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IBSA RESPONSE TO A SHARED RESPONSIBILITY: APPRENTICESHIPS FOR THE 21ST CENTURY IBSA welcomes the opportunity to respond to the Expert Panel’s report A shared responsibility: Apprenticeships for the 21st Century. IBSA commends the report’s vision for a future system that supports high quality employment and training both in the traditional trades and non-trade vocations. Overall, we view the recommendations as a positive step forward in addressing the issues facing Australia’s apprenticeship and traineeship system and the right direction to meet the related skills challenges in our economy. However, we note that the eligibility for government supported places of an increasing number of older apprentices as well as people seeking apprenticeship with higher level qualifications may present a future national challenge. We agree that the themes highlighted in the report - the model of skills formation, the leadership and sustainability of the system and the interaction with awards and workplace relations - capture the essential elements for the reform directions. BACKGROUND In its role as an Industry Skills Council, IBSA undertakes an annual environment scan for its six industries: Business Services, Cultural & Creative, Education & Training, Financial Services, Information & Communications Technology, and Printing & Graphic Arts. In representing these industries, IBSA recognises that a vibrant and innovative society is driven by a balanced contribution from the economic, social and cultural and creative dimensions of our nation. The environment scan engages with industry stakeholders and utilises statistical data on each of these industries, their training arrangements and workforce participation. Through this process, skill needs and workforce development priorities are identified for Australia’s innovation and business industries. The training packages are refined to meet the needs of industry and we identify investment priorities for Australia’s VET system. The 2011 IBSA environment scan notes that around 305,000 students undertake Vocational Education and Training programs from IBSA Training Packages and that the Business Services Training Package is the most highly used of all national Training Packages with a 13% increase in usage over 2009-2010. IBSA’s apprenticeships are mostly in the Printing industry with some states also implementing a number of Telecommunications qualifications as apprenticeships. The vast bulk of employment based training for IBSA industries is under the traineeships. The data indicate that there is a massive training effort across IBSA industries at the Certificate II level, totaling over two million trainees over the five years between 2005 and 2010. These are in the main, Certificate II in the business stream, qualifications which provide basic, generic skills for the administration workforce suggesting that a qualification at this level covers industry’s job skills needs for entry level, retraining on-the-job and older returning-to-work trainees. The numbers also include the entry level, retraining and older trainees’ skilling in the financial, information technology and cultural and creative industries. The following tables show apprenticeships and traineeships undertaken in the IBSA industries across age levels between 2005-2010: IBSA industries’ apprenticeships and traineeships at Certificate II level1 19 years and under 20 to 24 years 25 to 44 years 45 and over Total 635,218 508,820 734,445 274,382 2,152,865 In comparison with other industry areas, IBSA industries rank third after those in the Transport and Logistics and Services Industries. In the 19 years and under age group, the Services Industries have nearly three times higher numbers than IBSA industries which are second highest ranking. In the 20 to 24 years age group, the Services industries are nearly double IBSA and in the 25 to 44 years group, Services falls just behind Transport and Logistics which has nearly 1 million apprentices and trainees. In the mature age group Transport and Logistics leads with over half a million, then Services followed by IBSA. IBSA industries’ apprenticeships and traineeships at Certificate III level 2 19 years and under 20 to 24 years 25 to 44 years 45 and over Total 33,346 45,356 33,781 5,282 117,765 The picture changes significantly at the Certificate III level. Here the traditional trades which include Manufacturing and Construction and Property Services lead over Services Industries which totals well over one million but is only half of Manufacturing which is over two and a half million. IBSA industries across all age groups are significantly higher than five other trades and non-trades areas, but well behind more traditional trades in Agrifoods, Construction and Property Services, Electrotechnology and Energy, Manufacturing, and Services (Hospitality). IBSA industry trainees at this level start to specialise for higher skill requirements in specific areas of administration (including legal and medical), sales, customer contact, finance, cultural and creative industries, IT and telecommunications. At the Certificate IV or Diploma level, IBSA industry traineeships provide critical leadership and supervision training in specific areas such as frontline management and leadership roles. CONTRIBUTION TO THE ECONOMY Australia’s economy is now service based, with service industries accounting for around 80 percent of total gross added value. This contribution is up by more than 20 percent of contribution two decades ago. 1 NCVER Traineeships and Apprenticeships Collection, 2005-2010, March 2011 2 NCVER Traineeships and Apprenticeships Collection, 2005-2010, March 2011 Business Services contribution to the economy makes it the largest industry in Australia with total national income of approximately $100 billion. It has been one of the fastest growing service industries in recent years, benefitting from long term trends towards the outsourcing of business functions such as accounting, marketing, customer response and contact and IT support throughout other industries such as manufacturing. The Financial Services industry is as important to Australia’s economy as the Mining sector, the industry traditionally associated with Australia’s economic wellbeing, and its performance also delivers growth in related sectors such as communications, property and business services. The other IBSA industries which are growing in the economy are the Information and Communications