The Changing Situation of Electrical Apprentices
Submission to the Modern Award Review, Fair Work Australia
Prepared for the Electrical Industry Stakeholder Consortium
Hanna Schutz, Professor Michael Bittman, Sharni Chan, Michelle Jakubauskas and Professor
John Buchanan
1
Contents
1
Executive Summary....................................................................................................... 4
Demographic Profile........................................................................................................... 4
Labour Standards ................................................................................................................ 5
Living standards of apprentices........................................................................................ 5
Final comments ................................................................................................................... 7
2
Methodology .................................................................................................................. 9
Stage one............................................................................................................................... 9
Stage two .............................................................................................................................. 9
Stage three ............................................................................................................................ 9
Stage four ........................................................................................................................... 10
3
The changing profile of electrical apprentices ...................................................... 11
Changing age profile ........................................................................................................ 12
Changing household composition.................................................................................. 14
Growth in apprentices with vocational qualifications................................................. 16
4
Labour standards of apprentices .............................................................................. 18
Modern Awards ................................................................................................................ 18
Relativities .......................................................................................................................... 19
Apprentice wages as a proportion of the minimum tradesperson rate .................... 21
Adult apprentice rates ...................................................................................................... 22
The interaction between statutory minima and enterprise agreements ................... 25
Apprentice award pay compared to strategically selected enterprise agreements . 26
2
5
Living standards of apprentices ............................................................................... 31
Adapting and Modifying Indicative Budget Standards for Apprentices ................. 32
6
Apprentices under various housing scenarios....................................................... 35
Scenario One – the apprentice as a dependent child ................................................... 35
Scenario Two – The apprentice living independently ................................................. 37
Scenario Three – The apprentice breadwinner ............................................................. 39
7
Recruitment and retention of apprentices .............................................................. 42
Recruitment........................................................................................................................ 43
Retention of electrical apprentices .................................................................................. 46
Financial supports and incentives for completion ....................................................... 47
8
Conclusion .................................................................................................................... 53
Key findings ....................................................................................................................... 53
9
Reference list ................................................................................................................ 61
3
1 Executive Summary
The Workplace Research Centre at the School of Business at the University of Sydney, in
partnership with Professor Michael Bittman1, was commissioned by the Electrical Industry
Stakeholder Consortium to provide a report on the apprentice wages in light of the changing
demographic situation of electrical apprentices. The report was commissioned to provide
information for Fair Work Australia’s Modern Award Review Process as required under
Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
(Cth). Two key research questions inform this research:
1. Are electrical apprentice wages, particularly those set in modern awards,
appropriate in light of the changing age demographics of apprentices?
2. What role do wages, amongst other factors, contribute to apprentice completion
rates?
Demographic Profile
A review of ABS Census data shows that the demographic profile of electrical apprentices
has changed greatly in recent decades. In the 1950s, apprentices often commenced their
training at around 15 years of age and were supported by their parents. Given the age
profile of apprentices, it was thought that apprentices should be paid as a percentage of a
qualified tradesperson's wage to compensate for their lower productivity and the time
needed for on the job training.
In 2012, electrical apprentices are more likely to be
independent adults, some with families of their own. Many apprentices are now often
commencing their trade with year 12 qualifications and vocational education and training
(VET) qualifications including pre-apprenticeship courses. Many apprentices therefore
commence their trade with adult characteristics and deeper technical, cognitive and
behavioural skills than their predecessors. The assumption that apprentices have lower
work value because they are young people who remain marginally or wholly dependent on
their parents, and who have limited job-ready experience requires revision.
1
School of Behavioural, Cognitive and Social Sciences at the University of New England.
4
Labour Standards
Previous research studies suggest that a significant proportion of apprentices, including
electrical apprentices, are award reliant.2 The award minima are also important for
apprentices that earn above the award, as the minima set the floor for agreement making
and informal over-award bargaining. Apprentices, by virtue of their training status and
lower bargaining power, are not well placed to negotiate for better wages and conditions.
A number of modern awards cover electrical apprentices. Four modern awards were
examined in this research, these were the:
•
Building and Construction General On-site Award 2010.
•
Electrical Power Industry Award 2010.
•
Electrical, Electronic and Communications Contracting Award 2010.
•
Manufacturing and Associated Industries and Occupations Awards 2010.
There are significant differences in the relativities paid to apprentices and the provision for
adult apprentice rates of pay. There are strong grounds for the architecture of these awards
to be reviewed to ensure the relativities, adult rates of pay and continuity clauses reflect the
changing demographic situation of electrical apprentices. The different relativities and
provision for adult rates of pay in the above awards should also be reviewed as apprentices
undertaking the same trade/training can be covered by different awards and therefore
different rates of pay. There is no evidence that apprentices covered by one award are any
more productive than another.
Living standards of apprentices
For this research, we have compared apprentices’ income with the adapted and updated
Indicative Budget Standards for Australia as a way of examining whether an apprentice’s
income supports a standard of living acceptable to the Australian community.
