufacturing is the decline in the relative importance of big business, with
no other industry division showing a large decline’.
Without the supply of well-trained young people and skilled specialists
provided by public institutions, industries reported that there was no buffer
for boom times or project-based developments, and no back up source for small
businesses to draw on, as they had done traditionally. There are also fewer large companies
overall and in the manufacturing, engineering and the health and community
sectors and adjustment to the wind back in training by large public utilities,
or their closure, has not yet occurred.
At hearings Australian Manufacturing Workers Union (AMWU), reported the
effect of privatisation and corporatisation in the manufacturing sector.
Statistics drawn on from New South Wales, Victoria and Queensland showed that
the biggest trainers of skilled labour, not just trades but also at technicians
at associate diploma or associate professional levels, were the public
utilities such as the railways, electricity, and water authorities and the very
large engineering manufactures such as ADI, Telstra and the large motor
manufacturers. Not only have the public utilities been corporatised, but they
have in most cases contracted out their technical and maintenance functions,
with only corporate functions remaining. The AMWU advised that for a number of
reasons contractors do not train; the primary reason being that they achieve
contracts on the basis of a lower price.
The committee was told also of how lack of succession planning was
jeopardising future capacity in the sciences and engineering to respond to
emerging industry needs and to innovation in existing industries:
Over the last 10, 15, 20 years, we have seen
privatisation of our utility providers. Even the defence forces are looking to
outsource any non-combatant personnel, and they have outsourced much of their
work. Many of the companies that have taken up those contracts from the
government have initially, of course, sought to source people who were
previously employed by the government. But, a few years into their contracts,
they have started to realise there is no ready pool of people to fill the jobs
any more. There seems to be a grappling by private industry as to how to cope
with the training or getting of suitably qualified and trained engineers and
scientists into their business, because they have not taken on the role where
the government left off in training up engineers and scientists, in particular.
The committee believes that business is to an extent still free-riding
on the training schemes that disappeared a decade or more ago, and that the
next few years will see a serious skills shortage emerge as the post-war
generation, beneficiaries of public service training, retires.
The training responsibilities of business
The extent to which business has embraced a training culture which
matches its commitment to deregulation of the labour market is a matter of some
contention. The committee was informed that the competitive environment faced
by small and medium enterprises (SMEs), and indeed larger businesses, means
that profit maximising firms will only train to the extent that short term
needs are met; or otherwise risk the poaching of their skilled staff before
they have retrieved the value of their investment.
The committee heard how the insidious effect of this cycle can
destabilise regional economies. One submission reported that a large company in
Adelaide was able to ‘free ride’ off the training efforts of SMEs. It
ransacked their workforces by offering skilled staff 33 per cent more than the
small companies, while holding down supplier prices so that the SMEs could not
In the absence of a long term view, Greater City of Dandenong representatives
reported how the manufacturing industry, which is a major industry in the
region, is being destabilised by a lack of succession planning.
On the other hand, ACCI has submitted evidence from the 2003 ABS release
of data on employer training expenditure and practices that show employers are
spending more time and money in providing training and skills development to
The committee acknowledges that ACCI quoted these figures by way of arguing
against the idea of any resurrection of a training levy, but in quoting a
figure of 81 per cent of all employers providing some training to their
employees in the 12 months to June 2002 ACCI has been selective. The
percentage quoted is an amalgam of private and public sector training for which
the figures are 41 per cent and 84 per cent respectively. Employees in the
private sector vastly outnumber those in the public sector, so if ACCI is
arguing that industry’s record is a good one, the committee does not agree.
There is clearly a mismatch between what the current system can support
and what is needed to address skills shortages. From the employer’s point of
view there is an unrealistic expectation that SMEs will be willing to carry
responsibilities to recruit, train and reskill employees on a scale necessary
to meet future needs when present capacity to do so is reduced. As for
employees, it has been remarked that under current conditions, they
increasingly ask for broader occupational rather than specific enterprise based
training so as to maximise mobility, which employers are increasingly inclined
The manifestations of this in the manufacturing and electrical
industries, in particular, have been clear. Despite the manufacturing sectors’
strategic significance, between 1987 and 2001 the total number of metal trades
people employed nationally declined by 14 per cent. Over the same period, the
number of metal apprentices in training fell by 36 per cent. The number of
electrical and electronic tradespersons fell by just four per cent, but the
number of apprentices in these trades fell by 20 per cent. Kaye Schofield
argued in her submission that:
If the current situation continues in the manufacturing
industry, it will have major implications for general industry growth and the
sustainability of employment levels in key occupations and even alternative
approaches such as skilled migration will be unable to supply the number of
skilled people needed by the industry. The shortage of toolmakers for example
has prompted South Australian businesses to import 35 skilled tradespeople from
the UK but such a strategy is not sustainable.
The Australian Industry Group (AiG) confirmed that industry is not
keeping pace with replacement requirements given rates of expansion and
wastage, with non- completions of apprentices for the period undesirably high
at 20 to 30 per cent. Most worrying however, was the significant increase in
non-trade manufacturing traineeships, specifically in the lower AQF levels:
What is of most concern is the significant increase in
non-trade areas of manufacturing, specifically in the lower AQF levels. While
there is obviously some need by industry for ‘below trade’ skills the current
training package qualifications (based on industrial awards that necessarily
lag behind the changing needs of industry) do not facilitate access to the
higher-level qualifications. Often skills acquired in these lower level
qualifications are not recognised for credit transfer or advanced standing in
higher trade focussed programs.
In short there appears to be a disproportionate level of
activity within the lower qualifications, when compared to skill shortage areas
and the rhetoric of seamless pathways does not translate into the necessary
movement into the higher value skill rich areas of shortage.
The committee is strongly of the view that it is an inescapable duty of
government to ensure that industry faces up to its training responsibilities.
While it may have limited ability to influence labour markets in other ways, or
do anything about work training arrangements which effect economic growth, it
can ensure that there are incentives in place to influence the scope and
quality of industry training. The evidence to the inquiry clearly indicates
that skill shortages are in large measure the failure of industry to secure its
own future, and the likely effects of this on the economy in the middle to
long-term are frightening. This issue is explored in more detail in the Chapter
Six on industry’s role.
Despite the focus on flexibility, the committee is therefore concerned
that the present approach to skill formation appears to be not well suited to
the market conditions. Middle skill training, in particular, is the casualty as
work force skill sets polarise. The evolution of a knowledge economy may in
time provide opportunities for middle skilled careers but, at present, Australia
ranks only 16 out of 21 countries in terms of knowledge industry developments.
The connection between the skill profile of the labour force seems tenuously
linked to productivity. Instead, the deregulated labour and trading market has
achieved greater competitiveness in the short term: but at a cost. This cost
may be the sustainability of the Australia’s skills foundations, with
deskilling and lack of succession planning endangering sound social and
economic development in the future.
Within this scenario, the committee is concerned that ‘free riding’ has
emerged as the defining feature of skill formation, and considers that current
arrangements are not sufficient to counteract the significant disincentives to
training that exist today. The committee has heard from a number of sectors
that, in particular, the New Apprenticeship framework is skewing training
towards lower qualification levels, providing a disincentive or not providing
adequate assistance or structures to meet higher skill needs. The next section
of this chapter will consider how policy levers such as the New Apprenticeships
incentive structure and labour market mechanisms such as the Job Network can be
embedded into a more strategically targeted but integrated system to foster
skill development and meet present and future needs.