Technologies industries which account for an estimated revenue of around $82 billion across five major sectors – IT services, systems integration and software support, Internet services and telecommunications, software development, distribution of software and hardware and manufacture of ICT products and components. While convergence between the telecommunications, entertainment, printing & graphic arts and IT industries has enabled new product development and stimulated the provision of new services, the key areas of industry impact are in financial and business services. IBSA data on Apprenticeships and Traineeships While prioritising Government investment to priority industries is an important objective, an analysis that emphasises volume can overlook the importance of small-volume niche training to specific industries. Traineeship training is of two types – high volume in business and financial services and small volume, niche training in areas such as the cultural and creative industries where, for example, small numbers of highly skilled operators are trained in broadcasting and are critical to that industry. There are specific qualifications even in the high volume areas that are recognised for their critical impact across businesses and organisations, for example Certificate IV in Frontline Management, which, has around 73,000 trainees annually and is a vital qualification for the development of supervision, leadership and management skills. The next level of leadership and management skill development is the Diploma of Management with approximately 3,500 trainees annually, quite significant numbers. It is of note that the importance of traineeships to the Finance Industry, while not as significant in numbers as Business Services, skills the feeder group to the more advanced financial skills required by the industry. ISSUES IN RESPONSE TO THE REPORT IBSA is keen to have more people undertake skills training to equip them to access the new opportunities arising from the convergence of industries and occupations. We note that the data show apprenticeship and traineeship commencement activity has grown thanks to the Australian Government’s investment in training. IBSA stakeholders have serious concerns that traineeships in the business services areas have been undervalued. The IBSA industry environment scans indicate that skills needs have been reported in a number of key areas such as general business administration and occupations associated with the telecommunications sector and the NBN build and implementation, as well as in a number of financial services areas. NCVER data indicate that traineeships most affected by the proposed changes to eligibility in IBSA industries would be key business areas such as administration, customer contact and frontline management. IBSA stakeholders argue that these and other business, finance and technology traineeships provide important entry pathways and build vital relationships between employers and new workforce entrants. A core function of the Australians Apprenticeship system has been preparing people for entry to the workforce or for reskilling into an alternative industry; this function will be seriously affected with the redefinition of eligibility for Australian Apprenticeships employer incentives. The base skilling function of the apprenticeship and traineeship system, whether in trades or other areas, is critical in providing stable, reliable employment-based skills outcomes for both employers and individual trainees whatever the completion rate. In addition, it is worth noting that the lack of certification may not necessarily equate to incomplete competency achievement. A strong jobs market may also mean that significant numbers of commencements drop out or they may be promoted. Moreover, the importance of the Australian Apprenticeships Employer Incentives to supporting small and large enterprises to systematise and align the skilling of their new, base level employees should not be underestimated. The possible impact of the proposed eligibility criteria could well be a reduction in entry level workforce skilling with significant effects likely to be felt a number of years out. This effect would be broad and across all industries that use business and financial services skills and training, and to a lesser extent but with increasing importance to the introduction of the Australian Government’s National Broadband Network, information technology skills. A specific example would be the high volume Customer Contact skilling, primarily focused on delivering call centre skills, with about 25,000 people annually formalising their skills at Certificate II or III levels, used extensively across all industries, particularly financial and information technology businesses as well as in the service areas of government departments. The same effect applies to core business administration skills with nearly 50,000 people annually undertaking traineeships across all industries. Enterprises would not be able to support the same level of systematic training without the range of supports currently provided by governments. One result is likely to be the reduction of upskilling of people in post traineeship leadership roles. Large enterprises believe that the traineeships provide a range of skilling pathways – attractive to both employers and workers. They believe that if the proposed changes are implemented, a number of key groups would be adversely affected, including school-based trainees, other disadvantaged groups, mature workers considering retention in the workforce, women and indigenous workforce entrants. Their concern is also heightened about a negative effect on regional employment and skilling opportunities. Early indications from IBSA’s Enterprise Based Productivity Places Program are that the demand for telecommunications skills, while not historically high, is also going to peak around implementation of the Australian Government’s National Broadband Network. Exclusion of traineeships in this area may make it difficult for the Australian Government to achieve its policy objectives. We put forward the following comments in relation to the recommendations: 1. Establishment of a National Custodian to oversee reform that will ensure Australia has a high quality Australian Apprenticeships system that: responds to the needs of the economy supports nationally consistent standards for employment and training of apprentices and trainees focuses on retention and completion of apprentices and trainees