17 Jun 2020

Government unveils $380m subsidy for employers training apprentices

3:12 pm on 17 June 2020

A new government subsidy will pay employers up to $16,000 for each new apprentice they train from August.

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File photo. Photo: RNZ / Dom Thomas

Minister of Education Chris Hipkins said the $380 million Apprenticeship Boost would pay businesses $1000-a-month for each apprentice in their first year of training, and $500-a-month for apprentices in their second year.

Hipkins said the scheme would run for 20 months from August this year until April 2022, and about 18,000 employers would be eligible to apply.

The programme would help to ensure there was not a skill shortage when the economy recovered, he said.

"After the global financial crisis, there was a significant reduction in the number of apprentices on the job, because as the economy turned down employers often laid them off. And then as the economy started to pick up again, we struggled because [of] significant skill shortages," he said.

"We want to learn from that mistake that was made years ago, and we want to say actually we've got to do a better job of keeping our apprentices this time around, and hopefully recruiting new apprentices so the skilled workers are there when we need them."

The building and construction industry was already noting a downturn because of the Covid-19 pandemic, and other industries also struggled during the lockdown, Hipkins said.

The subsidy was focused on the first two years of apprenticeship, because that was when apprentices were most vulnerable, he said.

"We know that in the first couple of years, that's when employers have to put the most into their apprentices, it's where apprentices are most at risk of being laid off if employers start to feel the economic squeeze."

The scheme was available to apprenticeships in all fields, unlike the free trades training scheme the government announced in its May Budget, which was focused on industries most needed for the economic recovery, Hipkins said.

The amount of money employers received would vary depending on how far through their training their apprentices were when the subsidy began in August.

The maximum they could receive for a single apprentice during the 20-month scheme would be $12,000 for 12 months of training in their first year, plus a further $4000 for eight months of training in their second year.

'Our phones were ringing off the hook'

Industry and on-the-job based training organisation Competenz' chief executive Fiona Kingsford said the scheme was going to make a big difference.

"The opportunity to support apprentices, with wage subsidies ... alongside the free fees that we had announced last fortnight is a fantastic package to go together to support both existing and new apprentices."

She said it would mean about 3000 apprentices for Competenz alone and estimated it would mean at least another 25,000 new apprentices overall.

"To give employers the confidence to actually invest in bringing in young people and actually to retrain the people they've got, certainly having subsidies towards that and training support is gonna go a long way to having some confidence to invest in people."

She said there would still be some reticence from employers wanting to take on more people after Covid-19 and the $16,000 would not be enough on its own to live on, but there was already a lot of demand for the apprenticeships.

"The food industry, the engineering industries, they're taking on people. Just with the free fees ... our phones were ringing off the hook, we had significant enquiries around that.

"It's a subsidy, right, so it's looking at probably around 150 to 200 a week in the first year and that will reduce down into the second year ... the reason I guess they've targeted those first two years, those are the two years that you're probably least productive while you are really well and truly learning your trade so it is really incentivising employers to take on those younger people, give them the opportunity and train them up."

Some industries would do better from the scheme than others, she said.

"Forestry, now that China is taking logs and the economy's picked up in that space they're going flat out. Our food industries are flat out, so those industries are definitely going to benefit from these [government schemes] immediately.

"The construction [of] infrastructure, shovel-ready projects that's been announced - that all helps to giving people confidence."

She said the subsidy would be attractive for school leavers, but would also give employers more flexibility to retain and retrain some of their older staff.

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