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Call for apprentice wage subsidy to address collapsing apprenticeship system

"Ai Group is calling for urgent action from the Federal Government to address the nose-dive in apprenticeship numbers partly brought on by the COVID-19 crisis," Innes Willox, Chief Executive of the national employer association Ai Group, said today.

"Revitalising the apprenticeship system will be a cornerstone of the Vocational Education and Training (VET) reform process announced by the Prime Minister last week. Such reform is vital to address the overhaul of the training system in the medium term but any action from that process will be too late for many whose training will be cut short. History shows us many will never to return to their apprenticeships.

"We have already lost over 18,000 apprentices since March. The declining number of apprentice commencements is also a major area of concern. Without substantial support Australia is facing a dramatic decline in apprenticeship commencements which will contribute to an unacceptably high level of youth unemployment.

"Modelling released today by the Mitchell Institute estimates 130,000 fewer new apprenticeships and traineeships opportunities for young people as a result of the economic fallout from COVID-19 over the next three years. Furthermore, a reduction in apprenticeships and traineeships will lead to a 50% increase in school leavers that will not be in employment, education or training (NEET).

"To address this situation requires immediate action and Ai Group has proposed to the Federal Government that it introduce a universal Apprentice and Trainee Wage Support Scheme 2.0 (for first and second stage apprentices and trainees). This will be a constructive way to build apprentice numbers, provide youth with genuine employment opportunities and develop the skills required to lift our post-COVID economic recovery.

"The wage support mechanism would apply to all apprentices and trainees with a contract of training regardless of company size, number of employees, age, occupational groupings or geography. This program which we refer to as Supporting Apprentices and Trainees 2.0, should be available between 1 October 2020 - 31 December 2021. The timing is critically important as it could be phased in as the JobKeeper program is phased out.

"The benefits of a universal apprentice and trainee wage support are two-fold:

  • Young people would be more likely to gain meaningful training and employment and thereby assist in preventing a blow out in youth unemployment which would have devastating consequences; and
  • This wage support would put a floor into the apprenticeship system, by supporting employers to commence apprentices and trainees in real jobs, thus ensuring the ongoing development of a pipeline of skilled labour that will be vital for our COVID-19 economic recovery.

"The rationale for this scheme is clear. The COVID–19 crisis has decimated apprentice numbers. Apprentice commencements are down 60% compared with the same period in 2018. A further 18.236 apprentices and trainees have been either suspended or cancelled since 1 March 2020. Young people have been disproportionately impacted by the social, economic and health consequences arising from the global pandemic.

"Prior to COVID-19, youth unemployment had been more than double the overall unemployment figure, and when coupled with under-employment, around a third of that demographic had been locked out of potential wage earning and participation in the workforce. Experience from previous economic downturns tells us that it also takes at least twice as long for youth employment levels to recover. Youth unemployment in Australia could well exceed 20% without targeted and meaningful intervention (It was 13.8 percent in April according to the ABS).

"Under our proposal, payments could be managed through existing mechanisms already in place, such as those of the current JobKeeper program.

  • Stage One (or first quarter of nominal duration) – $500 per week wage subsidy
  • Stage Two (or second quarter of nominal duration) – $250 per week wage subsidy
  • Stage Three (or third quarter of nominal duration) – nil
  • Stage Four (or fourth quarter of nominal duration) – nil

"The direct budgetary cost of this scheme would be approximately $3.9 billion over the period from October 2020 to December 2021. This investment would be partly offset by budgetary benefits which would include reduced income support payments and higher taxes paid on wages during the period of the scheme and over future years.

"More than ever Australia needs a strong apprenticeship system and all potential employers of apprentices must be encouraged to engage with the system as the skills developed are one of the foundations fuelling our recovery. Group training organisations can be multipliers in the recovery," Mr Willox said.

Media enquiries: Tony Melville – 0419 190 347