supports high quality skill development to ensure all apprentices and trainees have well rounded and highly respected skills required by the economy. IBSA supports the recommendation, agrees that the current system is complex and that the systems across the states and territories need to be aligned, truly national and focused on quality. The initial taskforce proposed led by an independent chair and having a representative from each state and territory government, a union and an employer group is a positive model. The reform agenda of such a body would need to be highly focused and time limited in order not to simply become yet another body in an already crowded landscape 2. Enhance the quality and effectiveness of the Australian Apprenticeships system by clarifying the roles and consolidating the number of stakeholders in the system, ensuring that services are provided by the most appropriate provider, duplication of service delivery is reduced and administrative processes are streamlined. IBSA supports the recommendation and suggest that the National Custodian be tasked with this role also, working with governments, industry, unions and other key stakeholders. 3. Establish a formal accreditation process for the pre-qualification and training of all employers of apprentices and trainees to ensure a nationally consistent minimum standard of high quality employment and training is provided. We also support the establishment of an Excellence in Employment Scheme to recognise and reward those employers who have consistently demonstrated their commitment to excellence in training apprentices and trainees. This is a contentious recommendation and needs to take into account a number of factors. Firstly, we note that an accreditation process has the potential to alienate small business and as a consequence reduce apprentice / trainee numbers. IBSA emphasises that low completion rates are not always as a result of a breakdown in employer–apprentice relationships but occur for a variety of reasons. Retaining the number of employers willing to take on apprentices or trainees is imperative; imposing substantial additional bureaucracy on employers could result in a reduction in the pool of available employers interested in training. Moreover, we have concerns that the process may be overly bureaucratic and not add the desired value. This could be a serious issue in larger and more geographically dispersed States and could also result in impeding the employment of young people. Further, IBSA notes the overlap with the role of the Australian Apprenticeship Centres which actively educate employers about their responsibilities and their dealings with RTOs. We would not support duplication of existing awards and recognition schemes. The establishment of another excellence recognition program needs to be considered taking into account the many programs that already exist. 4. Establish structured support for employers to provide high quality employment and workforce development experiences for eligible apprentices and trainees. The focus of Australian Government support should be on assisting employers to provide high quality on-the-job and off-the-job training through support services such as mentoring and pastoral care. IBSA supports the recommendation but is concerned with the definition of ‘eligibility’ consistent with the introduction to this response. There may need to be some consideration of how a broader service may work with employers who prefer to employ directly rather than through Group Training organisations. 5. Redirect current Australian Government employer incentives to provide structured support services to eligible apprentices and trainees and their employers in occupations that are priorities for the Australian economy. While a wide range of occupations should be trained through apprenticeship and traineeship pathways, Australian Government support should focus on occupations that have tangible and enduring value for the economy – both in the traditional trades and the newer forms of apprenticeships and traineeships, such as community services, health services and information technology. IBSA is concerned that Recommendation 5 will have a major impact on industry access to business services skills that are required and used across all industries and businesses. IBSA has concerns in relation to the definition of ‘eligibility’. It should be noted that the majority of incentive payments are paid on completion which strongly favours traineeships over apprenticeship based on the duration of each. However the compliance demands are now more onerous on employers and to introduce a new eligibility system would clearly disadvantage some critical occupations. Apprenticeships and traineeships are particularly important in building the base skills in entry level workforces, skills that are transferable and increase employability for the individual along with reliability for the business. We are concerned that proposed changes to eligibility for Australian Government employer incentives would be very negative for these functional business skills in non-trade areas of Australian industries. IBSA is concerned that the proposed structure for eligibility for the Australian Apprenticeships system rests on the Specialised Occupations List that has been formulated for assessment of migration transferability. We believe that the Specialised Occupations List is not the appropriate list for the purpose of assessing entry and post entry industry skills needs particularly in the non-traditional trades’ areas that underpin the Australian innovation economy. Specifically highlighted in the list of ineligible occupations are IBSA industries’ clerical and administrative workers, occupations that cut across all industries. In addition, the report notes that females are the highest percentage of the non-trades workers. The proposed change would therefore have a significant impact on female participation in the workforce, including women returning to the workforce who heavily utilise the Certificate III in Business. IBSA would like to see more detail around the proposed solution “to mitigate by implementing strategies to assist females to enter non-traditional apprenticeships and traineeships.” Raising the status of apprenticeships as a valued career choice for females has been an ongoing objective for at least two decades with only very modest success to this point. IBSA industries provide valuable, non-traditional trade choices for both males and females which will boost participation and pathways development for the individuals, businesses and the economy. 