New Apprenticeships: refocus for the future
The committee is persuaded that the New Apprenticeships system needs
adjustment to better fit the new context provided by a highly competitive
market place, the more diverse but less certain career choices available for
young people, and the need retrain existing workers. In particular there is a
need to enhance the attractiveness of longer term VET training at intermediate
and higher skill levels. This is the necessary foundation for the development
of the fuller sphere of skills required to sustain the diverse range of
industries, including niche industries, on which our future economic growth and
social stability must be based.
The New Apprenticeship system is the principal mechanism set up
government to encourage employers to engage with training within the
architecture of vocational education and training reform. Following the model
of traditional apprenticeships, New Apprenticeships initially had an entry
level focus, aiming to combine employment with structured training, under a
contract of training or training agreement, leading to a nationally recognised
qualification. The ‘new’ aspects of the system are the expansion of training
into a broader range of industries and occupations beyond the traditional
trades, and a ‘competency based’ approach to delivery and completion of
training, in place of a requirement for ‘time served’. In 1998, the system also
became accessible to existing workers, with the advantages of the training wage
and incentives accruing to employers. In theory, and increasingly in practice,
New Apprentices can complete their training and gain their qualification as
soon as they are assessed as having achieved all the relevant competencies, as
set out in training packages developed to reflect the contemporary skill needs
of industry. Another characteristic of the New Apprenticeship arrangement is
the capacity for training to be delivered on-the-job, off-the-job, or a
combination of both. School-based New Apprenticeships allow students to
start employment-related training while still at school.
Under the ANTA agreement, states and territories agree to fund the
training component of all New Apprenticeships and have responsibility for audit
of the contracts of training and quality assurance. Under ‘User Choice’ policy,
they also agree in principle (with some exceptions in practice) to allow
employers and new apprentices to select their training provider, with the state
or territory government meeting the cost of the training under an agreed
payment formula. Under the Commonwealth Government New Incentives Program, the
Commonwealth offers employers a range of incentives to engage a New Apprentice
and, increasingly to complete their training. Incentives vary depending on the
level of the qualification. Additional incentives are also available to meet
rural and regional, innovation and indigenous needs. School Based-New
Apprenticeships have been introduced in recent years to provide a pathway for
students to combine employment and training under a contract of training while
still at school.
Some state and territory governments also provide additional incentives
targeted to their priorities, and may extend some general concessions in the
form of payroll concessions or reduced workers compensation contributions.
The most commonly cited statistics in relation to New Apprenticeships
appear impressive at first glance:
- In 2001–02, the Commonwealth provided more than $376 million in
employer incentives and personal benefits, increasing to an estimated $424
million in 2002–03.
- The number of people in training under New Apprenticeships has doubled
In June 2003, for example, the Minister, the Hon. Brendan Nelson MP announced
that 391 700 Australians were in training in New Apprenticeships, up 15 per
cent since March 2002.
- Media statements report that the number of people undertaking New
Apprenticeships in the traditional trades and related category had increased 2
per cent since March 2002.
Yet a significant number of submissions raised serious
doubts about whether the public is receiving an appropriate return on this
large and growing investment, in terms of the program’s contribution to
national skills formation and to enhancing the career prospects of individuals.
The committee examined a range of data on the profile of training under New
Apprenticeships to test the validity of these concerns.
New Apprenticeships in the traditional trades
A key issue, given the prevalence and persistence of skill
shortages in the traditional trades, is the number and proportion of New
Apprenticeships in the traditional trades. As noted, government announcements
indicate that the number of New Apprenticeships in the traditional trades has
increased and is now higher than in 1995.
The committee examined the cited source of this data, NCVER apprenticeship and trainee activity
The NCVER statistics for June
2003, indicate that ‘traditional apprenticeships’ have increased by 19 per cent
since June 1998, from 103,500 to 123,200 but have declined as a proportion of
the total number on training, from 54 per cent in 1998 to 31 per cent in 2003.
While this drop may be relative to stronger
growth in other areas, BVET argued at hearings in Sydney, that these
statistics indicate a substantial real drop in the number of traditional
From one perspective, the declining proportion of New Apprenticeships in
the traditional trades is may not be a concern: the relative demand for
training in these areas has also declined in line with the general decline in
employment in trades related industries and occupations. And it is not immediately
apparent, given the overall growth in the program, that growth in New
Apprenticeships in industries such as retail has been at the expense of the
numbers of New Apprenticeships in the traditional trades.
After all, the New Apprenticeship Incentive program is a demand-driven and
uncapped program and so, in theory at least, training in one industry or
occupation area need not be at the expense of training in other areas.
The relevant consideration, rather than the proportion of New
Apprenticeships in the traditional trades, is whether the rate of training in
the traditional trades is sufficient to meet the need. The usual measure for
this purpose is the apprentice training rate; that is, the ratio of apprentices
in training to employed tradespersons. Assuming that the ‘beginning’ apprentice
training rates are sufficient to meet the replacement needs of an industry or
occupation, any subsequent decline in the training rate is likely to result in
a ‘skill shortage’ in the occupation, unless wastage and attrition rates
decline to the same extent. In circumstances where there are significant skill
shortages in industries, as now prevails and has for some time, the apprentice
training rate will often need to increase in order to resolve the skill
shortage and meet new training needs associated with employment growth and to
replace retirements and attrition.
Dr Philip Toner provided the committee with his paper analysing
apprentice training rates in a number of trades occupations since the 1970s. It
indicates that while the training rate in some occupations, such as
construction, has fluctuated around a relatively narrow band which possibly
reflects the effect of economic cycles, the overall training rate has continued
to decline in the metal and electrical trades, resulting in skill shortages in
these occupations. Specifically, the apprentice training rate for the metal
trades, with some minor variations, has consistently declined from a band of
18–20 in the 1970s, to a band of 11–20 in the 1980s, a band of 9–11 in the
1990s to 8.5 in 200 and 8.2 in 2001. The apprentice training rate for the
electrical trades has also trended downwards from a band of 11.7–13.8 in the
1970s, 10–14.1 in the 1980s, 8.9–12.8 in the 1990s to 9.2 in 2000 and 9.3 in
Toner notes that the decline in the training rates in these trades from
the beginning of the 1990s has occurred over a period when there has been an
attempt to introduce a market for training and remove ‘inflexibilities’ in the
apprenticeship system. He takes this to suggest that simply introducing more
flexibility into the training system to improve ‘supply’ will not increase the
rate without remedying depressed demand, such as the effects of corporatisation
and industry restructuring.
In this context the committee notes that while DEST data suggests that
growth in traditional apprenticeship training is currently strong, Answers to
Questions on Notice from DEST confirms limited or negative training growth in
the mechanical and engineering sectors.
