Modelling the trades: An empirical analysis of trade apprenticeships in Australia, 1967-2006

The idea that apprenticeship numbers in the trades may be affected by labour market conditions seems fairly obvious. But just as obvious is the idea that government policy may be able to promote the take-up of trade apprenticeships. The significant increases in trade apprenticeship numbers in recent years have occurred as the Australian economy has boomed. At the same time government policy has been active in the area of apprenticeships; the introduction of incentives to employers, the removal of age restrictions to apprenticeships and the extension of the apprenticeship model to existing workers are of particular note. Modelling the trades: An empirical analysis of trade apprenticeships in Australia, 1967 - 2006, by Tom Karmel and Peter Mlotkowski, looks at the relationship between trade apprenticeships and the labour market. The authors seek to address the following issues: which trade apprenticeships are more affected by labour market conditions than others, and have government policies been successful in increasing the number of trade apprenticeships?

This paper presents a rudimentary econometric analysis of trade apprenticeships within each traditional area of apprentice training (metal and vehicle, electrical, building, printing, and food trades). These models are used to understand how apprentice numbers in the trades respond to changes in labour market conditions. The method of evaluating the impact of recent government policy changes is to replicate the counterfactual or no policy change scenario, and then compare this with the actual level of apprentice activity.

Key messages

• Metal and vehicle, electrical, and building apprenticeship numbers are particularly sensitive to labour market conditions.
• Printing apprenticeship numbers have declined due to structural change in the industry.
• Historical relationships between apprenticeship numbers and the labour market in the majority of industries have broken down over the last 10 years such that apprentice numbers are lower than would otherwise have been the case.
• Government initiatives have been unable to completely counteract this trend, with the possible exception of electrical and food apprenticeships.
• The removal of restrictions on age and allowing existing workers to take up apprenticeships has made a significant but modest contribution to the number of trade apprenticeships.

Tom Karmel
Managing Director, NCVER