Apprentice costs tallied up
A forthcoming NCVER report examines the cost of training apprentices to certificate III in the plumbing and electrical industries. The research draws on a small number of detailed case studies.
When deciding whether to undertake training, employers and individuals weigh up the costs and benefits. Reported benefits of training are both tangible and intangible and employers involved in the research reported receiving both.
Similar patterns of costs were found throughout all case studies, in that employers bore most of the costs, which were mainly made up of supervision of the apprentice followed by apprentice wages. As apprentices moved through their training, costs to employers were largely apprentice wages, with supervision decreasing.
Costs vary from approximately $160 000 to $250 000 for employers, but these are balanced by the productive output of apprentices plus intangible benefits (such as loyalty to the company and the company knowing the quality of the training). Apprentices also incurred costs, the largest component being the opportunity cost of working on an apprentice’s wage rather than getting the full wages of an unskilled worker. Apprentices also face the cost of tools and tuition fees.
The research involved employers who hired apprentices directly and those who hosted apprentices from a group training company. Employers reported high levels of satisfaction with both methods. One employer felt directly hired apprentices were more loyal to the company and therefore less likely to be poached by other employers. Another, who used a group training company, did so because of the flexibility: ‘we can use them as a pool of people so that when I am in trouble and I need five extra guys I can rely on the GTOs [group training organisations]’.
This important research establishes the financial costs incurred and the variations of cost throughout the apprenticeship, including any difference brought about by hiring arrangements. It provides a good foundation for thinking about how policy levers—wage incentives, for example—can best be used.
Industry partners—the National Electrical and Communications Association, Plumbing Industry Association and Group Training Australia—guided the research.
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