Occupational trends and new apprentice training

Key findings

• Apprentice and trainee commencements are forecast to taper-off in 2000 - 01, rather than continue at growth rates experienced between 1997 and 1999. Commencements are forecast to be approximately 145 000 in 2000 - 01, a decline of 45 000 commencements since 1998 - 99.
• Between 1995 and 1999 cancelled contracts-of-training have remained relatively steady when compared to contracts-of-training commencements.
• Service-based occupations will continue to increase in importance for apprentice and trainee training. However, traditional trade-based occupations are forecast to remain as a key component of Australia's employment-based training system.
• Both demand and supply-side effects are influencing increases in commencements of apprentice and traineeship training for some occupations, particularly those that are service based. A greater proportion of the Australian labour force is employed in services, thus creating the demand for such training, and the flexibility of the training system has allowed the development of service-oriented training, enabling the supply of training.

Background and method

New apprenticeships were introduced to Australia in January 1998. The new apprenticeship scheme was intended to provide practical training opportunities to a wider range of people than the traditional trade-based apprenticeship system. Two of the ways in which the new apprenticeship system introduced increased flexibility were the potential ways in which training can be delivered, and an increase in the range of occupations that are eligible for inclusion in the scheme.

This project examines the influence that the new apprenticeship initiative has had, and will continue to exert, on the type of employment-based training being undertaken in Australia.

The research utilises data from the NCVER's contract of training (COT) database, historical employment data from the Australian Bureau of Statistics (ABS) census of population and housing survey, and a macro-economic occupation and industry employment forecast. The data are analysed and manipulated to produce detailed forecasts of contracts of training (apprentice and trainee) commencements by occupational classification to 2000 - 01.

Apprentices and trainees

Previously, apprenticeships were available only to those people employed in declared vocations such as plumbing and carpentry. New apprenticeships have enabled the emerging service sector of Australia's industry to access this form of practical vocational education and the employer wage subsidies which are associated with it.

Apprentice numbers in Australia have increased steadily since the 1960s. In 1990 total numbers in training reached 160 000 and by 1999 they had passed 234 000 people.

Apprenticeships have traditionally been associated with young people, especially school leavers. Statistics from the COT collection show that there is an emerging trend of older people undertaking new apprenticeship training. The statistics also show that participation by females undertaking contracts of training is increasing. These trends suggest that the objective of the new apprenticeship scheme, to provide increased access to training for all people, is proving to be effective. In 1999 approximately 100 recognised vocations existed in which an apprenticeship or traineeship could be undertaken.

The fields of study in which most contracts of training are undertaken are services, tourism and hospitality, engineering and surveying, and architecture and building.

Training

There are four principal delivery methods available for apprentices and trainees:

• off-the-job institution-based training
• off-the-job distance education
• flexible work-based training
• enterprise-based training

For some time, the principal training provider for apprentice training in Australia has been TAFE. Although the new apprenticeship system was introduced with the capacity for employers and employees to choose their own training provider, TAFE continues to provide the majority of Australian apprentice and trainee training.

Australian employment

Two factors which have influenced the type of and extent of employment available in Australia are the emergence of globalisation, and the development of an information and service-oriented economy. The transition from a production- and manufacturing-based economy to an economy structured to provide services and information has resulted in a reduction of goods handling. The Australian training system that was developed for an economy in which goods were the dominant traded item must be adapted to meet the emerging needs associated with services, technology and the trade of information.

While there has been an increasing number of contracts of training being undertaken, the relative percentage of young persons in the Australian economy is declining. That is, the pool from which potential apprentices and trainees can be selected is reducing relative to the total labour force.

Occupational employment

While industries are independent, occupations span multiple industries. For example, a computer professional can work in finance, hospitality or personal services, in fact, almost any industry.

People employed in occupations that are industry dependent are more susceptible to productivity and technology shocks.

Employment prospects for occupations in the coming years will depend upon two main factors: firstly, on the distribution of occupational employment by industry sector and, secondly, on the skill level of the occupation.

Scenarios used in forecasting

Previously, the best available method for deriving apprentice and trainee numbers by occupation has been extrapolation of current trends. Simple extrapolations should be treated with extreme caution. Since 1997 apprentice and trainee numbers have increased significantly following the introduction of the New Apprenticeship scheme. It is unlikely that this recent growth will be maintained for an extended period. Therefore, an extrapolation based on these recent trends is likely to be severely misleading. To overcome the need to extrapolate current data, a macro-economic forecasting model has been used.

