Finance Federal Budget Long-term unemployment set to explode without education funding boost

Long-term unemployment set to explode without education funding boost

Government must invest more money in apprenticeships to protect jobs for young people. Photo: TND
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The federal government is under pressure to spend more on vocational education after the Prime Minister flagged changes to the sector without opening the public purse.

Scott Morrison used a lunchtime address at the National Press Club on Tuesday to highlight investment in skills and training as being central to his economic recovery plans.

He said the current vocational education training (VET) system was “clunky and unresponsive” and required wholesale changes to ensure students learn the skills required by employers.

Mitchell Institute policy fellow Peter Hurley said the PM had addressed valid concerns about the VET system, but ignored the crisis engulfing the sector as a result of COVID-19.

Australians face higher rates of long-term unemployment and poorer health outcomes unless more funding is announced, Mr Hurley said.

And unions and business groups have echoed his views.

“There wasn’t any extra money in the announcement,” Mr Hurley told The New Daily.

So we’re still in the situation where we’re getting less money going into the vocational education training sector than there was a decade ago.”

That’s despite the number of new apprenticeships in April 2020 plunging 50 per cent on the same time last year – putting at risk the future livelihoods of almost one in eight school leavers who rely on them.

“There’s absolutely nothing that was announced today that’s going to change that, because the apprenticeship side of things relies on contracts with employers,” Mr Hurley said.

Employers have axed roughly 15,000 apprenticeships since March, according to Ai Group. Photo: Getty

It’s not just apprenticeships

The economic fallout from coronavirus has also disproportionately affected industries that offer the most apprenticeships – with many employers cancelling existing apprenticeships in addition to cutting back on new opportunities, and government support falling short.

The roughly 12.5 per cent of school leavers who immediately join the workforce are heading into these industries, as well.

And then there’s the impact of the coronavirus on universities.

Mr Hurley said roughly 60 per cent of school leavers entered the workforce via university – of which 25 per cent take gap years to travel or work before studying.

Given international travel has ground to a halt and the labour market is no longer functioning, Mr Hurley said a big chunk of gap-year students would now start university immediately after finishing school.

“But at the moment there are caps on the number of places that universities can get funding for, so universities are limited if they need to adjust and take in these extra students that might be coming,” Mr Hurley said.

So what you’re getting here is a really big problem, particularly for young people, with pathways into the workforce – and the settings we’ve got just aren’t right.”

This means fewer young people will enter full-time training or employment – falling into a category of “disengagement” known as Not in Employment, Education and Training (NEET).

“If people fail to make that transition from [school] to employment and they stay in that NEET category for an extended period of time, it’s associated with rates of higher long-term unemployment, poor health outcomes and a lifetime characterised by insecure work and lower pay,” Mr Hurley said.

“There wasn’t anything in the speech that deals directly with that issue.”

Unions and businesses call for more funding

Mr Morrison also spent much of his address making the case for reforms to the industrial relations system, which he said had “lost sight of its purpose”.

He said Industrial Relations Minister Christian Porter would be tasked with bringing together unions and business groups to simplify the award system and “get back to basics” on enterprise agreement making, among other things.

Australian Council of Trade Unions secretary Sally McManus said the unions welcomed the opportunity to sit down with employers and government, as they wanted to see “a better, stronger and fairer Australia”.

But she told The New Daily the Morrison government would need to increase funding to TAFEs.

“The government has made historic cuts to the vocational training sector, resulting in lower quality education and ultimately less apprentices and trainees, while millions of taxpayer dollars have been extracted as profit,” said Ms McManus, referring to the failed privatisation of the VET system.

While reform may be needed in the sector, especially when it comes to private providers, there is no replacement for the funding that the Morrison government and its predecessors have cut from the system.”

Ai Group chief executive Innes Willox made a similar point.

He said: “Ai Group is a keen supporter of the PM’s plan to overhaul the VET system. This overhaul needs to be both ambitious and include additional funding. Current funding arrangements are unacceptably inconsistent and incoherent.”

Mr Willox added that special attention should be paid to apprenticeships, with 15,000 axed since March alone.

“Without substantial support, Australia is facing a dramatic decline in apprenticeship commencements and an unacceptably high level of youth unemployment.”