Reforming apprenticeships

Around 50% of apprenticeships in Queensland are cancelled before they are completed, raising a question about whether apprentice wages are too low relative to welfare payments. Of course, if apprentice wages were higher, employers might not take them on. Today’s mX newspaper reports (p. 2):

Apprentice and trainee employer WPC Group chief executive officer Nicholas Wyman said most first or second-year apprentices were living on or below the poverty line.

An average first-year apprentice automotive mechanic earns an average of just $270 a week, compared to welfare payments that could be more than $290 a week, Wyman said.

But Wyman said increasing wages could deter employers from hiring apprentices.

Instead, he called for Australia to follow the German system in which employers were accredited and four out of five apprentices completed training.

Accrediting employers – which I take to mean accrediting them to deliver all the training necessary for the apprenticeship so apprentices don’t have to go to TAFE or a private training institute as well – is an idea worth exploring. Of course, we’d need to consider whether the costs of accreditation and the ongoing burden it places on employers aren’t too great.

Some other ideas for reform of apprenticeships are contained in an independent report commissioned by the Australian Government which was released this week:

Expert Panel Final Report

This report includes some useful recommendations, especially around improving recognition of prior learning and current competencies, and targeting government funding to support training in professions where there is a genuine national interest, say due to skill shortages – e.g. training for plumbers rather than for McDonalds staff (see Brawl over McJobs scheme).

The Expert Panel also recommends that apprentice wages be reviewed, but I don’t think this is necessary, given that any wage increases for apprentices would reduce their employability. In any case, the wage level only has a small impact on the decision of apprentices to quit midway, as found in this study by the Queensland Department of Education and Training’s econometrics guru Bernard Trendle (see p. 13):

The labour market and apprenticeship retention in Queensland’s traditional trades

So apprenticeships may need reform, but apprentice wages aren’t the major issue to focus reform efforts on. Ultimately, the low completion rates of apprenticeships may be due to the market simply not valuing formal qualifications as much as industry experience.

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