Rt Hon Helen Clark
Prime Minister

ADDRESS TO

Port Nicholson Rotary Club Breakfast

Modern Apprenticeships

Park Royal Hotel
Wellington

7.30 am

Wednesday, 22 March 2000

The Port Nicholson Rotary Club has long taken a particular interest in skills training.

It is therefore appropriate at this Prime Ministerial breakfast that I outline to you an initiative the government is taking to boost the level of skills in the workplace.

Some years ago industry training was given a radical shake-up. The Apprenticeship Act went. The Industry Training Act came in 1992.

Ever since we have heard quite contradictory reports about the level of skills training

On one hand we are told that the numbers in industry training have never been so great.

On the other, families complain that they have never found it so hard to get young people into work-based training, and industry is expressing concern about skills shortages.

What I know is that whenever I mentioned during the election campaign that Labour in government wanted to get more young people into apprenticeships, the applause nearly brought the house down.

Apprenticeships traditionally provided the route to secure employment or self-employment.

The perception, and in my view the reality, that well rounded, work-based trade and technical training is much harder to get into has concerned many families who want their young people to have good work prospects.

So what lies behind the conflicting facts and figures?

In the 1990s there were around 27,000 apprentices at a time.

The defenders of the industry training system of the ‘90s point to numbers of industry trainees now running at about 56,000, of whom they say some 24,000 are seeking to gain the National Certificates which replaced the traditional “apprenticeship orders”.

That latter figure itself would suggest that the numbers in apprenticeship-style training are down.

In addition, it remains unclear how many of the industry trainees overall actually complete their training.

The financial incentives on industry training organisations have encouraged the signing up of training agreements, rather then the ensuring of completions.

Anecdotal evidence suggests that completion is uneven. During this year, Skill New Zealand will collect data on completion rates to give more accurate information.

My own guess is that overall more people are doing short and more specific courses, and fewer people are graduating with well rounded trade qualifications.

What we do have evidence of is the extent to which young people are missing out on trade training opportunities.

During the 1990s, industry trainees actually became on average older.

In December 1999 only ten per cent of trainees in structured industry training were aged 16 – 19 years, and only 24 per cent were 20 – 24.

Two-thirds were aged 25 years and older. In some industries, there are high numbers in the forty-plus age group.

So the impression of parents that it is hard to get their school leaver children into apprenticeship-style training is not wrong. It is hard.

Employers these days tend to offer industry training to workers who have been employed for several years and have proved their reliability, rather than offering the traditional pattern of apprenticeships to school leavers.

One can’t blame employers for taking that course, but from a public policy point of view government has to consider what it might do to increase opportunities for young people.

The reasons why are obvious.

In the first place, idle hands make mischief. No-one likes seeing school leavers drift from dead end scheme to dead end scheme without prospects.

That is an issue of justice. But more skills training for young people is also an economic necessity. How ridiculous it is to see so many unemployed or under-employed when our industry sectors are all reporting greater difficulty in finding skilled staff.

A number of indicators are now pointing to skills shortages.

The December 1999 NZIER Quarterly Survey of Business Opinion reported that 35 per cent of firms were finding it more difficult to find skilled labour.

A survey of Wellington manufacturers late last year found more than half reporting skills shortages.

The same trend is clear in Auckland. The Northern Employers’ and Manufacturers’ Association surveys manufacturers each month. In December, 33 per cent were finding skilled staff increasingly difficult to recruit. That had risen to 45 per cent in January, and the latest information on the February survey suggests the number is up to 56 per cent.

The good news is that the economy is growing. What would be unfortunate would be the hampering of that growth by avoidable skills shortages.

This country has waited for sustainable growth for a long time. It would be a tragedy to have it nipped in the bud because we are not giving people the chance to be part of the skilled workforce.

The huge importance of boosting participation in skills training and opening up opportunities for young people in employment was stressed by Labour in opposition and is being given high priority now we are in government.

We promised a new Apprenticeship Act and we aim to introduce it this year.

What we are launching today is the pilot scheme for modern apprenticeships which will be introduced nationwide from early 2001.

The aim is to have up to 3000 new modern apprenticeships in place by early 2002.

The Modern Apprenticeship Programme provides a new way into high quality, work based training. It is aimed mainly at 16 – 21 year olds.

We expect that the potential apprentices will have gained some qualifications at school and be ready to study at levels three and four on the National Qualification Framework.

What will distinguish the modern apprenticeships from other tertiary education with a work based component will be that the apprentices will be employed.

The issue the government has had to tackle is the best way of getting these apprentices into work.

This new Modern Apprenticeship Programme does not propose financial incentives to take on apprentices. The evidence from such a scheme in the early 1990s was that ninety per cent of the employers who received the incentive would have taken on an apprentice whether the incentive had been available or not.

So we have opted for another approach.

The government will be funding the establishment of Apprenticeship Co-ordinators.

 Their job will be to screen potential apprentices and arrange work placements with employers. Young people without employment will be able to approach co-ordinators to arrange their employment and training.

 Co-ordinators will work with employers and apprentices to produce an individual training plan, and, where necessary, manage the training arrangements and ensure that the training leads to assessment for credits towards a complete national qualification.

In this way we aim to make it as easy and straightforward as possible for employers to take on apprentices.

 Co-ordinators will ensure that systems are in place to guarantee training quality

 They will support the apprentice by providing advice and resolving problems as they arise. For example, if an employer no longer could provide work for an apprentice, the broker would arrange for the apprentice to complete a National Certificate with another employer.

 They will also be accountable for outcomes for Maori and Pacific peoples. This government is committed to moves to close the gaps between Maori and Pacific peoples and other New Zealanders. Trade training was traditionally a route for upward mobility for Maori and can be again.

The co-ordinators could limit their activity to placement of the apprentices, oversight of the training, and mentoring – or they could actually directly employ potential apprentices and then hire them out to firms for work based training.

Apprenticeship Training New Zealand is a good example of the latter options. With strong support from the relevant industry training organisations, industry, and the Engineers Union, it has played a pioneering role in establishing new apprenticeship arrangements.

The new co-ordination scheme will come under the oversight of Skill New Zealand. It will administer the payments for the new service to the co-ordinators. The co-ordination services will be free to apprentices. In addition, the training subsidy currently distributed through industry training organisations will be available.

The co-ordination costs are estimated at $2,200 per apprentice a year. In addition there will be initial one-off set up costs for the co-ordinators so that they can engage with employers and encourage them to participate in the new programme.

In the pilot phase this year we plan for 500 new apprentices, and aim to increase to 3,000 a year by 2001/2002.

We have allocated $5.164 million in 2000/01 for the new co-ordination function. The costs for 2001/02 are estimated at between $10 and $11 million, and thereafter at $12-13 million for the 3,000 apprentices.

That amounts to between $27 million and $29 million over the next three years.

I am really proud of this policy because I believe it meets two very important objectives.

In the first place it opens up opportunities for young people to work-based training. Last year I met apprentices employed by Apprenticeship Training New Zealand. Without exception, they were thrilled to have the opportunity to train and were very optimistic about their future employment prospects.

And secondly this programme aims to start plugging the skills gap. It is infuriating to see our economy trying to grow, but being hampered by skills shortages.

We can do something about that. This announcement today is our first step in addressing the problem. Coming as it does on our 103rd day in office, it is clear how high a priority raising skill levels and providing opportunity for young people has for this new government.

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