BUDGET PREVIEW: Will the apprenticeship system revamp work?

In this year’s state of the nation speech, Prime Minister John Key announced a major revamp of the apprenticeship system, with financial incentives for those who participate.

The intent of this revamp is to build a more productive and competitive economy. The question is, will it work?

Grant Thornton New Zealand employs young accounting professionals and considers the training programme to be vital to the on-going and continuous up-skilling of its accountants.

Public practice accounting firms are recognised worldwide, not just for their brand name, but for the training they provide, and potential future employers see accountants who have been trained within such practices as having a competitive advantage.

People of every age and industry need the assurance of being supported and an awareness of what additional qualifications and training can provide for them.

The government’s decision to support individuals, irrespective of age, to improve their skills and qualifications is a positive step forward.

The financial incentives the government are offering will provide both employees and employers with $1000 towards tools and off-job course costs or $2000 if they are in priority construction trades.

This is similar to the approach accounting firms have taken for a long time. A ‘sign-on’ bonus system creates competition between individuals and within firms so the highest calibre people are selected.

When this is combined with a commitment to fund post-tertiary qualifications, a genuine incentive for young people to further their education and skills is generated.

Small population

As a nation we are constrained by our small population. Therefore it is important that we educate and create a skilled labour force for the future prospects of the economy.

By providing employers with incentives to train individuals through the apprenticeship training regime, the government is recognising the need to help more companies create a higher skilled labour force than what we currently have.

Despite New Zealand’s unemployment rate being relatively high at 6.9% (December quarter 2012), many firms struggle to recruit the right people from within the realms of qualified professionals.

Experienced hires are often filled by overseas skilled workers on a temporary secondment basis or immigrants who are not as familiar with the New Zealand business environment.

While these solutions work, they do not proactively address the continuing skilled labour force shortage or New Zealand’s long-term productive issues.

The latest Grant Thornton International Business Report survey showed 98% of New Zealand businesses want the government to actively promote apprenticeships. It seems the government has heard this cry and it will be interesting to see if this is given further attention on Budget day.

The funding for this new scheme has been enabled by a tightening up of the industry training system to remove tens of thousands of “phantom trainees” who were not achieving any credits.

Mr Key announced the government is “streamlining this scheme, reducing the number of qualifications and putting the emphasis on achievement rather than token participation”.

While there is a risk to any government-funded programme, hopefully this revamp will ensure New Zealand has more skilled individuals employed throughout every industry to help lift our productivity.

This will be the true test. But as it is with any training initiative, only time will tell. 

Vanessa Black is an associate, Audit, at Grant Thornton New Zealand, chartered accountants and business advisers. Email: vanessa.black@nz.gt.com