Training for the skilled trades in Australia, 1980-2000: Training reforms

Aims

This paper examines trends in occupational mismatch in the metal, building, vehicle and electrical trades and questions whether the process of award restructuring which began in the late 1980s has created incentives for unskilled blue collar workers to pursue skill-based career paths in the trades. In so doing, it has been necessary to examine the reasons for high attrition rates by qualified workers from their trade as well as the motives behind employers' decisions to hire unqualified workers to do trade work.

The study focuses on the metal, building, electrical and vehicle trades which account for over two-thirds of the traditional trades. As such, it is primarily about men as they dominate these trades.

The analysis contained in the body of this study has used secondary data sources to detect trends over time in training rates, levels of attrition and the amount of upgrading. The employed method of analysis is not definitive, but rather indicative. By combining gross trends and comparisons in the data with deductive reasoning, the analysis can only suggest causal relationships in the labour market.

To assess the effect of policy and institutional changes instigated during the late 1980s, a lengthy post-change review period such as ten years is required. Accordingly, it is premature at this time to undertake a labour market assessment of the New Apprenticeship initiatives that began nationally in January 1998.

The term 'apprenticeship' in this report is considerably narrower than current usage and refers to only the traditional three-to-four-year apprenticeship in the manual trades.

Labour in the skilled trades, 1971-96

Despite strong indicators of high vacancy rates for most types of skilled tradespeople throughout the 1950s, 1960s and 1970s, the emerging labour market data of the 1970s revealed concurrent large numbers of qualified tradespeople working in jobs that required skills well below trade level. This situation operated simultaneously with very high levels of unqualified people working as tradespeople.

In the metal, building, vehicle and electrical trades during 1971, about 4 in 10 men working as skilled tradesmen did not have a trade certificate. By 1996, this had fallen to 2.5 in 10 for the metal, vehicle and electrical trades and 3 in 10 for the building trades.

Only limited evidence exists on the reasons employers hire unqualified workers to do skilled work. Nevertheless, difficulties in recruiting formally trained workers do not appear to be a major cause. Earnings data have been examined to show how highly employers value a trade qualification compared with lesser qualifications and no qualifications. The data indicate that trade qualified workers only receive a small premium over people with a one-year qualification in both trade jobs and intermediate and elementary production jobs. While this suggests that they are more productive, it is not clear that all jobs within this broad occupation warrant the full skilled trade level qualifications. Many employers have been content to upgrade workers to do trade jobs (rather than bid up wages for qualified ex-trade tradespeople) which implies that a significant minority of jobs do not need formally qualified workers.

Factors inhibiting training paths for unqualified tradespeople

If as many as 4 or 2.5 in 10 workers are satisfactorily performing trade work without formal training, then the value of a considerable portion of the training system is in some doubt. Trade jobs which require less than the full set of practical and theoretical trade skills should be more appropriately classified as jobs requiring a shorter, more basic, level of qualification. Alternatively, some people may efficiently acquire the necessary trade skills on the job and have small need for the formal limitations and requirements of an officially controlled training program.

Relatively high levels of unqualified tradespeople indicate some type of failure by the training system to provide an appropriate mix and quantity of training courses for workers and businesses. Some of the inflexibility of apprenticeship arises from the traditional assumption that trade training should be a (workforce) entry pathway. This has made traditional trade training less suitable for older workers who require structures which offer scope for prior recognition, more out-of-normal working hours class times and a smaller salary sacrifice on account of their financial commitments, maturity and work experience. Potentially, the training system should offer types of training and accreditation such as:

• short courses in the trades area for trade jobs that do not require the full set of trade skills
• training programs for experienced workers who require additional or top-up off-the-job training/education to achieve the competency of formally trained worker
• accreditation procedures for workers who have acquired full competency but have not completed an apprenticeship

By 1980, there were only a few legislative impediments which inhibited the flexibility of the trade training system but almost all of these had disappeared by 2000. Some remaining barriers may, however, be encoded in regulations.

Prior to the process of award restructuring which began in the late 1980s, wage and job classification structures and the work culture in many firms were not designed to encourage workers to upgrade skills through ongoing training courses. Few opportunities existed for unskilled and semi-skilled workers to progress through to skilled status and beyond. Evidence from the 1990s indicates that more than half of large firms had made some attempt to introduce job classification structures conducive to career paths and training. By 1990, one in four firms with more than 20 employees, whose main occupation group was tradespeople, had introduced career paths and between one in three and one in five firms had introduced formal training where previously none had existed. Structures, especially in the metal trades, were established to support adult apprenticeships and training pathways for sub-trade level workers.

