The Business Council is calling on all sides of politics to support businesses to take on more apprentices and help future-proof Australia's workforce, by delivering additional employer incentives to address the skills gap crisis.
One in three occupations across the economy report a skills shortage, with particularly stark data in sectors like clean energy - requiring approximately 30,000 electricians by 2030 and 80,000 by 2050 - and construction, which faces a 200,000 shortfall of skilled workers according to Infrastructure Australia.
Furthermore, Jobs and Skills Australia has flagged around 38 per cent of skills shortages are in occupations requiring a vocational pathway.
The BCA's proposed redesign of the Australian Apprenticeships Incentive System (AAIS) would encourage small, medium and large businesses to take on more apprentices, through an increased wage subsidy and new grant funding.
Business Council Chief Executive Bran Black said it was important all sides of politics commit to providing greater assistance to employers, and especially those who excel at training apprentices, following the Government's positive announcement last week to provide $10,000 directly to new construction apprentices.
"Businesses tell me that existing employer incentives don't reflect the true cost of training an apprentice, and that means we need a new approach to ensure businesses are supported to train more people," Mr Black said.
"Businesses play vital roles in training the next generation of skilled workers, and if employer incentives aren't increased in amount and scope, we'll see fewer employment opportunities offered, which will ultimately exacerbate our nationwide skills gaps.
COVID-era employer incentives saw a wage subsidy of up to $28,000 paid over the course of an apprenticeship. Currently, employees of priority trade apprentices only receive $5000 in the apprentice's first year, while non-priority employers receive nothing.
"Every-time employer incentives have been reduced in recent decades there has been a corresponding drop in apprentice numbers and, conversely, every increase in employer incentives has produced an uptick in apprentice commencements and completions." (See chart 1).
The BCA believes a new incentive scheme is needed to better reflect the financial cost of training apprentices.
Under the BCA proposal, baseline support of up to $4000 per apprentice per year for the first two years of the apprenticeship would be paid to all employers, and up to $3000 per apprentice per year would be paid to all employers for the final years of training.
Small and medium businesses - where the bulk of apprentices are trained - could receive more funding by demonstrating their status as a good trainer, including by achieving a 70 per cent plus average completion rate for previous apprentices, hiring and supporting women in male-dominated trades and vice-versa, and engaging high-qualified training supervisors.
This model aligns with the AAIS Review finding - released last week - that employer apprenticeship incentive schemes should recognise and reward success.
Mr Black said large businesses, which have around a 90 per cent completion rate compared to the 50 per cent national average, should also gain access to a $40 million grant pool to help expand successful programs and get more apprentices to finish their trade.
"Businesses that demonstrate know-how and which invest in mentoring apprentices have better completion rates, and so they should be recognised and incentivised to take on more trainees."
"Taking on an apprentice is costly and carries a high financial risk for a business due to the resources required for training and the risk of poaching in later years, and so we believe more help is needed to reduce cost and risk."
The BCA is also advocating for more seamless pathways between school education and the vocational skills necessary to thrive in the workforce.
"We know completion rates are better when learning and work are integrated, and so we'd also like to see a greater focus on work-integrated learning in universities and non-trade VET courses, particularly in emerging sectors like digital and cyber," Mr Black said.
The BCA welcomed the release of the Strategic Review of the AAIS last Friday, and the recommendation to provide more support for businesses, as argued for by the BCA in its submission to the Review.
Chart 1: Effect of apprenticeship commencements based on changes to employer incentives 2008 - 2022
