Download a lost generation of apprentices

OPINION:
A LOST GENERATION OF APPRENTICES
1 October 2009
Australia has been relatively unscathed by the global financial crisis that has ripped
through many industrialised countries, sending unemployment to enormously painful
levels.
There is now growing confidence that unemployment in Australia will peak below 7 per
cent instead of the 8.5 per cent forecast in the May Budget.
The stabilising of the labour market has helped to overcome fears of job losses, which
has been crucial to the rejuvenation of consumer confidence and spending.
But before we start popping the champagne corks, there needs to be a sombre
recognition of the silent victims of the economic downturn: The thousands of apprentices
that have had their indentures cancelled.
The decline in apprenticeships in the building industry has been devastating. It greatly
exceeds the unemployment rate among other workers. Many young people embarked
on their three or four-year apprenticeship looking forward to a rewarding career in
building or fitting out homes, offices, industrial buildings and renovations.
Most builders, electricians, plumbers, carpenters, tilers, plasterers, renderers, glazers,
joiners started their career as an apprentice. The current generation of apprentices has
had their career cut short. It is not only a savage blow to apprentices, but also
represents a massive wastage of ‘human capital’.
Because the number of apprentices in training declines when building activity declines,
builders and contractors usually face shortages of skilled labour when activity moves into
recovery.
From an industry perspective, investment in apprenticeship training should be occurring
precisely when industry activity is contracting. But builders and trade contractors are
forced to hand back apprentices or cancel indentures when their work turns down.
The downturn will not last forever and business and governments need to be preparing
for recovery.
With housing showing signs of turning the corner and investment in mining
infrastructure, ports, energy supply, communications, water and transport set to lift over
the next 12 to 18 months, there is every chance Australia will see the emergence of
skilled labour shortages. This will re-ignite inflationary pressures and put a match under
interest rates.
Many of the apprentices in the building industry are employed by smaller and mediumsize businesses that just cannot hold onto apprentices indefinitely. But action taken now
to curtail further erosion of apprentices in employment and training would place the
industry in a much stronger position to manage the upturn in building activity.
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Federal and state governments have programs that seek to increase participation by
young people in apprenticeships. The May Budget consolidated a number of federal
incentives into a single-stream program, New Tools for Your Trade Payment.
But if we are going to avoid the loss of a generation of young apprentices, more effort is
needed to encourage small business to keep apprentices employed over the next 12
months, prior to an anticipated pick-up in the level of building and construction activity.
One possibility would be to make the Newstart Allowance payable to small business
employers of 1st and 2nd year trade-based apprentices in Certificate II and Certificate III
courses. The Newstart Apprentice Allowance would be worth about $3000 and could be
payable monthly in arrears over a period of 13 weeks to employers of a 1st or 2nd year
apprentice that had been employed for a period of at least three months.
The Newstart Apprentice Allowance would run until mid-2010. The cost of the allowance
for small business employers of 1st and 2nd year trade-based apprentices would be about
$250 million for the next 9 months. Compared against the total spend of $42 billion on
the Nation Building & Jobs Plan, it looks a high, value-for-money proposition.
Since the Australian Government would have to bear the cost of Newstart Allowance
when apprentices seek paid work (after having lost their apprenticeship), the additional
cost of the Newstart Apprentice Allowance should be modest.
But of real merit, the Newstart Apprentice Allowance aims to keep apprentices in work
and training, avoiding the dislocation and cost caused by the loss of the apprenticeship.
For years, the industry has experienced chronic shortages of skilled labour. This has
boosted earnings and encouraged a new generation of young people to venture into an
apprenticeship in a trade. But now, many have had their hopes dashed.
It is not too late for Government action to prevent the many other apprentices turning
their back on a trade-based career, possibly forever.
Shane Goodwin
Deputy Managing Director
Housing Industry Association
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