6. Reinforce the need for a shared responsibility for the Australian Apprenticeships system by establishing an Employer Contribution Scheme in which employer contributions will be matched by the Australian Government. Employers who meet defined benchmarks for training and support of eligible apprentices and trainees would have their contribution rebated, either in part or in full. IBSA understands that this recommendation is not supported by the Minister. 7. Facilitate a cooperative and flexible approach by governments and industry bodies to allow for the continuation of both training and employment of apprentices and trainees during periods of economic downturn. Early intervention should be a key element of this approach. Support for a range of measures to be in place until economic recovery occurs could include: reduction of work hours offset by additional training increased off-the-job training placement with other employers within the industry increased mentoring and support. IBSA supports the recommendation; counter-cyclical measures will ensure labour flow. 8. Formally regulate the quality of VET in Schools within the VET system to enhance the consistency and quality of training across all jurisdictions and to recognise the potential of VET in Schools as a pathway into an apprenticeship or traineeship. IBSA supports the recommendation and suggests that the new Australian Skills Quality Authority is the appropriate body to undertake this. IBSA notes that VET in Schools and apprenticeship/traineeship pathways are sometimes incorrectly viewed as having the ‘same outcome’. While this is a definitional issue, it has implications for State funding. 9. Increase national consistency in preparatory training by directing the National Quality Council to develop definitions for pre-apprenticeship and pre-vocational training. IBSA supports the recommendation. 10. Provide additional support for apprentices and trainees who face specific challenges, such as: Indigenous Australians disability located in regional or remote Australia having poor language, literacy and numeracy skills. Australian Government support will be provided to these apprentices, trainees and their employers to assist in overcoming barriers to participation and completion of their apprenticeship or traineeship. Support will be through the provision of tailored structured support services and the continuation of some current Australian Government employer incentives. IBSA supports the recommendations around improving the preparation for apprenticeship candidates and providing support for foundation skills and flexible opportunities for those with special needs to help develop careers in remote or regional areas. However, the report is deficient in assessing the success or otherwise of existing arrangements and what sort of increase in benefit a marginal increase in support would provide. The report acknowledges the variability of return on Australian Government investment in training and recommends that eligibility for financial support and investment in apprenticeships and traineeships should be linked to high priority areas for the Australian economy and linked to equity objectives. While IBSA agrees that traditional trades are a high priority, we wish to emphasise that business, financial, information technology and associated services play a critical role in Australia’s economy and support enterprises across all industries. 11. Implement a strategy to raise the status of apprenticeships and traineeships including promotion as a valued career choice for both males and females. This should be led by the Australian Government, in consultation with state and territory governments, industry bodies and unions. The National Custodian, when established will lead the ongoing effort to raise the status of apprentices and trainees. IBSA supports the recommendation. We note, however, that a significant measure of status is engagement and that enhancing engagement has the effect of improving status. IBSA looks forward to a strategy that rationalises current activities such as media campaigns, advertising, State and Territory and National Training Awards programs etc to enhance the status of apprenticeships and trainees. 12. Promote a culture of competency based progression in apprenticeships and traineeships, in partnership with industry bodies and employers. Additionally, a greater acceptance and achievement of competency- based wage and training progression should be supported by all stakeholders. IBSA supports the recommendation. 13. Improve the implementation of Recognition of Prior Learning and Recognition of Current Competence and support provisions for such recognition in modern awards to ensure that flexibility and mobility are supported. IBSA supports the recommendation. 14. Support a review of apprenticeship and traineeship provisions, wages and conditions by Fair Work Australia, considering: the removal of barriers to competency based wage progression in modern awards apprentice and trainee award pay compared to going rates of pay age, diversity and circumstances of commencing apprentices and trainees allowances (travel, tools, clothing, course fees) cost to apprentices and trainees of participation in an Australian Apprenticeship part-time and school-based arrangements recognition of pre-apprenticeship and pre-vocational programs supervision ratios for apprentices and trainees. IBSA supports the recommendation and believes that Fair Work Australia will address any sensitive issues around payments. SUMMARY IBSA believes that there is a critical nexus between entry level skilling and better future industry employment. While industry uses different parts of the training system for different purposes, the systemic support for apprenticeships and traineeships in business, financial and information technology services continues to support the Australian Government in achieving its skills, productivity and workforce participation targets. We commend the Expert Panel for its recommendations to address, simplify and improve issues within the system to help support employers and individuals succeed in their skilling and productivity outcomes. We wish to highlight the crucial role of the broad services industries in the innovation and business economy and encourage the panel to reconsider the criteria for eligibility for structured support.
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