Aside from legislative and award provisions, the training pathway for skilled manual workers can be blocked at several junctures. An examination of the formal recognition procedure for people who had acquired the required level of competency, and, the processes for allowing partially skilled people to complete the skill process (access to off-the-job courses, credits of indenture terms and recognition for prior learning), reveal that this pathway is more of a windy and unsignposted track than a clear channel. Many of the courses and accreditation processes are semi-unofficial, ad hoc and not widely advertised. The Tradesmen's rights regulation act 1946, State and Territory recognition legislation are best known and most established but these appear to supply, at most, only 3-4% of recognised domestically trained tradespeople. Lack of co-ordination among relevant training parties, lack of pecuniary incentives by the registered training organisations (RTO) to recognise existing skills and provision of information to workers and employers in the more fragmented parts of industry appear to have hindered the formal skill accumulation process in some States.

The low importance of these extra-apprenticeship methods for allowing people to supplement their skills and acquire full AQF-III (Australian Qualifications Framework) status is epitomised by absence of any serious data collection on this issue.

The incidence of adult trade training

Having looked at the existence of institutional or legislative barriers and positive provisions for training pathways, data is examined on:

• the incidence of training among production (blue collar) workers
• the number of apprentices or people undertaking skilled vocational education receiving recognition of prior learning (RPL)
• the number of adults in trade training
• the number of people who were formally upgraded as adults working in the trades

Most of the data will only reveal trends from 1989 to the mid-1990s. The slow diffusion of information on training reforms and the length of time required for firms to change their human resources management systems in industry implies that it is too early to detect effects from the New Apprenticeship reforms of 1998.

Most data sources are consistent with the view that, since the late 1980s, adults have become more likely to gain a skilled vocational qualification. Provisions for the recognition of existing skills have assisted this change. However, the number of adults involved appears very small, especially compared with the number of unqualified tradespeople currently working in the metal, building, vehicle and electrical trades. There is no rise in the tendency for tradespeople to gain formal accreditation for skills gained informally or overseas.

Job satisfaction for trade qualified workers

Expected and actual job satisfaction is an important determinant of the desire to undertake education and training and to prematurely leave an occupation. A model to test for the determinants of achieved pecuniary and non-pecuniary job satisfaction according to post-school qualification has been devised. Even though it is not possible to objectively compare satisfaction levels across individuals, different levels of subjective satisfaction across groups of the workforce may explain systematic differences in labour market behaviour.

The analysis found that trade qualifications are associated with lower levels of measured non-pecuniary job satisfaction and pre-tax wages and salary income. That is, once other factors such as schooling, age, sex, work experience, location etc. are taken into account, people with a trade qualification have lower wages and lower non-pecuniary job satisfaction than other qualification groups. They are similar in this aspect to people with no post-school qualifications.

These results provide a basis for questioning the quantity and quality of labour that is attracted into the trades and into trade qualifications. It also provides a partial explanation for the observed attrition from the trades, especially into lower paying jobs.

Attrition from the trades

Attrition or wastage from the skilled manual trades has been acknowledged for some time as a factor contributing to the shortage of skilled tradespeople in certain markets. Separation from the 'home' occupation is generally higher for tradespeople than for professional and para-professional workers and is inversely correlated with median income. Lack of careers paths and limited opportunities for promotion though training pathways were highlighted during the late 1980s as a source of job dissatisfaction and subsequently high rates of attrition. In addition to its other goals, award restructuring was intended to specifically address this shortcoming.

A minority, albeit a growing one, of qualified tradesmen has been moving into 'higher' managerial or technical occupations where their trade skills are likely to be used to some extent. However, many qualified tradespeople are also taking semi-skilled or unskilled manual and service sector work. In 1996, 17.9% of metal, vehicle and electrically qualified tradesmen and 14.4% of qualified building tradesmen were working in these less skilled jobs. A further 8-13% were working in clerical and sales jobs where the relevance of trade skills is unclear. The percentage of trade qualified men working in a less skilled job compares with 7.4% for tertiary qualified men.

High wastage or attrition is often found in occupations where there are comparatively few prospects for advancement and the main avenue for job variety and challenge is acquired through changing jobs or occupations.

