Completion rates for group training organisations and direct employers: how do they compare?

By Lisel O'Dwyer, Patrick Korbel Research report 11 October 2019 978-1-925717-38-9

Description

Analysis of NCVER’s National Apprentice and Trainee Collection shows clear differences in the profile of group training organisations (GTO) apprentices compared with direct employer apprentices. Employer size and apprentice demographics are key attributes of the likelihood of apprentices completing. GTO apprentices and trainees are younger, more likely to be in the trades, more likely to be new rather than existing workers, and more likely to be indigenous. Accounting for the different demographic profiles of GTO apprentices and trainees, and for employer size, reveals that GTO completion rates are substantially higher than for small and medium direct employers. For non-trade apprentices and trainees, after these adjustments, GTO completion rates are also higher than for small, medium and large direct employers.

Summary

About the research

Australia has two main types of employers of apprentices and trainees: ‘direct employers’, which are businesses that directly employ an apprentice or trainee; and group training organisations (GTOs), whose role is to employ apprentices and trainees and place them with host businesses.

Under the latter arrangement, GTOs are responsible for selecting and recruiting apprentices and trainees, matching them to host businesses and taking responsibility for meeting all employer obligations, including paying wages and entitlements, arranging formal training and assessment, and providing pastoral care and support throughout the contract.

Group training can be particularly helpful to small and medium-sized businesses, which often find making a commitment to an apprenticeship difficult, in that they lack the resources to manage an apprentice or trainee, or are unable to provide the comprehensive on-the-job training required for an apprenticeship or traineeship.

This study compares the contract completion rates of apprentices and trainees attached to GTOs with those attached to direct employers. Overall, completion rates with GTOs are similar to or slightly better than those of direct employers; however, further examination reveals that completion rates are dependent on a range of attributes relating to the employer and the apprentice or trainee, and these need to be considered to make meaningful comparisons. In particular, employer size and apprentice demographics are the key characteristics of the likelihood of apprentices completing.

After accounting for the different demographic profiles of GTO apprentices and trainees and employer size, the study shows that GTO completion rates for all apprentices and trainees are substantially higher than for small and medium direct employers. For trade apprentices and trainees, GTO completions are higher than for small and medium employers. For non-trade apprentices and trainees, GTO completions are higher than the rates for both small and medium, and large direct employers.

Executive summary

Maximising apprenticeship and traineeship completion rates is a longstanding concern for governments, in that they represent the return on significant government investment in training. One way of maximising completion rates is to use group training organisations (GTOs) to employ apprentices and trainees and place them with host businesses. GTOs represent one of two main types of employers of apprentices and trainees in Australia. The other category is ‘direct employers’, which are businesses that directly employ an apprentice or trainee.

Part of a GTO’s role is to provide the additional care and ongoing support necessary for apprentices and trainees to successfully complete their training contract, thus maximising completion rates. This type of support is not always easily provided by a direct employer, particularly small to medium enterprise (SME) employers.

This study investigates the impact of GTO’s additional support services on contract completion rates and how these compare with the rates for apprentices and trainees placed with direct employers. Many direct employers also provide pastoral care and support to their apprentices, but such provision is often more difficult for small direct employers in particular.

We compare the completion rates of apprentices and trainees employed by GTOs and those employed by direct employers, accounting for employer size and different demographic profiles of the apprentices and trainees with GTOs and those with direct employers. Given that GTO apprentices and trainees are generally placed with small or medium host employers, we compare their completion rates with those of apprentices and trainees with small or medium direct employers. Using data from a single GTO, we also compare the outcomes and characteristics of apprentices and trainees who stay and complete their apprenticeship with the GTO with those who cancel completely or cancel and recommence with direct employers. We then present the results of interviews with GTOs, direct employers and apprentices, together with a separate review of comparative legislative frameworks and reporting practices (see support document).

Findings

An analysis of NCVER’s National Apprentice and Trainee Collection shows clear differences in the profile of GTO apprentices and trainees compared with direct employer apprentices. GTO apprentices and trainees are younger, more likely to be in the trades, more likely to be new rather than existing workers, and more likely to be Indigenous.

Although there are no comprehensive data on the size of GTO host employers, it is generally accepted that small to medium-size employers make up a significant proportion of all GTO host employers. Accounting for the differing demographic profiles of GTO apprentices and trainees, and for employer size, reveals that GTO completion rates are substantially higher than for small and medium direct employers. For non-trade apprentices and trainees, GTO completions are higher than the rates for both small and medium, and large direct employers.

Exploring the characteristics of apprentices and trainees who complete and those who cancel at a single GTO in Queensland revealed that apprentices and trainees most likely to cancel are those employed under incentive schemes (additional to the Australian Apprenticeships Incentives Programme), while part-time apprentices and trainees and those who had completed a prevocational course had the highest completion rates. There was no difference in the markers of disadvantage between those who completed with the GTO and those who transferred to direct employers.

The interviews with 15 GTOs revealed no consistent pattern in their experiences with completion rates over the last five to 10 years. Respondents with improved completion rates attributed their improved rates to:

  • weekly site visits with individual apprentices and trainees
  • pre-training, such as VET in Schools and prevocational courses
  • improved working conditions and support including long-term staff for stability of pastoral care relationships
  • their involvement in industries with low retention rates (such as hairdressing and hospitality) ceased

Those GTOs with declines spoke of losing more people in the first six months of the apprenticeship or traineeship than previously experienced (although NCVER data show that attrition rates for apprentices and trainees with GTOs over this period have generally been stable), due to:

  • increasing incidence of mental health issues in apprentices and trainees
  • a crowded marketplace (increasing competition for apprentices and trainees from other employers)
  • increased number of apprentices and trainees from disadvantaged backgrounds
  • for GTOs in rural areas, the impact of drought.

The consulted GTOs identified lesser recognised advantages, including their:

  • approach to apprentices and trainees as clients rather than as employees or students
  • ability to act as neutral third parties in conflict resolution and provision of timely access to services
  • capacity to arrange access to industry experts
  • ability to make good matches between apprentices and trainees with hosts through their familiarity with the needs of the host
  • access to jobs not publicly visible
  • capacity to foster relationships with schools to impart insights into trades and non-trades careers to potential apprentices and trainees.

Most direct employer respondents were unfamiliar with the concept of the GTO and how they operate.

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Support document - literature review .pdf 1.6 MB Download
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