Updated: Aug 26, 2020
By Josh Williams, GAN New Zealand Coordinator and Principal Consultant, Skills International
It’s quite a year we are all having. As I write this, New Zealand is in a second partial lockdown attempting to stamp out COVID-19 for the second time. So far, so good, but our ‘team of 5 million’ is working together again to prevent a second wave such as we have witnessed in a number of countries now.
We are also acutely aware and concerned for our global neighbours, mostly very far away, who have suffered more and worse than we have. We have had relative success to date with the health aspects of the COVID crisis, but we certainly share the spectre of economic downturn, job losses, and the generational impacts of rising debt.
Just eight months ago, January, feels like the ‘olden days’. Things were very different. Skills shortages were acute and widespread. Unemployment was at record low levels, with many industries looking to fill skills and labour shortages and address infrastructure issues. One symptom of this was vocational education providers struggling for numbers as the thriving labour market attracted more young people straight into work.
Our Prime Minister Jacinda Ardern and her Labour-led government had shown a consistently strong interest in skills and training issues, influenced by the global ‘future of work’ debates. Automation, technology change, gig economy, aging workforce: New Zealand ticks all those boxes. In particular, Jacinda Ardern described apprenticeships as a “no-brainer”, because of the way they combine earning and learning, launch young people into successful careers, and develop skills in productive jobs in the areas the economy needs.
That January, our Government announced $12 billion for 'shovel ready' infrastructure upgrades. In those days, our main concern was where we would find enough skilled people to wield the shovels. The Government could never have dreamed that just seven weeks later it would announce a $12 billion COVID-19 wage support package.
That same month, our Building Minister also celebrated record numbers of Construction apprentices, and that total apprentice numbers had eclipsed 50,000. That was certainly cause for celebration, because it meant we had finally recovered from the near-halving of apprenticeship numbers that followed the 2008 global financial crisis (GFC) and associated recession. It is worth noticing that it takes much longer to gain apprentice numbers than it does to lose them.
Returning to today, it’s pleasing that government and industry players alike in New Zealand seem determined not to make the same mistake as we did after the GFC. Intuitively, most seem to grasp that vocational education will play a central role in our respective economic recoveries. Here, the picture is not all rosy, particularly in the hardest-hit services industries, but it is not all gloomy either: apprenticeship sign-up rates are holding up overall and have increased in construction, specialist trades, and the primary industries, compared with 2019.
In my view, downturns are when you should double apprentices, not halve them. Apprenticeships keep people in jobs while upskilling. It’s when industries have time to train. Apprentices are not the most productive workers but they're also not the most expensive. Training and qualifying apprentices is always a service to an industry, and in tough times they are a tremendous service to families and communities.
Within its COVID response package, our Government’s 2020 Budget included a $1.6 billion package for skills and vocational training, with a major focus on retaining and supporting our workplace trainees and apprentices. Depending on where you are reading this that number might look quite small, but in our context it represents about 10 years’ worth of industry training subsidies in a single stroke.
The mix of skills we need will change as the economy is reshaped, and importing skilled migrants may not be the easy option for quite some time. It shouldn’t have taken a crisis, but it’s heartening to see so much attention and investment going into workforce skills, and that retraining and redeployment initiatives are being supported, particularly at a regional level.
The biggest item though was direct wage support for the employers of first and second year apprentices. Business groups and industry bodies have long argued that the government ought to offset employers’ direct costs of training apprentices, especially when they are achieving the same formal qualification outcomes as more generously subsidised institutional learners.
Direct employer incentives can worry policy makers, if they sense that public money is subsidising private business. Yes, there are risks around gaming and dependency that require careful policy design. But as long as learners are achieving the same quality assured qualifications, the only difference is they are doing so inside the labour force rather than outside it. For good measure their employers also throw in commercial competence, labour market match, reduced student debt, and productive employment.
An apprentice’s well-equipped tertiary institution is a real workplace, but the time and teaching and capital costs are borne by their employer, who makes that investment despite being unlikely to see the direct return in terms of skills and productivity gain. If their business does well, that’s good for the economy, and we should reward employers that contribute to upskilling the workforce. If their learner does well, that’s also good for the economy. Right now wage subsidies are being applied to businesses whether there is formal upskilling or not, so it makes sense to use such incentives to support those employers who are contributing to workforce development, and to encourage more employers to join the training effort.
For all of these reasons, advantages of workplace learning, the need for industry leadership, and the steep challenges ahead, the time is right for us to be establishing a New Zealand country network of the Global Apprenticeship Network. As an outward looking nation with eye on the bigger picture, we’re keen to be part of a collective effort and global mission to upskill our workforces, for the prosperity and wellbeing of people in New Zealand and around the world, now and long after the crisis is over.