Trade apprentices will help our post COVID-19 recovery. We need to do more to keep them in work
- Written by Peter Hurley, Policy Fellow, Mitchell Institute, Victoria University
The Australian government needs to urgently act to protect Australia’s 180,000 trade apprentices from the economic effects of the coronavirus.
Advertised vacancies for new apprentices have collapsed due to COVID-19 – from 1,731 vacancies in January to 880 in March 2020.
If the trend continues over the next year it will lead to a loss of 35,000 new apprenticeship jobs. But the reduction may be much larger, given the uncertain economic environment ahead.
The low number of new apprenticeship vacancies doesn’t show the full extent of the problem. There are currently another 180,000 enrolled apprentices, many of whom may have already lost their jobs or been stood down.
Australia must ensure we do not lose the workforce we will need as part of any recovery effort after the coronavirus restrictions end.
What is the impact?
While official data on the early impact of the coronavirus on apprenticeship numbers won’t be available for another six months, the size of the challenge can be estimated by looking at apprenticeship figures during the previous few years.
Data shows the industries with high numbers of apprentices include construction, automotive, electrotechnology, hospitality and beauty services.
Many of these industries are already hard hit by the coronavirus outbreak, particularly hospitality.
While some industries may remain open, such as construction, any downturn will likely impact apprentices. Evidence shows apprenticeship numbers are sensitive to changes in the employment market.
Increases in unemployment result in a decrease in apprentice numbers, as well as employers taking on fewer new apprentices.
This means even in industries that remain open, higher unemployment will likely have big impacts on apprenticeship numbers.
Research has shown changes in the number of new apprentices take between six months and a year and a half to flow through into total apprentice numbers.
Apprenticeships are usually three to four years in length. Economic downturns affect the pipeline of apprentices moving through the system. The result is that a decline in people starting apprenticeships can be felt for many years to come.
This means Australia risks a generation of lost apprenticeships as young people lose connections with their employers and cannot complete their training. It also threatens any recovery effort by removing skilled workers from industries trying to rebuild after the pandemic.
What has happened previously?
Research from the 2008 global financial crisis and 1992 recession shows the impact of economic downturns on apprenticeship numbers.
During the GFC there was a 6% seasonally adjusted drop in people starting apprenticeships. While this drop was relatively small, many of those who lost their jobs during this period did not return to complete their apprenticeship training.
Read more: Don’t be too quick to dismiss ‘dying trades’, those skills are still in demand
The 1992 recession tells a more disturbing story. The 5% increase in unemployment resulted in a 25% drop in apprenticeship numbers.
Early indications show this downturn will be much more severe than the GFC and the 1992 recession. There are early forecasts of a 7% increase in unemployment, to almost 12%.
There are also no guarantees of a quick return to the normal employment conditions necessary to maintain current apprenticeship numbers.
What can be done?
The wage subsidies announced by the Australian government are a great start to maintaining current apprenticeships. Many employers will be eligible to access the JobKeeper payment to pay apprentices A$1,500 per fortnight.
Businesses ineligible for the JobKeeper payments, may be able to access the Supporting Apprentices and Trainees program. This program was announced in early March and means the government will pay employers up to 50% of an apprentices wage.
However, these measures only help current apprentices and don’t allow new apprentices to move into the system. Also, they only last six months. We need to begin planning to make sure apprentices stay working while offering opportunities for new apprentices following the coronavirus response.
One way to do this is to support education institutions to offer training to out-of-work apprentices. This is difficult during current restrictions because online learning may not be appropriate for many apprenticeships. But education institutions, particularly TAFEs, can offer simulated work environments.
This will allow any out-of-work apprentices to gain valuable training and work towards meeting qualification requirements.
Read more: JobKeeper payment: how will it work, who will miss out and how to get it?
Intermediate labour market programs can also help keep apprentices in work while the job market remains weak. These programs have traditionally been used as a bridge to employment for the long-term unemployed.
They provide actual work experience and usually involve working on projects that have a community benefit. Work should start now to ensure such programs are ready to be deployed if needed.
It is vital to make sure we keep apprentices enrolled and connected to workplaces. If we don’t, we risk causing problems that will last beyond the current period and impact the lives of Australia’s young people and the economy.