Dropout apprentices costing billions

APPRENTICES and trainees who drop out could cost Australia almost $12 billion over the next decade, with small and regional businesses copping most of the pain, according to new NSW modelling.NSW Education Minister Adrian Piccoli will ask his state, territory and Commonwealth counterparts to make apprenticeship completion a national priority at tomorrow’s training ministers’ meeting in Melbourne.He released new figures showing the cumulative impact of non-completion in NSW, which trains about 30 per cent of Australia’s apprentices and trainees, would be $3.5 billion over the next decade.Employers would incur the bulk of the costs through productivity loss, administration expenses and other expenditure, while state and federal governments would also lose hundreds of millions of dollars in subsidies and incentive payments.NSW-commissioned modelling by Deloitte Access Economics has estimated the combined losses in the state last year at over $180 million. Employers lost $124 million, the state government $33 million and the Commonwealth $26 million in payments to NSW apprentices and employers.Mr Piccoli said the estimates were conservative because they were based on a non-completion rate of 36 per cent.The National Centre for Vocational Education and Training has estimated the non-completion rate for trade apprentices as 44 per cent, after allowing for people who change employers during the course of their training.Mr Piccoli said small and medium businesses and rural areas suffered disproportionately, partly because they had higher drop-out rates and partly because they had more apprentices in the first place.He said over 80 per cent of NSW apprentices worked in enterprises with 50 employees or less.Over 90 per cent of employers had less than four apprentices – almost two-thirds employing just one apprentice – and 44 per cent of businesses with apprentices were outside major cities, even though regional NSW has just 34 per cent of the state’s population.“These employers are doing more than their fair share of apprenticeship training and bearing a disproportionate share of the costs of non-completion,” Mr Piccoli said.“If no action is taken over the next decade the cost to NSW employers is likely to exceed $1.2 billion. The NSW Government would incur costs in the order of $425 million and the Commonwealth over $260 million.”Mr Piccoli said affordable, accessible and tailored options were needed to support apprentices “and their overwhelmingly small and medium business employers”.“These businesses generally don’t have a specialised human resource department or the extensive resources larger companies have. Attention should not only be focused on changes at the national level – we must also think locally.”Group Training Australia CEO Jim Barron said non-completion was the “hot-button” VET policy issue across the political spectrum.He said there were substantial knock-on effects on top of the immediate costs to employers and governments. “If a young person drops out of an apprenticeship they’re less likely to re-engage, [as is] a small business person [who] has an unhappy experience with an apprentice.”Mr Barron said governments that funded activities to address the problem – mentoring, pastoral care and information provision, for example – would recoup the investment in improved tax receipts.He said large-scale recruitment of apprentices without retention strategies was a false economy. “We have record sign-ups but we don’t have record completions.”Earlier this year Tertiary Education Minister Chris Evans said apprenticeship completion rates were appalling. This year’s federal budget included $80 million over four years for apprenticeship mentoring services, and $22 million over two years to advise school leavers about apprenticeships.“Clearly that’s a down payment in restructuring apprenticeship services that commence more, progress more and ultimately complete more,” Mr Barron said.