Prevalence of New Apprenticeships in low-skill areas
A number of submissions and some academic studies raised concerns about
the disproportionate growth in New Apprenticeships in industry areas such as
retail and hospitality, with high turnover at the lower levels where New
Apprentices are concentrated. While it may be argued that these industries are
experiencing high employment growth and have as great a need for training as
any other, the bulk of occupations in these industries are at the lower skill
levels, and rarely if ever appear in DEWR skill shortage lists. Mark Cully in
the Pathways paper, noting the phenomenon of under-utilisation of existing
skills referred to above, questioned whether the relatively high level of
training at Certificate 3 and 4 levels in the ‘relatively low skill level’
occupations in retail and hospitality, represents a wastage of investment in
The proportion of training associated with part-time or full-time
employment may also be an indicator of the level of skills formation given that
part-time employment can often be considered of lower ‘quality’ than full-time
employment. Recent research by Sadler (2001) has demonstrated that in 1999–2000
part-time apprenticeships and traineeships accounted for about 98 per cent of
the increase in new employee commencements, and represented 29.5 per cent of
all commencing apprentices and trainees (almost one in three). These part-time
commencements were mainly trainees and in only a few industries. Eighty-six per
cent of all part-time apprentices and trainees commencing in 2000 were in four
industries: 30 per cent in Wholesale, Retail and Personal services (WRAPs); 22
per cent in tourism and hospitality; 21 per cent in business services and 13
per cent in transport and distribution.
Given the trend to part time New Apprenticeships continues, with
part-time New Apprenticeships, rising from 11 per cent in June 1998 to 32 per
cent in June 2003,
large growth in low skill high turnover industry sectors may be a matter of
concern. However, to the extent that one accepts that the investment in
training should simply reflect shifts in employment and employer demand (as
current policy appears to do to a large degree), the growth in New
Apprenticeships in industries which have a high proportion of part-time
employment and at the lower skill level, is not necessarily at issue. Many
industries and occupations, from the road freight to the retail and hospitality
industry, argue that they have a legitimate need for training and should have
access to the full range of government support so that their industries are not
trapped in a low skills path to the detriment of their employees and the
Nevertheless, a number of submissions and witnesses argued that, given
limited resources and competing priorities, public investment in New
Apprenticeships should not be simply demand-driven but should be more closely
targeted to high priority areas, that is areas where there are skill shortages
and areas which are a greater priority for national skills development, such as
in higher skill levels and in new and emerging, high skill industries. From
this perspective, the rapid growth in training in low skill industries with no
skill shortages, driven largely by New Apprenticeships incentives, alongside a stalled
or declining training rate in high or intermediate skill occupations, some with
serious skill shortages, represents a serious misallocation of public
resources. Mr Bert Evans, chairman of BVET, put it this way:
The situation we have is that the Commonwealth incentives
do not discriminate regarding the availability of employer incentives. They are
equally available to manufacturing and automotive industries, which I have a
lot to do with, where there are clearly skill shortages, and to industries where
there are no shortages. I will give just one simple illustration of that. It
concerns electricians, which we are nationally short of. The crude training
rate for electricians in 2001 was 11 per cent but in the low skill occupation
of process meat workers the figure was 23 per cent. You will see it is skewed
to the bottom end of the scale. They are certainly driving demand but are not
strategic in their allocation.
The Commonwealth might argue that its incentives program is targeted
because incentive payments increase with skill level, given there are
additional incentives for priority groups or areas. Yet the evidence to the
inquiry discussed in following sections indicates that the AQF level alone is
not a sufficient basis for differentiation of incentives, because the levels do
not represent a reliable measure of the skill level or the required training
investment by the employer or employee. A further factor is that the incentive
structure does not appear to address the structural barriers to training in
some occupations and industries which should be a high priority for skill
Disincentives to middle and higher skill development
The New Apprenticeships incentives system has been cited as an important
and successful mechanism to encourage employers to train, yet it has not been
effective enough to generate sufficient skilled people for employment in skill
shortage areas. A key issue is that the high costs of taking on traditional
trade apprentices in engineering, manufacturing and printing, for example is a
considerable disincentive to businesses, both big and small.
A recent study by the Centre for Labour Market Research (CLMR) estimated
that on average, the ‘net cost’ of
employing an apprentice over the four years amounted to approximately $22,000. While many of these costs are incurred in
the initial phase of the apprenticeship, when the apprentice requires more
supervision and may not be very productive, the competitive pressures under
which most businesses operate can often dissuade them from bearing this cost
for the sake of a long-term benefit. In this way, as the report Skills
For the Future noted, the tough business environment and global industry
dynamics makes it a rational decision for business, in terms of the profit
imperative, not to embrace training or high value product development.
In these circumstances, the most rational economic decision for most individual
employers is to ‘free ride’ on the training efforts of others, by recruiting,
rather than training, skilled tradespeople. When all or a majority of employers
take this route, the result is ever more competition for scarce skills and a
serious impediment to the growth of industry and an equally serious loss of
Another related consequence of this was the shift to a low skill
equilibrium, with employers choosing to limit training investment to that
required for immediate productivity, resulting in a growing proportion of the
labour force in semi-skilled or low skilled positions. The Cairns Regional
Group Apprentices Limited elaborated on this phenomenon, contending that there
has been an increase in lower-level traineeships under the New Apprenticeships
program at the expense of traditional trades apprenticeships, leading to a
dilution of the traditional trades skills base. Mr John Winsor claims that:
Trades which have historically produced qualifications
comprising a wide skill base have been replaced by narrow, specific skills
based traineeship models. This, I believe is clearly evidenced in engineering
trade callings where the trade of Engineering Tradesperson-Fabrication
(formerly boilermaking) now has a traineeship model titled Engineering
trainee. This is a narrow based, Certificate II, specific welding skills
traineeship which is in many instances replacing the wide based trade
calling...It is stated that Certificate II traineeships may progress to the
higher level certificate III trade callings, but in my experience this rarely
The AiG, as noted above, and Engineering Employers Association of South Australia
(EESA) submission raised similar concerns, noting that the ‘significant
increase’ in training in ‘below trade’ or lower AQF levels in manufacturing and
suggested that the ‘disproportionate level of activity within the lower
qualifications’, is not addressing the need for ‘higher value skill rich areas
of shortage.’ A reasonable conclusion is that the increase in lower-level
traineeships is substituting for traditional apprenticeship training. As a
solution, AiG and EEASA propose that lower level qualifications need to be able
to articulate into or provide advanced standing for higher trade focused
programs, so that they can provide a pathway to formation of well-rounded trade
The Curtain Consulting submission raised concerns that the current
policy framework for training is also favouring low skill acquisition at the
expense of both middle and higher skills, in two significant ways. First, trade
and technical training (and perhaps other intermediate level training as
discussed below) has become devalued in the eyes of young people by its
inclusion with more basic vocational training under the single banner of ‘New
Apprenticeships’. Second, Curtain argues that few New Apprenticeships in areas
outside the traditional trades are providing an intermediate skill outcome or
the solid foundation to enable further skills acquisition. He arrives at this
conclusion by considering both the expected duration and AQF level of New
Apprenticeships, on the premise that AQF level alone is a poor guide to skill
NCVER data indicates that only 41 per cent of New Apprenticeships at AQF 3
level, outside those defined as traditional apprenticeships, have expected
durations of more than two years; only 8 per cent have expected durations of
three or more years.
The Department of Education and Training, Western Australia (DETWA)
provided further evidence of the different skill formation investment
associated with the same AQF level in different occupations. The measure in
this case is the standard number of hours of off-the-job or structured training
required for most New Apprentices to meet the competency standards associated
with grant of the AQF 3 qualification. DETWA pointed out that a one year
traineeship in Cleaning (requiring 191 hours of training delivery) and a four
year Electrical Apprenticeship (requiring 845 hours of training delivery) both
lead to grant of a Certificate 3 qualification.
Curtain also demonstrates that New Apprenticeships are making little
contribution to higher skills development. Only 4 per cent of New
Apprenticeships at AQF Level 3 and 4 with expected duration of two years or
more are at the Associate Professional level or above.
