Is the push to increase entry to university hurting apprenticeships?

New research conducted by the National Centre for Vocational Education Research (NCVER) into the impact of increasing university participation on apprenticeships and traineeships, and the characteristics of those individuals entering higher education or vocational education and training, is providing new insights into the current and future profile of graduates moving into work. The research suggests there is a demographic shift in the characteristics of those opting to go to university, mainly aspirational young migrants and first-generation Australians. By and large, however, increasing university participation is not seen to be having a material impact on the numbers of undertaking an apprenticeship or traineeship.

The study reveals that commencements in apprenticeships and traineeships have been declining since 2012 – albeit a modest increase during the global pandemic (see graph below) as a result of the Commonwealth’s Boosting Apprenticeship Commencements wage subsidy – despite considerable employment growth over the same period. This decline coincided with an increase in university enrolments, attributed to the introduction of the demand-driven system, which uncapped funding and expanded university access during the period from 2012 to 2017.

However, correlation does not imply causation, with the report’s authors concluding that ‘concern about university access impacting apprentice availability may be unwarranted’ because the change in characteristics ‘has not been substantial’, and that ‘that there seems to be a sufficient pool of potential apprentices to satisfy increased employer demand’. The report observes that in 2022, 15.7% of apprentice applicants reported being unsuccessful in gaining a contract of training, due to a lack of positions, down from 26% in 2018.

For reference, the following graph shows the trend in commencements and completions in apprenticeships (trade) and traineeships (non-trade) since 1995. While trade commencements peak at certain times, completions remain comparatively low and flat across the time series.

The study found that the profile of a young person who is likely to undertake an apprenticeship or traineeship, rather than enter university, has remained largely unchanged since 2007. The profile of a person most likely to take on an apprenticeship or traineeship than enter university in 2019 is more commonly to be male, Aboriginal and Torres Strait Islander, Australian-born, speaks English at home, attended a government school, or resides regionally and rurally.

The study uses data from the Longitudinal Surveys of Youth (LSAY) to compare the characteristics of apprenticeship-bound young people with those who are university-bound to determine whether the characteristics have changed between 2007 and 2019. The report found that young people aged 15 to 19 years have not become more or less likely to commence an apprenticeship over university based on their gender, Indigenous status, geographic location, maths achievement or whether they attend public or private school. However, the report does recognise that while apprenticeship commencements have declined for 15 to 19 year olds, commencements for those over 25 years old have risen, especially for females since 2015, most likely as a result of a Fair Work Commission decision to increase apprentice pay rates for adults and existing workers.

The report cites the Productivity Commission’s 2019 report into the demand-driven system, noting that ‘if approximately 60% of young people are now entering university by the age of 22, that leaves 40% to form a pool of potential apprentices’ and that in 2021, only 5.8% of 15 to 19 year olds commenced apprenticeships.  There are opportunities to engage those in the target age category into apprenticeships and traineeships including through incentives, which is now the topic of a Federal Government review.

We would like to hear your views about the apprenticeship system. An online member forum meeting has been set for Friday, 19 April 2024 at 11am (AEST). If you are an Ai Group member and would like to participate in the meeting and contribute to our submission, please contact CET@aigroup.com.au.

You can access the full NCVER report here.

For more information on the Strategic Review of the Australian Apprenticeship Incentive System, click here.