Careers paths for tradespeople, as measured by their incomes, are considerably flatter compared with other major classes of skilled worker. Generally, qualified tradespeople who leave the trade for managerial jobs also improve their earnings but those who leave for other occupations do not. Tradespeople who take up unskilled labouring jobs generally suffer a decline in earnings.

Qualified tradespeople leave the trade for a range of reasons, the most common being to get a better or more interesting job. Coming a close second in importance are those who left to get better pay or seek a promotion. These findings reinforce the analysis on job satisfaction above. Few people were discouraged by the conditions of work, and only a small percentage left because of a lack of work.

This section also sought to inquire whether participation by qualified tradespeople in post-trade training courses would produce more highly skilled workers who have higher productivity and can thus command higher wages. Unfortunately the empirical evidence is contradictory. The 1997 Australian Bureau of Statistics (ABS) education and training survey suggests that workers who have undertaken further training improved their work efficiency; however, the Melbourne Institute of Applied Economic and Social Research (Melbourne Institute) survey suggests that on balance they do not lead to higher wages. The ABS survey indicates that training does not have much impact on the participant's promotion prospects; however, in the Melbourne Institute survey, respondents claimed that, on average, training courses lead to better and more interesting jobs and had a significant effect on career paths.

It is possible that heterogeneity within the trade group or difference in survey year have contributed toward these varied responses. Some trades or some types of tradespeople may be affected differently by training. Unfortunately the level of information available at hand does not permit us to reach a conclusion.

What should be done?

Current problems with the training system appear to arise not so much from the numbers in training, but from the level of training qualifications on offer and the high attrition rates from the trades. Ideal training or education systems are self-regulating. This means that signals from customers and new technologies are transmitted through firms to prospective students and workers and training providers without third party intervention. Three basic conditions are required for such a flexible and accommodating system:

Regulatory and institutional impediments should be removed. The award restructuring process which began in the 1980s has prompted most prerequisite legislative and award reforms. Training packages, and the provision for AQF II level certificates in the traditional trades, which have been operational since 1999, should be regarded as a major advance in this area. However, the path for the skill recognition of workers trained through means other than the apprenticeship or the TAFE system, still appears complicated and marginal to the main training system. This is especially the case for adult workers who cannot attend classes during normal business hours. Incentive structures within the TAFE system may be discouraging adults to pursue these training pathways.

The incentive structures to encourage workers to train and remain in jobs that use their skills should be strengthened. Without the correct incentives for school leavers and unqualified workers to complete a training course, there is little point removing impediments. High leakage rates out to other occupations makes training an expensive skill creation option. Specifically, the wage differential for skill should be increased, especially the increment for years of experience. Conditions of work, prospects for advancement and the non-pecuniary rewards from certain jobs should be improved to encourage the highly skilled to remain within their trade.

Finally, the training and work culture of the relevant industries needs to be educated to keep abreast of the new developments in the training system. This is a difficult and expensive task to accomplish and probably requires extensive site visits as well as a continuation of existing information material. The flow of information needs to be ongoing and, of course, two-way.

Further research

Two major themes emerge from this study which are important for an efficient, self-regulating vocational training market: firstly, whether there should be an expansion and heavy promotion of basic vocational qualifications in the metal, building, electrical and vehicle trades to cater for the market currently occupied by upgraded tradespeople. The second theme concerns the incentive for workers to obtain formal training and then consistently applying these acquired skills to related occupations. Part of this proposed investigation would look at why wages over the life cycle are so low or flat for qualified workers by comparison with unqualified workers.

Research on the first topic should include the reasons employers hire unqualified workers to do trade work. Lack of data on this topic has forced the study to rely upon old ad hoc surveys and data that in many cases do not provide enough detail to make an argument or conclusion definite.

Suggested research questions include:

• whether informal skill acquisition is or is not a more efficient mode of training for some trades
• level of knowledge held by employers and workers about AQF II level qualifications
• reasons for lack of sponsorship of existing employees as AQF III apprentices for upgrading employers
• reasons for lack of sponsorship of existing employees as AQF II apprentices for upgrading employers

Research for the second topic should look at which employers are claiming shortages of or difficulties in attracting skilled workers and reasons why they don't increase the pecuniary or non-pecuniary employment package offered to their skilled workforce (but not their lesser skilled workers). Higher life cycle rewards for vocationally trained workers will affect interest by school student in apprenticeships (both the calibre and number of students) and should stem attrition from the trades.