On the premise that more investment in intermediate skills formation is
desirable, Curtain suggests that New Apprenticeships should differentiate
between a basic vocational or skilled vocational outcome.
However, other than AQF levels, there are no performance indicators which
adequately differentiate training outcomes in the skill formation profile at
By comparison, OECD member countries have various measures for determining
verifiable vocational pathways. Benchmarks for intermediate skills acquisition,
for example, require that on and off-the-job training should be of sufficient
depth to provide direct entry into an occupation, and mobility between
employers; should provide a grounding for higher skill acquisition at technical
or associate professional level; and should be of a minimum duration to allow
for competency to be demonstrated at the required level of complexity.
Curtain concludes that there is a need to conduct research to better understand
what differentiates skill levels and to establish appropriate indicators to
better target higher skill needs.
The evidence from both Curtain and the DETWA points to a significant
difference in the duration of both on-the-job experience and off-the-job
training associated with the same qualifications in different occupations, with
the required amount of both work experience and off-the-job training associated
with AQF 3 in the traditional trades being much higher than that associated
with AQF levels in other occupations. Yet under the current Commonwealth New
Apprenticeship Incentives program, the same incentive is paid for an AQF 3
qualification, irrespective of the average duration of the training contract or
the required commitment for off-the-job training. In this circumstance it is
easy to see why employers of traditional apprentices argue that the current
incentive is inadequate, while in some other occupations, where the same
incentive is paid for a much smaller investment of time and effort, the
incentive is leading to a significant increase in New Apprenticeship training.
The committee is concerned that the anomalies described above are
leading to an unfortunate devaluation of some vocational pathways in the eyes
of the community. The
committee also believes that these anomalies mean that employer incentives
which are based on AQF level alone will result in a distorted investment
towards ‘lower cost, lower skill’ qualifications (albeit perhaps at AQF 3
level) and away from ‘higher cost, higher skill’ qualifications at the same AQF
level. The committee considers that these anomalies indicate the need for an
adjustment to the Commonwealth incentives at the AQF 3 level to better reflect
the variation in skill level and cost to employer.
The committee also considers that appropriate measures need to be
developed in reporting on performance at the associate professional,
para-professional and intermediate skills, both for a better understanding of
trends in skill formation and as a means of tracking progress against other
The committee recommends that ANTA in consultation with
stakeholders, should consider developing a set of skill performance indicators
in addition to the relevant AQF level to better distinguish between basic,
intermediate and higher vocational training outcomes. These could be modelled
on the OECD benchmarks and would provide an improved basis for targeting
incentives under the New Apprenticeship scheme.
In relation to the progression of the national training agenda more
generally, the committee is aware that in the November 2002 meeting of
the ANTA Ministerial Council (MINCO) commitments were made to progress
harmonisation of standards and incentives through the implementation of model
clauses by 1 July 2004. The clauses aim to achieve national effect of
registration and accreditation decisions, application of sanctions and legal
enforceability of national standards. Additionally, they aim to remove
legislative barriers to New Apprenticeship pathways and ensure legally
enforceable training agreements. Progress was to be monitored by ANTA CEOs
Committee and reported to the next ANTA Ministerial Council.
Given the desirability of building a national system, when
responsibility for funding of vocational education remains the province of the
states, the committee commends these developments, and recommends that the
government should continue to work towards achieving harmonisation of standards
and incentives through ANTA MINCO for the benefit of providers and their
clients, employers and trainees.
The committee recognises
that lack of national consistency in training standards and incentives makes
the ideal of nationally portable qualifications difficult to achieve. The
committee therefore recommends that the Commonwealth should work towards
achieving nationally consistent standards and New Apprenticeship incentives
through ANTA MINCO for the benefit of providers and their clients: employers
However, the committee is concerned that ‘national consistency’ should
benefit both employer and trainee and considers that certain safeguards should
be in place to uphold the intention of the model clauses.
Flexibility and New Apprenticeships
‘Flexibility’ is central to New Apprenticeship training and workplace
arrangements, and yet remains a point of contention. Within training parlance
‘flexibility’ has become a kind of ‘buzz-word’ reflecting the demands of
business for faster response to skills needs, as well, it must be said, for
training short cuts. In its submission, DEWR noted that Workplace Agreements
are a principal mechanism to provide enterprises with the flexibility needed for
training under New Apprenticeships. Under trainee provisions in the agreements,
employers can negotiate part-time and casual training arrangements not allowed
under parent awards. Wages can also be varied to reflect the different
combinations of training and work and to include competency based progression
criteria. DEWR advised that fifty three per cent of certified agreements
provide for entry level training provisions under New Apprenticeships.
The committee was advised that given Commonwealth legislation has the
capacity to override some state protections for trainees, there are concerns
that legislative arrangements may give the employer an unreasonable degree of
power over the New Apprentice. In particular, the AMWU raised concerns that
state-based protections on complaints and right to appeal, along with
prohibitions relating to casual and part-time employment for traineeships, are
being eroded under Australian Workplace Agreements (AWAs).
The submission recommended that protections provided to traditional apprentices
under the Workplace Relations Act (WRAct), through exemptions allowed under
Subsection 170VR(2), should be extended to cover traineeships.
At hearings, the ACTU also commented on the lack of a legislative framework
under which cases of abuse of New Apprenticeship training can be pursued, with
the Crimes Act being an unlikely avenue for young people in most instances.
ACTU also considered that reform is required to both Federal and state
industrial and workplace relations laws to remove exemptions for trainees and
apprentices from unfair dismissal laws, and to limit the use of casual and
contract work to genuine short term and cyclical demands.
The point is whether the focus on flexibility may undermine workplace
conditions, which will in turn fuel skills attrition in trades based areas.
Government incentives and the opportunity to pay a ‘training wage’ potentially
provides unscrupulous employers with an incentive to engage trainees even if
they cannot or do not intend to provide the supervision or relevant work
experience; the capacity to provide on-the-job training and poor practice by
some RTOs makes an opportunity for employers to obtain the benefits of
employing a trainee without incurring any of the costs and commitments.
While the Commonwealth might argue that these examples are due to poor audit
practice by state agencies, the committee believes the lack of targeting of
incentives and the availability of fully on-the-job training may lead to poor
training outcomes. In this context, at hearings in Melbourne, the ACTU tabled a
number of case studies of New Apprenticeships being used to churn trainees
through low skill contracts, and to downgrade pay and conditions for existing
At hearings, DEWR was asked to respond to concerns raised about the WR
Act and consider whether protections awarded to apprentices should be extended
to trainees. DEWR confirmed that exemptions to the WR Act allow state law to
prevail in the case of apprenticeship arrangements, and that it is possible for
further exemptions to be prescribed by regulation (170VR2)(d) and 170LZ (2)
(d). However, DEWR reminded that the primary focus of the WR Act is to
encourage employers and employees to determine wages and conditions of
employment as far as possible at enterprise level. Any limitation of this
potential would have to be tested against this objective, and any amendment to
the Act would thus be a policy decision for government.