2
Research conducted by the National Centre for Vocational Education Research suggests that approximately
72% of apprentices in electro-technology are award reliant.
5
Budget standards are calculated at two levels –
1. an austere (near poverty) low cost standard and
2. a modest but adequate standard
The low cost budget is very frugal and requires careful management of expenditure to avoid
deprivation, disadvantage and even poverty. In contrast, the modest-but-adequate standard
is a standard comparable to broad community expectations and sustains the consumption
patterns typical of ‘middle Australia’, and affords full opportunity of participating in
contemporary Australian society.
This research looked at apprentices’ costs of living in the following three scenarios:
•
the traditional apprentice or apprentice as ‘dependent child’;
•
the independent apprentice living in shared rental accommodation; and
•
the apprentice breadwinner who supports their own family.
Scenario 1 – the traditional apprentice as ‘dependent child’
Scenario 1 corresponds to the situation of traditional apprentices, when learning a trade was
the obvious alternative to completing high school. Parents would often continue to support
their apprenticed children until they became qualified apprentices, providing practically all
their needs, perhaps in exchange for ‘board’. This arrangement shifts the costs of the early
years of apprenticeship to parents.
After deducting board, the first year apprentice’s remaining pay ($227.98) is only barely
above the unemployment benefit for this age (Austudy) and their disposable income is well
below the Henderson Poverty Line.3 In contrast to someone of a similar age, a typical, first
year award-reliant apprentice, earns only 58 per cent of the income of an unskilled worker at
McDonalds. The qualitative research confirmed that even small misfortunes can tip someone
living at this standard into debt.
3
In the March quarter 2012 the Henderson Poverty Line for a single person is $470.36 per week (Melbourne Institute of Applied
Economic and Social Research, 2012).
6
Scenario 2 – the independent apprentice living in shared rental accommodation
The prospects of living independently away from the parental home, even at the meagre low
cost standard is beyond the reach of second year apprentices. This weekly income precludes
living in Sydney, Perth, Darwin or Canberra even with all the scrimping and saving, implicit
in the low cost standard. Under Scenario 2 neither first nor second year apprentice modern
award rates are above the Henderson Poverty Line (with housing costs). Only third year
apprentices, whose earnings are typically 75-85% of the award for a fully qualified
tradesperson, are comfortably above the poverty line and approach the income required for
modes of adequate standard of living.
Scenario 3 – the apprentice breadwinner who supports their own family
The Australian Bureau of Statistics’ Census data shows that there has been significant
growth in the number of apprentices aged 25 years or over. As at 2006, over one quarter of
electrical apprentices were in this situation. As a result, it is important to consider the living
standards of apprentices who have dependants. The costs of raising a family are twice as
high as sharing with non-family member. The estimated income required for a modest but
adequate standard of living estimate the cost of supporting a spouse and a young daughter
in medium priced two bedroom unit is between $870.61 (Hobart) and $1,070.78 (Sydney).
Adult apprentice rates are not contained in all modern awards, which leaves older
apprentices vulnerable to a significant drop in wage on commencement of an
apprenticeship.
In addition, even award-reliant apprentices, who are paid on adult
apprentice rates of pay, are financially positioned to only meet a fraction of the costs
associated with undertaking an apprenticeship. As a result, the prevalence of financial
resource constraints associated with undertaking an adult apprenticeship makes it
unattractive and difficult to commence and complete apprenticeship training.
Final comments
The modern awards objective, set out in section 134 of the Fair Work Act 2009 (Cth)
establishes that Fair Work Australia must ensure that modern awards, together with the
National Employment Standards, provide a fair and relevant minimum safety net of terms
7
and conditions. The modern awards objective requires Fair Work Australia to consider: the
relative living standards and the needs of the low paid, and the impact of modern awards on
the performance and competitiveness of the national economy (among other factors). These
two issues are intimately connected. The wages and conditions of electrical apprentices are a
critical factor in the recruitment and retention of apprentices, and apprentices are critical for
the future skill base of Australia’s economy.
The findings of this report highlight a number of issues of importance for the Modern
Award Review. Our interviews demonstrate that there are both financial and non-financial
factors that influence recruitment and retention of apprentices. Financial incentives often
become the tipping point which encourage young people not to take up a trade. When
analysed in the context of budget standards data, it is apparent that some potential
apprentices are deterred from starting an apprenticeship because of low apprenticeship
wages. For those apprentices who can marshal substantial financial support from their
families, non-financial factors such as access to recognition of training, quality mentorship
and opportunities to develop a broad range of relevant skills will be an important
consideration alongside the critical issue of their wages. Therefore, improving the wages of
apprentices alone will not be a fix-all strategy to increase apprenticeship recruitment and
completion rates.
