Job Trainer Is Good Policy – how does it work?
Last week the government announced a $2 billion ‘Jobtrainer’ package designed to promote skills training. The idea is to encourage more employers to maintain apprenticeships and to encourage school leavers and mature workers to acquire new skills. If successful this could provide a significant boost to growth and productivity.
The first part of the package, worth $1.5 billion, is aimed at keeping current apprentices and trainees working. The second part worth $500 million will fund training courses for school leavers and others who want to upgrade their skills.
The $1.5 billion wage subsidy for trainees and apprentices will pay eligible employers $28,000 a year to subsidise the wages of an apprentice or trainee. This is meant to fund 50% of their wage. At $7,000 a quarter, it is less than Jobkeeper at $9,750 a quarter but unlike Jobkeeper it is not linked to business turnover.
There is a limitation on the size of the organization eligible for the subsidy: firms with more than 200 employees are ruled out.
The federal government estimates about 90,000 businesses will use the scheme, supporting about 180,000 apprentices or trainees. The scheme is scheduled to run till March 31, 2021.
The second part of the package is conditional on the states matching the federal government’s $500 million. If matching funding is provided then it is estimated that 340,000 free or low-cost training places will be made available. Courses will be prioritized in skills needed in sectors that the National Skills Commission has identified as areas of major job growth in the immediate future. Examples nominated include health care and social assistance, transport, warehousing, manufacturing, retail and wholesale trade.
Many of the 340,000 training places are likely to be shorter courses, known as skill sets, which are parts of full qualifications.
These skill sets can provide students entry into new industries and also pathways to full qualifications which Australians can access through existing funding and subsidy arrangements.
This will provide a boost to the vocational education and training sector which has suffered recently from funding cuts, accusations of roots, and the loss of trainers to the mining and construction industries.
The limitation of the Jobtrainer scheme is that there is no incentive for employers to take on more apprentices or trainees. This a limitation with the government’s stimulus package generally, there is no incentive for the private sector to make the necessary investment to get the economy growing again.
At the moment a married couple on Jobkeeper is paid $75,000 a year to not work. The unions want to keep this going indefinitely and to throw in free child care as well. ACTU president Michelle O’Neill told ABC ‘Insiders’ host David Speers on Sunday that free childcare would lead to more female participation and would be good for the economy. But Speers didn’t ask, and she didn’t say, who was going to provide those jobs in an economy where private sector investment has fallen off a cliff.
This is the key point, none of these spending initiatives the government has introduced will achieve anything without substantial economic reform.