The committee considers that a policy change is needed: the unequal
treatment of trainees as against traditional apprentices under Commonwealth law
means that the rhetoric of equal opportunity under New Apprenticeships pathways
is more than misleading. Trainees have less protection under the law in the
workplace and less certain avenues of complaint against inadequate training or
employment conditions. Existing workers may also be more vulnerable, given
they may be forced to take on a traineeships to keep employment so that the
employer can pay them a reduced training wage and receive incentives. The
potential for ‘churning’ is also heightened where there is no recourse to
unfair dismal laws. This undermines the promise of fair training and employment
opportunities for the young and old under New Apprenticeships. The committee considers
that present inconsistency of treatment of trainees under Commonwealth law must
The committee recommends
that the Workplace Relations Act should be amended, or a regulation made, to
ensure that Subsection 170VR (2) applies equally to all New Apprenticeships;
that is both apprentices and trainees.
To prevent abuse of New
Apprenticeships, the committee considers that provisions for a training wage
should not apply to existing workers.
Another concern was the potential for flexibility to drive deskilling.
In this regard the committee has some concerns about proposals to modularise or
breakdown traditional apprenticeships into lower qualification components. Some
industry representatives argued strongly that more flexible arrangements, in
terms of length and level of traineeships, are essential if skill shortage
affected sectors are to provide training that offsets the cost of employment
and focuses on employers skill needs. For instance, the Housing Industry
Association proposed that traditional four year apprenticeships should be
broken into discrete shorter phases of training, at AQF 2 qualification. This
would allow for the specialisation needed to reflect industry change and would
be particularly beneficial to regional businesses.
However, according to the HIA, this development has been ‘thwarted by the union
movement and small self interest craft based organisations who will not
tolerate training for thousands of workers who operate in specialised fields of
The HIA also notes that traditional demarcation between work of apprentices and
pre-apprentices stands in the way of people gaining some skills needed to be
immediately productive when they commence an apprenticeship, with unions in
opposition to these ‘trade skills’ being developed outside of the contract of
Educators expressed different views about modularisation of training
pathways. Victorian TAFE Association Chief Executive Officers Council observed
that while traineeships are designed to be flexible for SMEs, employers
arguments for increased flexibility in traineeships was most often about
achieving fully on-the-job training. The Council advised that TAFE would have
to reject proposals to break down training for fully on the job delivery if it
considered that the quality of training would be compromised. This earned the
provider a reputation for inflexibility among some employers. To address
concerns, the Council recommended that research on how job training
models can work to balance quality standards of TAFE while also meeting
productivity expectations of employers was needed.
Chisholm Institute of TAFE, which has a profile in meeting training
requirements of the emergent photonics industry, reported that there are no
systemic problems with flexibility in the Institute, as TAFE now focuses on
specialist skills in short modules to meet needs of industry.
Chisholm nevertheless warned that excessive modularisation of training in the
interests of multi-skilling could put the trainee in the position of ending up
a ‘jack of all trades’ and ‘master of none’. In this context the committee was
advised that it is important that a qualification has a specialist core stream
with integrated elements of other technology areas of associated with it.
The AMWU provided a useful context for evaluation of these viewpoints by
observing that the potential for deskilling exists, and has always existed, and
that the key is to ensure that the core competencies that make up the
qualifications are adequately and coherently communicated. It was considered in
this light that flexibility to meet new skill needs, outside of old industry
job demarcations, is something that industry needs, with the proviso that
skills acquired are transferable. To achieve this end, the system itself has to
focus on building career and skill pathways in a training market that supports
The committee recognises that the debate over the potential for
modularisation of traditional apprenticeship training and its delivery raises
some contentious issues which are not easily resolvable, given the competing
need to achieve flexibility while consolidating genuine training opportunities
for trainee. On a practical level, there is a need to fast track training in
the trades to meet skill needs, and that shorter modularised training may
provide the necessary fillip needed to encourage employers to take on more
entry level trainees to consolidate the skills base and provide more
opportunities to young people to start on the ladder in trades training. At the
same time, the committee fears that the endorsement of this approach may
encourage an even more short term view of training on the part of some
employers, with an absence of commitment to further training to develop a broader
One result could be an even greater erosion in the skills base in
particular industries, and a vicious cycle whereby there are not enough
experienced trades people to train and supervise new entrants. For trainees
the consequence may be that opportunities to gain full qualification and
transportable training will be more limited; for industry and the community
this could mean less safe workplaces, buildings and public infrastructure.
The committee therefore considers that an alternative approach would be
to build the capacity of apprentices to achieve qualifications in a shorter
time frame. In particular, it appears that despite the fact that
competency-based training is based on the idea that qualifications can be
achieved according to trainee and employer capacity, most jurisdictions retain
time-based requirements governing New Apprenticeships, whether for the
traditional trades or other forms of training.
This restricts the use of New Apprenticeships for meeting skill shortages or
sudden surges in demand for skill, through the use of accelerated training
approaches. It may also act as a barrier to the engagement of adult apprentices
or cross-skilling or upskilling of those with a strong base of existing skills
on which to build.
The committee understands that many, if not most, state jurisdictions
retain a fixed four year indenture for traditional apprenticeships, although
there is some scope for early completion. While the committee notes and agrees
with evidence indicating that most traditional trades will continue to require
significant periods of training of up to three to four years to achieve the
necessary level of mastery,
it also considers that the contractual arrangements need to be reviewed to
reflect the increasingly diverse pathways for acquisition of trade skills.
recommends that states and territories should review time-based requirements
governing apprenticeships and provision be made for true competency based
training to be achieved by completion of the full apprenticeship in an
While young school-leavers are likely to remain the majority of
applicants for traditional trades apprenticeships, an increasing number of
these, and older applicants, many have existing vocational qualifications
obtained through VET in schools programs or in related trades and other
occupations. The apprenticeship system should provide simpler processes for
early completion of qualifications for those applicants who start with a sound
base of relevant vocational skills, or who are extremely proficient, as well as
those undertaking accelerated training in order to meet surges in demand, such
as for major resource projects. The committee considers that where related core
competencies have been achieved, these should be accredited through a process
of Recognition of Prior Learning to allow additional units to be taken to
achieve the apprenticeship in a shorter time frame.
recommends that, where core competencies have been achieved, these should be
accredited through a process of Recognition of Prior Learning to allow
additional or supplementary units to be taken to achieve the apprenticeship in
a shorter time frame.
Finally, the committee considers that if quality of accomplishment is to
be sustained under the increased flexibility offered by competency-based
training, then some protections and supports must be put in place to achieve
genuine career pathways for entry level trainees, and to build confidence among
all stakeholders in the skill development process.
Training plans for monitoring and mentoring
One approach would be to build a stronger sense of obligation and
commitment between the employers and trainees. This would have the double
effect of inspiring confidence on the part of the employer while enhancing the
status of training in the eyes of the trainee. A mechanism for this might be to
require that training plans be achieved through negotiation between employers
and trainees at the commencement of training, and for a monitoring and
mentorship program to be carried out as part of plan’s implementation within
In its report on the quality of vocational education and training in
Australia, Aspiring to Excellence (2000) the committee recommended that
the Commonwealth and ANTA should work to ensure that training plans are used
more strategically, are nationally consistent and effectively monitored. The
recommendation had evolved out of inquiry findings that training plans, which
are supposed to be an integral part of Training Agreements and are signed at
commencement of a New Apprenticeship, were being implemented in an ad hoc
fashion, with commitments varying between states, RTOs and employers, and
incentives paid irrespective of whether training was delivered.
However, in its response to the report the Government that advised that, while
it supported developments for a nationally consistent approach, requirements
for training plans were otherwise considered adequate.
