Research

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Research

From school to work: The role of traineeships

The Australian Traineeship System was introduced in 1985 to add flexibility to the vocational education and training (VET) system. Traineeships followed the apprenticeship principle of combining formal training with on-the-job work experience, but with a shorter training period. Thus they allowed the apprenticeship model to be extended into occupations requiring basic skills, where four-year apprenticeships were not available and/or not suitable.

The number of people participating in traineeships initially remained low but began to accelerate from around 1995. In 1998 the formal distinction between traineeships and apprenticeships was removed with the introduction of the more flexible New Apprenticeships System. Under this system the number in training at certificates I and certificate II level (equating to the pre-existing traineeships) has continued to grow rapidly, such that these now outnumber people in traditional apprenticeships by around two to one. Thus traineeships have become an important avenue for formal entry-level training in Australia.

This study analyses the role of traineeships in the transition from school to work using data from a sample of the cohort of young Australians who were in Year 9 in 1995. The sample has been surveyed each year from 1995 to 2002—corresponding to ages 14 through to 21—as part of the Longitudinal Surveys of Australian Youth conducted by the Australian Council for Educational Research. First of all the characteristics associated with participation in a traineeship are examined; following this we estimate the impact of entering a traineeship upon a range of measures of labour market outcomes. These include the impact of participation upon employment and earnings, career prospects, and the quality of jobs attained.

The transition from school for this cohort corresponds to a time in which traineeships were growing very rapidly. In 1999, the year after the end of high school for those who completed Year 12, there were an estimated 145 000 trainees in training. This was to increase to 238 000 by 2002. In our sample, participation in traineeships peaked at 6.5% at age 18. On a cumulative basis, 10% of the sample had participated in a traineeship (including school-based traineeships) up to and including the age of 18; just under 15% had done so by age 21.

In terms of socioeconomic background and performance at school, those who enter traineeships and apprenticeships are quite similar. They tend to come from a higher socioeconomic background and to have performed better academically in Years 9 and 10 than those who leave at the end of Year 10, but have a lower socioeconomic background and school performance, on average, than those who complete Year 12. Multivariate analysis confirms that people from lower socioeconomic backgrounds, with poorer early literacy and maths aptitude, and poorer school performance are more likely to enter traineeships upon leaving school except for those from non-English speaking backgrounds, who are markedly less likely to enter traineeships. Young people who enjoy artistic activities and those involving personal interaction also tend not to be attracted to traineeships.

To assess the impact of participation in a traineeship on the school-to-work transition, outcomes for those who participated in a traineeship up to and including 1999 (the year the cohort turned age 18, or the first year after Year 12 for those who completed high school) are compared with outcomes for young people who did not enter formal VET or university in either the year they left school or the following year. Outcomes are compared for each of the years 2000, 2001 and 2002 to provide estimates of both the short- and medium-term impact of traineeship participation.

After controlling for a range of individual characteristics, the analysis suggests that entering a traineeship, as opposed to leaving school without undertaking further vocational education or training, results in a modest reduction in the probability of being unemployed by age 21, as well as higher wages of around 5%. These benefits come at the cost of an initially lower wage of around 6% at age 19. This is consistent with the human capital model of training, which predicts that workers partially finance firm-provided training through low initial (training) wages and recoup those costs through higher growth in post-training earnings. For both employment outcomes and wages at age 21, the estimated effect within this group of having participated in a traineeship is greater than the estimated effect of having completed Year 12.

The most robust evidence of the value of entering a traineeship is indicated by the likelihood of the individual being in the type of job they would like as a career. At ages 19 and 20, around 55 to 60% of those who had participated in a traineeship saw their job as one they would like as a career, compared with 35 to 40% of school leavers with no further education and training. This large 20-percentage-point difference persists when other characteristics of the individuals are controlled for, although the estimated difference falls to around ten percentage points for workers aged 21.

Consistent with this, those who had participated in a traineeship are more satisfied with the type of work they do, their training opportunities, and their career prospects in the early stages of their working lives. However, by age 21 years, there are no significant differences between the trainees and non-trainees in terms of job satisfaction (the type of work done, pay, training opportunities, promotion opportunities), or with their overall career prospects. Thus, in contrast to the impact upon quantitative outcome measures of employment status and wages, which improve over the ages of 19 to 21 years, the positive impact of traineeships upon qualitatively assessed outcomes appears to diminish quite rapidly.

On the balance of the evidence from this sample, traineeships can be seen to offer an effective pathway from school to work for young people who are unlikely to go on to higher VET courses, apprenticeships or university. Those who enter traineeships progress relatively quickly into what they perceive as a 'career' job. In relation to the labour market outcome measures investigated in this study, among this group, entering a traineeship appears to be at least as valuable as completing high school.

The analysis has concentrated upon the impact of entering a traineeship, rather than completing a traineeship. Thus the estimate of the effects of a traineeship incorporates the outcomes of the considerable proportion (in the vicinity of 50%) of trainees who do not complete their formal traineeship. We believe this to be the effect of most relevance to policy-makers and to young people assessing their career options. Additional estimations show that concentrating on the effect of 'completing' rather than 'entering' a traineeship would not have changed the conclusions to any substantive extent.