Calculations for this project use a model known as the Murphy model to forecast trends in occupational employment. The Murphy model is a large-scale, disaggregated-level dynamic macro-economic model which examines beyond the current trend and considers the influence of industrial composition and other factors when presenting employment forecasts.

In analysing the data available, a ratio was derived for three consecutive financial years: 1995 - 96, 1996 - 97 and 1997 - 98. The ratio combined commencement and re-commencement data from the COT data collection with occupational data from the ABS to derive a contracted employment (C:E) ratio. The ratio provides:

• an indication of the extent to which enterprises that employ people in various occupations utilise the apprentice and traineeship system
• a descriptive measure of changes in the extent of occupational participation in apprentice and traineeship training
• a value which can be utilised with macro-economic occupational forecasts to model scenarios of future apprentice and trainee numbers

In this report there are three C:E scenarios modeled, each of which provides output for the 2000 - 01 financial year. The scenarios used to derive C:E forecasts for 2000 - 01 are combined with employment data to calculate actual numbers of contract of training commencements. Details of these calculations are found throughout this section and in the appendices.

Scenario 1 is a constant measure, in which the C:E ratio is projected to remain at 1997 - 98 at least until 2000 - 01. That is, the C:E ratio from 1997 - 98 for each occupation is related to the employment forecasts for 2000 - 01 to derive contract of training commencement forecasts.

Scenario 2 is an extrapolation of the current trend data. The trend derived is the average growth experienced between 1995 - 96 and 1997 - 98 extrapolated for three years to 2000 - 01. Given the expansion of contract of training commencements following the introduction of the new apprenticeship training scheme, it is unlikely that this scenario is a realistic projection. Scenario 2 serves to show what is considered in the context of this study to be the maximum growth potential for contract of training commencements.

Scenario 3 draws on the macro-economic projections of employment growth to model the impact of economy-wide growth on the C:E ratio. The key element for deriving scenario 3 is the forecast annual employment growth by occupation developed through the macro-economic modeling. That is, the average forecast growth rate for each occupation is related to the C:E ratio for 1997 - 98 to derive the C:E ratio for 2000 - 01.

All three scenarios utilise the expertise of the macro-economic forecasting by including the employment forecasts by occupation. However, of the three scenarios, the third is preferred as a means of deriving the 2000 - 01 C:E ratio and forecasting contract of training commencements. Preference for scenario 3 stems from the fact that this scenario uses the employment occupational forecasts and relates these data to current occupational employment data.

Results

Forecasts of contributions to the number of apprentice and trainee commencements are able to capture the contribution of the demand-side influences (forecast increased employment) and also the supply-side effects (increased employment-based training opportunities for occupations and industries).

Occupations forecast to contribute significant proportions of the contract of training commencements in 2000 - 01 include the traditional tradespersons and related workers, and intermediate clerical, sales and service workers. General clerks are forecast to contribute 13 500 contract of training commencements in 2000 - 01. Globalisation and a trend towards an information economy is expected to maintain the momentum of Australia's industrial composition from manufacturing to services. The shift in industrial emphasis will continue the trend away from occupation-specific skills, which can quickly become out-dated, to general competencies. The changing nature of Australia's trade and composition of gross domestic product (GDP) present significant challenges to the national employment-based training system. Occupations in service industries, especially those related to health and personal services, are forecast to contribute significantly to future numbers of contract of training commencements.

While changes to Australia's industrial composition will provide non-traditional occupations with an opportunity to develop employment-based training, occupations and industries which have traditionally supported employment-based training, especially the trades, will remain important contributors to the national training effort.

No matter which perspective of the direction of Australian employment and training is considered, the future of the new apprenticeship system appears strong. Three scenarios presented in this research forecast that in 2000 - 01 between 138 800 and 208 000 persons will commence a contract of training. These figures are projections that derive from forecasts ranging from zero growth in the rate of commencements through to an extrapolation of the high-growth rates of current commencements. Despite presenting these extreme cases of commencements in contracts of training, a more probable outcome derived using a macro-economic forecasting model of occupations and a C:E ratio is also presented. The figures presented forecast a tapering in the number of commencements following the recent period (1998 - 1999) of extraordinary growth.

Examination of the forecasts at different level of disaggregation found that the more highly disaggregated the data, the less variation in the forecasts from the three scenarios. It is recommended that for resource allocation, policy planning and general decision-making, forecasts are derived using highly disaggregated data. While the alternative forecasting methods are not recommended, they should not be discounted as they provide a potential modeling option where high-level disaggregated data are not available. The integration of the national contracts of training data with a robust macro-economic forecasting tool has proven to be a valuable tool in determining future contract of training commencements by occupation.