Submissions to this inquiry contested this view, arguing that properly
negotiated and monitored training plans have potential to address a range of
very considerable failures in the New Apprenticeship system, including the
containment of high non-completion rates and employer abuse of the system.
There was also very significant potential to overcome educator suspicion about
training outcomes under New Apprenticeships system, if educators could be
brought into the auditing and mentoring process accompanying plan commitments.
In this regard, the TAFE Teachers Association of the NSW Teachers
Federation reported that they are at present engaged in a statewide
consultative process to discuss what resources trade teachers would need to
play the role of go-between, to negotiate the training plan and ensure
employers understand their training commitments. TAFE saw benefit in resources
being provided to: develop training plans with the input of both the employer
and apprentice; ensure the training plan is adhered to both on and off the job;
to develop and maintain student profiles; to assess on-the-job training; to
provide gap training ensuring the teaching of underpinning and transferable
skills and knowledge; and provide capstone testing.
The committee considers that TAFE’s capacity to develop student profiles
or passports could be a beneficial means of embedding the training plan into a
longer term skill development pathway in both traditional and non-traditional
Given that the TAFE sector currently carries the bulk of training responsibility
for training in the traditional trades and in manufacturing, the committee is
sympathetic to the view that funding should be allocated to TAFE providers for
this purpose from Federal sources.
Where potential for conflict of interest exits, the committee also considers
that when TAFE is not the provider an RTO, where it is not also an employer,
unions or industry bodies could receive this incentive and take on the
monitoring and mentoring role.
The committee reiterates
its view, expressed in its report on quality in vocational education and
training, Aspiring to Excellence (2000) that individual training plans
require a higher level of commitment on the part of all stakeholders, and
recommends that ANTA MINCO should review its position on the usefulness of
these training plans for monitoring, auditing and evaluating outcomes.
The committee further recommends that at the
next meeting with MINCO, ANTA should give consideration to requiring nationally
consistent implementation of individual training plans, and support provision
of additional Commonwealth funding for targeted incentives directed to TAFE to:
- develop individual training plans with the input of both the
employer and apprentice;
- develop and maintain student profiles linked to individual
training plans, and
- implement quality assessment and mentoring procedures for
The committee considers that if TAFE is not
involved, any additional incentive could be allocated to another negotiator
such as a Registered Training Organisation (where it is not also the employer), a union or industry body to
help employers negotiate individual training plans with the New Apprentice and
carry out the necessary support and auditing roles.
To uphold the intent of the implementation of training plans it was
suggested that New Apprenticeship incentives should not be provided until the
training plan has been negotiated and agreed to by both parties, and agreed
The committee examines this issue, and potential for other adjustments to New Apprenticeships
Targeting incentives to build skills and stimulate demand
One of the fundamental questions for the inquiry is whether adjustments
to New Apprenticeship incentives can be made for improved support for middle
and higher skill development given its apparent failure so far. The committee
heard much about the relative capacity of the system to build skills
development in a range of industry sectors, but the hollowing out of skill
development at key trades and para-professional levels emerged as a focal
Studies of New Apprenticeships give an uneven picture of their take up
by industry. Recent analysis of industry sectors by the Newcastle Employment
Studies Centre showed that while 90 per cent of employers in the sample were
aware of the availability of financial incentives available, only 54 per cent
actually use them. Of interest to the committee were findings that workplaces
in retail and in metals and engineering are among the highest percentage of
workplaces that use financial incentives to train their employees.
In the light of this, the committee compared the substantially different
employment outcomes and training profiles of these sectors. Trade
apprenticeships (at ASCO 4) exhibited the highest retention rates (with three
quarters completing), have the highest employment outcomes and training is in
Meanwhile intermediate clerical, sales and services (ASCO 6) have the second
highest attrition rate (58 per cent), and exhibit highest growth rates in low
skill part-time New Apprenticeships.
Another disturbing contrast is that where trade apprenticeships are filled by
young people at entry level leading to AQF level 3 and 4 qualifications, the
largest increase in employment growth under New Apprenticeships has been
predominately in low skill traineeships among older workers, with close to a
third of all New Apprenticeships being 25 years and older.
Alarmingly, studies show that this group of New Apprentices exhibits the least
positive training outcomes from their traineeships.
These trends led VET expert Dr Philip Toner to the conclusion that the
occupational structure of trainee intake is significantly different from the
occupational structure of total employment (excluding Trades and Related
occupations) in Australia. The share of these low skill occupations in the
total workforce is half that of the trainee intake.
Given these factors, the committee considers that the New Apprenticeship
system is doing a disservice to young people, in failing to create
opportunities for middle skill training, and therefore to provide the
foundations for higher skill development. With highest training growth
occurring at in the lowest skill levels, and no growth in middle skill development,
questions must also arise about whether current arrangements provide value for
money if the objective of New Apprenticeships is to consolidate the nation’s
skill base. At worst it could appear that the dollars needed to sustain Australia’s
economic and social prosperity are being misspent as a wage subsidy or means of
reducing unemployment statistics.
The committee appreciates that the government is aware of some of these
concerns. Its recent review of Commonwealth incentives reconfigured payments of
New Apprenticeships incentives from 3 July 2003 with the result that graded
payments for AQF levels 3 and 4 would be available. Additional payments were
also to be made for disadvantaged workers and the welfare dependent, and Living
Away from Home allowances extended. In response to concerns about high non
completion rates, the payments have also been redistributed to include 20 per
cent of payment on commencement and 80 per cent on completion.
While the committee commends these developments it considers that
current allocation of incentives under the New Apprenticeships system fails to
provide adequately for middle and higher skill development, with 75 per cent of
the New Apprentice expenditure of $476 million dollars going to support
training in high turn over low skill careers. As NCVER told the committee, this
happens without any assessment of the value of training outcomes in those
sectors which currently absorb most of the training dollar.
Further the committee is concerned to hear reports that back up payments
for completion will provide a further disincentive to employers to take on
apprentices for the full training term, fuelling the poaching of apprentices in
skill shortage areas.
Given, this committee finds it remarkable that the Government decided against
redistributing completion payments for low skilled training, which is usually
of short duration, apparently because it might be a disincentive to employers.
Like the Government, the committee is anxious to see maximum
opportunities for employment, but the committee does not agree with ANTA that
targeting incentives for high skill development would not necessarily achieve
Given the problematic nature of identifying skill shortages as they evolve, the
committee would suggest that, as a first measure, incentives for trade level
qualifications should allow for a weighting of New Apprenticeship incentive
payment at commencement to compensate for the expenses of appointment. This
payment should be contingent on compliance with a negotiated training plan,
attached to the New Apprenticeship Training Agreement, and subject to a
monitoring and mentoring process which is part of that plan.
The committee recommends that incentives for
trade level qualifications and higher level traineeships, should provide for
the bulk of the New Apprenticeship incentive payment to be awarded to the
employer at commencement. The payment should be contingent on compliance with a
negotiated individual training plan, attached to the New Apprenticeship
As a disincentive to abuse of lower level training arrangements, the
committee considers that completion payments made under the New Apprenticeship
system should be tied to training outcomes, and that the full payment should be
awarded on completion.
committee further recommends that for training qualifications below AQF
Certificate 3, the full New Apprenticeship incentive payment should be awarded
on completion on demonstration of skill outcomes, as negotiated under the individual
An important consideration for the committee was how to incorporate
incentives for middle skill development within a broader framework which would
encourage higher skill acquisition. The committee was interested in the view
that there is a need to raise the status of middle skill training, and one way
of doing this is to make more evident the links between qualifications at that
level and the potential to upgrade these through articulation to training at
The committee was advised that the first step is to remove the cap on New
Apprenticeship incentives for Levels 5 and above.
