The Government is investing $1.6 billion in trades training and apprentices, which will go a long way towards removing the barriers to training and supporting the sector
Removing the barriers to training – By Warwick Quinn
The impact of the Covid-19 lockdown and the Government’s response continues to be, to use a now well-used term, unprecedented. In this column, BCITO chief executive Warwick Quinn provides an update on the Government’s response to boosting apprenticeship numbers and what this means for the construction sector.
We know that apprentice numbers are tied directly to the health of construction firms, mainly residential construction firms. As the largest sector of construction (and the largest employer of construction apprentices, with over 80% being BCITO trainees) it is a good barometer when it comes to considering how construction activity and training is likely to react to the current circumstances.
The amount of existing work and the ongoing confidence in the supply of future work is the crucial determinant in the willingness of employers to take on apprentices. Without Government intervention, we anticipated there would be a significant decline in apprentice numbers over the next 6–18 months, but the extent of that decline, and the recovery time, is difficult to assess with any certainty at this stage.
We know that for every construction employee that is laid off, four apprentices are. During the GFC the construction workforce shrunk by 8%, but apprentice numbers fell by 32%. With economists predicting a reduction in construction activity (and the workforce) of anywhere between 8 and 12% this time around, the effect on training would genuinely be significant.
We expect consumer confidence in the housing market to be negatively affected, which will result in residential construction being similarly impacted. Trainee numbers will be an early casualty and it is difficult to see how this can be avoided (although we hope we are wrong). The property market often seems to hold up well initially, as it did in 2008 and 1987, but a year on is when it starts to bite. This is due to the length of construction transactions and the degree of precommitment. Once these have run their course, work can get thin on the ground.
The challenge, therefore, is to try and retain (or keep a connection with) the number of apprentices currently in the system, not to waste their learning to date, and have a capable and trained workforce ready when the recovery is underway.
Accordingly, we wrote to Government ministers sharing these views, and with the Budget on 14 May we saw their response. Investing $1.6 billion in trades training and apprentices is truly unprecedented – there’s that word again – and, along with $5 billion for 8000 new public houses, will go a long way to removing the barriers to training and to supporting the sector.
The two main planks of the Government’s policies are no fees for targeted trades training and apprenticeships, and the employer financial support for training an apprentice – the Apprenticeship Boost scheme.
All apprenticeships (i.e. a Level 4 programme over 120 credits) are now free from 1 July 2020 until 31 December 2022. Some targeted sectors have other programmes that are fees-free as well and construction is one of those. Virtually all BCITO apprentices and trainees will not be charged fees from 1 July and this applies to current apprentices and new ones.
The Apprenticeship Boost scheme runs for 20 months from 1 August 2020. It is administered by the Ministry of Social Development (MSD) and is designed to support employers who have an apprentice in the first and second year of their apprenticeship. An employer is eligible to receive up to $12,000 for a first-year apprentice ($1000 per month) and $6000 for a second-year apprentice ($500 per month). As the scheme runs for 20 months, the maximum support available is $16,000 per apprentice.
However, there are some conditions to the support. The Apprenticeship Boost scheme is not the wage subsidy in disguise; it is not cheap labour. The apprentice must be enrolled in an apprenticeship and show progress in their learning. The support is paid monthly. If the apprentice is not progressing, then the support will cease, and if the apprentice changes employer, the money follows the apprentice, with the new employer eligible for the balance.
Employers who train can apply for Apprentice Boost now (see link below).
Build the best model
We have been asking for support for years, particularly during a recession when training gets whacked. We now have that support, and it is up to the construction sector to do the right thing, step up to the plate and respond in kind.
We will only get one opportunity and we cannot afford to blow it. We know plenty of work is the best medicine for firms and apprentices, but maybe, just maybe, when it is thin on the ground, that firms with plenty of work on, and who don’t formally train now, will consider taking on an apprentice. This will increase the number of firms training in our sector.
If we do this, then we will have a model that will work next time.
Warwick Quinn is the chief executive of the Building and Construction Industry Training Organisation (BCITO); employers who train can apply for Apprentice Boost now at workandincome.govt.nz/employers/subsidies-training-and-other-help/apprenticeship-boost.html