Effects of COVID-19 on Apprenticeships and Traineeships

Claudia Reiners
June 17, 2020

Effects of COVID-19 on Apprenticeships and Traineeships

4bf428ed6af9ff680b7ac8b24b046f3d?s=50&d=mm&r=g Claudia Reiners
Head of Strategy

There’s no question that the COVID-19 pandemic has affected all spheres of life, from employment and education to recreation and leisure.

One domain which has been hit hard is the vocational education sector, with apprentices and trainees being left in the lurch part way through their studies due to the coronavirus-induced downturn.

We explore the short and long-term effects of the coronavirus pandemic as discussed in the Mitchell Institute’s ‘Impact of COVID-19 on Apprentices & Trainees’ report, and unpack what the findings could mean for the nation’s workforce and economy as a whole.

Short Term Effects of the COVID-19 Pandemic

As social distancing measures were rolled out to limit the amount of non-essential close contact individuals could have, thousands of Australian trainees and apprentices quickly found themselves out of work.

Less experienced workers, apprentices and trainees are often the first to be let go when times are tough. On top of this, many apprentices and trainees work in the hospitality, beauty, construction or automotive industries, all of which have been hit extremely hard by coronavirus restrictions.

While it is unclear just how many apprentices and trainees have lost their jobs as a result of the pandemic, the Mitchell Institute forecasts that traineeship and apprenticeship enrolments will decline by 20% over the next few years, hitting their lowest point in 2023.

45,000 fewer commencements are expected in 2021 and 2022 compared to pre-coronavirus levels, with this number eventually dropping to 50,000 in 2023.

As a response to these worrying predictions, the Australian Government has provided some financial support to employers and workers.

The JobKeeper payment is perhaps the most well-known, being extended to eligible employers to help them retain staff.

Treasury estimates suggest that without JobKeeper, the unemployment rate would reach 15% instead of the current forecast of 10%.

The Federal Government has also launched the Supporting Apprentices and Trainees initiative, which offers a wage subsidy to help businesses with their cash flow and retention of existing apprentices and trainees.

Around 70,000 small businesses are expected to benefit from the subsidy, being able to keep 117,000 apprentices and trainees in work and training.

However, the Mitchell Institute warns that these measures could mask the real impact of the economic downturn, as we will only see the real decline in commencements 18-24 months after the onset of the recession.

So, what are the long-term effects we can expect to see from the coronavirus crisis, and what measures are being taken to boost the Australian economy’s resilience?

Long Term Effects of the COVID-19 Pandemic

According to the Mitchell Institute, previous recessions have been characterised by an amplified relationship between the unemployment rate and apprenticeship/traineeship figures.

The last two recessions saw apprenticeship commencements (the number of apprenticeship/traineeship training contracts that started in a given time frame) declining by 30% for every five percentage points that the unemployment rate rose.

What this means in real terms, is that over 100,000 people will miss out on the vocational training that they otherwise would have completed.

The reduction in the number of apprenticeships and traineeships on offer will also lead to 50% of school leavers being classed as not in employment, education or training (NEET), which indicates disengagement and points towards poor long-term outcomes.

While stimulus packages and policies are assisting in the short term, the Mitchell Institute warns that these measures may actually mask the extent of the downturn.

On top of this, how many host employers will actually be able to retain their apprentices and trainees after the JobKeeper payments subside in September?

We are likely to see long-lasting ripples from this reduction in apprentice and trainee numbers, such as skills shortages and a slow economic recovery.

With apprentices and trainees being necessary for the economy to recover, but there being fewer opportunities for these young people due to the pandemic, we risk being stuck in a vicious cycle if the right measures aren’t taken now.

A number of policy responses are suggested by stakeholders, including:

  • Increasing employer incentives and wage subsidies, to mirror the government renovation grants that are being offered for the rest of the year to prop up the construction industry
  • Integrating new apprentices and trainees into public spending projects to expose them to more opportunities
  • Establishing labour market programs to enable eligible apprentices and trainees to still work in their field
  • Supporting registered training organisations (RTOs) in offering training to out-of-work apprentices, with TAFEs being particularly well equipped to offer simulated work environments in an age of online learning

With skills shortages already being pronounced prior to the pandemic, Australia simply can’t afford to let apprentices and trainees fall by the wayside.

Planning needs to be carried out to help apprentices and trainees stay employed, while also offering opportunities to new apprentices and trainees entering the workforce.

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Claudia Reiners
Head of Strategy
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