The committee recommends that New Apprenticeships incentives
should be available for qualifications at AQF Certificate 5 and above, to
foster higher skill development under traditional and non-traditional New
The committee also considers that to achieve this goal, some further
support is needed to institutions to foster middle and higher level
traineeships. In this context, the committee notes that Innovation incentives
are provided to employers under New Apprenticeships, but that the tertiary
sector is not given any special assistance or encouragement to build the
necessary partnerships, or adjust their courses. Given this, recommendations
were made for targeted incentives to assist universities and TAFEs to enter
partnerships with industry, and to collocate, to achieve the type of flexible
pathways necessary for promoting middle to high skill acquisition.
The inquiry heard about a number of models which might benefit from such
an incentive, and which would fit with proposals under New Apprenticeships at
AQF level 5 and above to consolidate pathways to higher skill development.
At hearings in Dandenong, Chisholm Institute of TAFE reported its work
with industry in the development of the synchrotron. The institute confirmed
that there was potential to meet the needs of a whole new stratum of skills at
paraprofessional level comprising high skilled technical jobs at AQF 4, 5, 6
and spin offs for lower level technical qualifications at Certificate level 3
and at trade level. Chisholm considered that the present AQTF framework is
adequate to provide paraprofessional qualifications and could support a master
apprenticeship stream, as in Germany.
The Royal Melbourne Institute of Technology (RMIT) University told the
committee about an articulation model developed with Robert Bosch Australia, a
prominent manufacturing company, which would provide a coherent training
pathway from trades through to professional engineer which allowed for work and
study in the workplace at the same time. The model involved a student
completing Year 12 VCE over two years, while also beginning an apprenticeship.
Those recruits who had passed VCE (Year 12) with good passes in English,
Mathematics and Physics would have to the opportunity to undertake an
engineering diploma part-time while they completed their apprenticeship. The
Advanced Diploma in Engineering could be credited to an Engineering Degree and
is the equivalent of the first two years of a degree full time degree.
RMIT advised that, as duel sector institute, the opportunity exists to
progress to degrees and further study and research, given the articulation
pathway between engineering diplomas and degrees at RMIT. To support the
pathway, RMIT recommended that TAFE should be allowed to obtain innovation
incentives and be rewarded for its contribution on the basis of innovation
outcomes, as the actual training hours are delivered by Bosch as the RTO.
However, the Victorian TAFE Association Chief Executive Officers Council told
the committee that at present there are limited financial incentives for
collaboration between the various stakeholders. Nevertheless, Victoria is
considering a Bill to allow TAFE to offer degrees.
The committee considers that, as a complement to innovation incentives
provided to employers under Commonwealth New Apprenticeships, ANTA should give
due attention to models proposed by RMIT and Bosch Australia, and others, and
consider whether targeted funding of innovation incentives should be provided
to institutions to foster articulation pathways.
The committee recommends that ANTA should give consideration to
providing targeted innovation incentives to TAFE and universities to fund them
for their development of partnerships with industry, and to support efforts to
build multiple training pathways between institutions.
A further concern is that New Apprenticeships do not differentiate
between entry level and existing employees in the application of the incentive.
Many industries reported that technology change and skills attrition makes
upskilling existing workers and attracting other skilled people from related
industries for retraining essential. It was suggested that quite separate
schemes should be developed to target the different employment needs of each
group. The aim is to guarantee the appropriateness of the training and the
probity of the assessment process, with an emphasis on devising a workable
mechanism for assessing and funding Recognition of Prior Learning (RPL) (otherwise
known as Recognition of Current Competency).
Given findings that older workers in traineeships have consistently poor
quality training and outcomes under New Apprenticeships, the committee is
persuaded that a separate scheme may be required to address the needs of
Reskilling is a key strategy for many skill shortage areas, both for meeting
emerging skill needs and in providing lifelong learning opportunities for an
The scheme many need to operate on a tax rebate basis, as a learning bonus and
may include targeted incentives for higher level certification, above
Proposals for a separate scheme are examined in more detail in Chapter 5.
Recognition of Prior Learning
However, the committee considers that Recognition of Prior Learning
(RPL), or Recognition of Current
Competency, is essential if trade apprenticeships are to be fast-tracked
to meet skill needs. The committee also takes the view that RPL should be a
standard procedure in assessment for all training, not just for upskilling, and
should be treated as such by providers and employment services. RPL is an
expensive process and not without its implementation problems. Although a
requirement for RTOs, the committee was told that RPL is unevenly applied, due
mainly to funding systems operating in the states.
DEST advised that requirements and processes for RPL will be reflected in the
draft Training and Assessment (TAA) Training Package, which is being
developed to replace the existing Assessment and Workplace Training
Package. The draft package is expected to be submitted for endorsement
to the National Training Quality Council by October 2003.
Work is also being done to identify barriers to the implementation of RPL, and
to develop a set of national common principles and operational guidelines for
RPL, with results expected in March 2004.
The committee supports these developments but recommends that cost
disincentives to RPL should be redressed. Without implementation of RPL as
standard practice, training is now offered without due consideration of
individual or organisational needs, resulting in a waste of training effort. In
some industries, as in the health and community sectors, RPL is likely to make
more affordable the higher skill levels now required under legislation, but
which are now unmanageable.
RPL is also likely to ensure that the Job Network does its work properly, both
in skills matching for those with informally acquired skills and better
targeting and assessment of the capabilities of young people for future
training to match their aspirations and link with available jobs.
The committee considers that Recognition of Prior Learning (RPL),
encompassing recognition of current competencies, should be conducted for all
jobseekers to ensure that those with relevant skills or capacities have the
opportunity to acquire the necessary skills to meet their own and industry’s training
needs. To achieve this, the committee recommends:
- ANTA should endorse the adoption of national common
principles and operational guidelines for RPL, and address identified barriers
to Registered Training Organisations (RTOs) and TAFE undertaking RPL;
- an incentive for RPL should be provided under New
Apprenticeship contract arrangements, either as a supplement or as a complement
to incentives provided for training; and,
- training should be provided for Job Network staff with
relevant industry experience under the proposed Training and
Assessment (TAA) Training Package. All job seekers registered with Job
Network should be RPL assessed and have access to appropriate training and
available jobs. For higher
level or specialised skills this may require TAFE, or other RTOs, to undertake
The committee is particularly anxious to ensure that young Australians
have good employment opportunities in life, and is convinced that this object
should be a natural complement to industry’s need for more skilled people. On
this count, the committee was alarmed to hear that Job Network apparently does
not provide the link between employers and young people for skilled work, being
regarded by employers as a vehicle for the long term unemployed and for
disadvantaged job seekers.
The committee also heard that New Apprenticeships Centres do not have the
capacity to provide sufficient job matching services for every industry sector;
indeed, their focus is on proccessing contracts on the approach of employers.
This means there is effectively no Commonwealth supported mechanism to seek out
and match up skilled people with available jobs.
Job Network: matching skills with
Evidence to the
committee indicated a need for a nationally integrated approach to job matching,
as well as for better targeting of local and regional requirements. Rural
representatives reported that the capacity to address skill shortages has
plummeted since introduction of Job Network, which did not carry the labour and
employment focus of previous approaches.
Fragmentation of match-up and training services, due to the proliferation of
private and community providers, made it impossible to link people up in
different areas. RTOs could not get the critical mass necessary to provide
courses in certain areas, despite employer demand.
At an institutional level, Chisholm Institute of TAFE reported that under the
Victorian model of Local Learning Area Networks, TAFE had developed strong
partnerships with government and industry to address training and employment
needs, but links with Job Network were still undeveloped.
Finally, with the focus being on long-term unemployed, early school
leavers and recently redundant older people were not receiving the targeted
assistance they needed.
DEWR anticipates that the introduction of Job Network Employment
Services Contract 3 (ESC3) will address identified weaknesses in job matching.
National Employment Services Association and Jobs Australia also considered
that the new computer system introduced under the contract should improve
capacity to match available skills and unemployed persons on national, regional
and local scale.
These organisations were also working with DEWR, ACPET and ANTA investigating
the potential to aggregate demand between a number of providers in a region to
allow provision of training to meet demand.
Advances had been made with training credits for Work for the Dole, with
additional credits for mature workers and indigenous unemployed. There would
also be more targeted matching for WFD placements to job aspirations and prior
training of individuals.
The committee approves these developments and, in particular, regards progress
towards aggregation of demand as an important means of addressing training and
employment needs in regional areas.
In its response to Questions on Notice DEWR also confirmed further
advances to be made under the Employment Services Contract 3 including better
links between Job Network and Work for the Dole;
improved monitoring and evaluation on Job Seeker Account expenditure on
vocational skills training and targeted studies of jobseeker assistance and
employment outcomes under the Active Participation Model;
and better links between training providers and Job Network providers through
networking, holding fora and through printed media.
The committee notes and especially commends the introduction of
Intensive Support Job search assistance training for Job seekers aged 16 to 24,
as it will apply as soon as they start receiving unemployment benefits. A
companion to this will be a resource package for career counsellors to assist
them to advise young people in their post school choices, and printed material
to make young people at risk aware of Job Network Services.
Another important advance is the increased provision made to Job Network
Services to recognise different educational outcomes for indigenous job seekers
and for the 15 to 20 year old who have not completed year twelve.
However, at hearings in Canberra DEWR confirmed that although there is
more flexibility under the new Job Seeker account, no specific assistance has
been made available for 15 to 24 year olds to obtain specific training that
leads to national qualifications, unless
the job seekers are also Indigenous.
The committee is of the view that Job Network does not offer sufficient
opportunities to young people to gain appropriate employment-related
training, given the intensive assistance offered focuses on general skills such
as making job applications. There are also concerns that work experience and
on-the-job training opportunities for young people are too limited. In this
regard, the committee acknowledges that DEWR has made considerable advances
with the introduction of the Job Seeker account, but notes it has not targeted
additional funding for youth at risk for employment-related training.
The committee also believes that, to improve opportunities for work placements
of young people, impediments to work placements, including lack of public
liability insurance and workers compensation, should be addressed so
that job seekers can better improve their skills base.
The committee recommends
that additional provision should be made through the Job Network Job Seeker
account to support 15 to 24 year olds to obtain employment-related training
that leads to national qualifications, particularly in the traditional
trades and areas of skill shortage.
The committee recommends that the Commonwealth should
identify and develop strategies to address impediments to genuine work
placements, including the availability of public liability insurance and
workers compensation, so that young people have increased opportunity to gain
work experience and build their skills.
Another matter of importance to the inquiry is the capacity of the
system to provide relevant employment-related training for upskilling or
cross-skilling of unemployed people to fill skill shortages. That is, the committee believes that
unemployed people who may have qualifications in another trade, or have
competencies that are not formally acquired, should be eligible to obtain the
necessary competencies and qualification to fill a skilled vacancy in the
trades or other areas of skill shortage.
To achieve this, Job Network will need to conduct effective Recognition
of Prior Learning, as recommended above, to fund links to appropriate training,
and to provide wage subsidised placement with an employer. The committee is
concerned that the capacity to fund such links will not be sufficient given
that, even under ESC3, the proportion of incentive available to Job Network
providers is some 30 per cent less for a training or education outcome, over an
employment outcome for people of the same unemployment duration.
As Jobs Australia advises, under these arrangements only the most
well-resourced and committed Job Network provider would be able to offer a job
seeker both vocational training and a wage subsidised placement by an employer.
In this regard, the committee notes that under ESC3 Job Network assistance can
now be provided as a companion to New Apprenticeships incentives.
The committee considers that Job Network providers should enter into
arrangements with employers to access New Apprenticeships to ensure
appropriately skilled unemployed people have access to training for upskilling
and cross-skilling to fill skill shortages.
The committee recommends
that Job Network providers should enter into arrangements with
employers, with the agreement of all industry players, to access New Apprenticeships
for unemployed people who have relevant skills to achieve fast-tracked
apprenticeship qualifications in skill shortage areas.
The committee also considers that Job Network providers may need
additional motivation to more effectively identify and match up all available
skilled people with available jobs, especially in more difficult to fill skill
shortage areas. The National Employment Services Association submission advised
Even though seen as a highly valuable and intrinsic part of the
Job Network suite of services, job matching has represented a financial
liability to many Job Network providers and has often been subsided from other
areas of operation. As such, the capacity of the Job Network to value add with
regard to the issue of skills shortages has been limited. Job Network Members
have generally sought to canvass employers whose vacancy needs match the
current skills of registered job seekers.
Other evidence confirmed this view. The Greater City of Dandenong
provided the committee with a survey which indicated that Job Network (circa
1999) did not try to place people in traditional trades including hairdressers,
metalworkers, bookkeepers, and CNC operators because placement took longer than
two weeks. As the payment is made on the number of job placements, these
positions remained unfilled. This process was thought to feed a training market
of RTOs focused on easy to fill positions, with no overarching plan to meet
required skills development.
The submission from Maribryrnong/Moonee Valley Local Learning and Employment
Network (LLEN); Melbourne’s West Area Consultative Committee and the Western
Region Economic Development Organisation (WREDO) also reported that Job Network
was unable to attract and recruit local residents into skill shortage positions
in the region, despite data survey findings that the number of appropriately
skilled people far exceeded the number of jobs available.
While the new data matching services under the ESC3 might be considered
to assist the job matching process, NESA expressed concerns that its
introduction may actually reduce the capacity of job matching activities given
the nature of the substantially expanded administrative and compliance
reporting tasks needed for data matching.  In
this regard, the committee notes with concern that on the introduction of the
system on 3 July 2003, the Government had to provide $20 million in extra
funding to shore up the capacity of Job Network providers to keep contact with
On this basis the committee suspects it may be necessary to overcome
considerable costs disincentives to Job Network to link and place people with
jobs in skill shortages areas.
The committee considers that the new Industries Strategies Task Force,
set up by DEWR to develop approaches for Job Network and other employment
services to link up employers and job seekers in areas of skill shortage, could
play an important role in determining the nature of any targeted assistance.
The committee recommends that
the Industries Strategies Task Force should monitor the present capacity of Job
Network to meet skill shortage needs. It should establish benchmarks to assess
employment outcomes and evaluate whether any mechanisms are needed to improve
Job Network’s capacity to arrange additional training for jobseekers with
competencies in skill shortage areas.
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