In addition to the critical issue of reviewing wage entitlements, the FWA Modern Award
Review should take a broad approach to ensure that the award minima lay strong
foundations to promote the mentoring and training needs of apprentices and build a skilled
and adaptive workforce in the longer term. This involves examining clauses relating to:
wage relativities, training, supervision, mentoring, allowances, and provision for adult rates
of pay.
8
2 Methodology
In answering the research questions, the WRC used a mixed methods approach combining
both qualitative and quantitative research methods.
The research was conducted over
several stages between April and September 2012. Each stage is summarised below.
Stage one
In order to examine the labour standards of electrical apprentices, the WRC examined the
wage rates and conditions in four modern awards of relevance to electrical apprentices. This
involved a comparison of relativities in the modern awards and clauses relating to adult
apprenticeship rates. The analysis was undertaken prior to the 2012 National Minimum
Wage Adjustment, therefore all of the rates referred to in this report are based on the 2011
wage rates.
In order to gauge the labour standards of enterprise agreement-covered apprentices, the
WRC compared the relevant modern award rates with ten strategically selected enterprise
agreements in sectors where electrical apprentices have strong representation: energy and
power supply and building and construction. Secondary information sources including data
and literature were also examined to determine the prevalence of award reliance amongst
electrical apprentices.
Stage two
The quantitative research involved analysis of Australian Bureau of Statistics (ABS) data
from the Census of Population and Housing 2006 and the the Indicative Budget Standards
for Australia to analyse the adequacy of apprentice wages in contrast to indicators such as
the Henderson Poverty Line, the Newstart Allowance and Austudy.
Stage three
Between 18 and 30 June 2012, interviews were conducted with current or former electrical
apprentices to obtain an insight on the individuals’ personal histories, perspectives, and
9
experiences during their electrical apprenticeships. The interviewees were selected from the
Australia at Work study, a five year longitudinal study tracking the working lives of over
8,000 Australians conducted by the WRC. The participants in the Australia at Work study
were selected in 2006 from randomly selected households.4
A total of sixteen participants currently working as apprentices or former apprentice
electricians (at some point in the five year study) gave permission for the researchers to
contact them for in-depth interviews at a later stage.
The WRC contacted all sixteen participants and a total of ten agreed to be interviewed for
the study. All of the ten participants were currently undertaking or had already completed
their apprenticeship. The qualitative research therefore did not capture the experiences of
apprentices who did not finish their apprenticeship and should be read in light of this.
With the permission of interviewees, the interviews were digitally recorded and transcribed
by an external transcription service. The qualitative data were then analysed using the
software program N-Vivo. Each interviewee has been de-identified and given a new name.
Verbatim quotes have been used to illustrate the experiences of the interviewees and these
bring useful additional insights to the quantitative analysis.
Stage four
The final stage of the research analysed the quantitative and qualitative evidence in order to
develop a consolidated set of final recommendations that are weaved throughout the report.
4
http://www.australiaatwork.org.au/australia-at-work-the-study.php
10
3 The changing profile of electrical apprentices
This section of the report considers whether the assumptions traditionally used to inform
decisions about appropriate compensation for electrical apprentices, require revision in light
of statistical shifts in the socio-demographic profile of electrical apprentices. The discussion
is underpinned by statistical insights on the age, living arrangements and qualifications of
electrical apprentices, observations on how these have changed over time (ABS Census of
Population and Housing), and historical and qualitative insights on the assumptions used to
define a ‘typical’ electrical apprentice in Australia.
Historically, the process for setting electrical apprentice wages has been informed by a
number of complex, and intersecting assumptions. Firstly, apprentice wages are broadly set
as a percentage of a qualified trade person’s minimum wage, to ensure the employer is
compensated for the lower productivity associated with employing apprentices.
Historically, it has been assumed that the demands associated with provision of, and
participation in, on-the-job training combined with the lower level of proficiency typically
associated with novices, will reduce productivity of the workplace overall (Expert Panel,
2011). Secondly, apprentice workers have been broadly characterised by some common, and
enduring socio-demographic and labour market characteristics. In particular, it has been
assumed that apprentices are younger workers (<20 years old), usually new to the labour
market or with limited work experience (in their first job), and transitioning but having not
yet fully achieved economic independence (eg living at home with their parents).
The following discussion will use a ten year observation period (1996-2006 data) to identify
that many of the assumptions underpinning electrical apprentice experience require revision
in light of wider labour market and socio-demographic shifts. In the ten years to 2006,
electrical apprentices are increasingly older and more qualified at the point of
apprenticeship entry, are living in a more diverse range of living arrangements, and with a
wider variety of financial responsibilities, than was the case in 1996.
11
Changing age profile
Post WWII, apprenticeships began to emerge as a common form of training and
employment for young people (Apprenticeships for the 21st Century Expert Panel 2011).
Throughout the 1950s and up to the 1990s, an apprentice would ‘sign-on’ with an employer,
typically at about fifteen years of age, before completing a senior high school certificate
(grade 12). Indeed, researchers argue that the perception of apprenticeships as a ‘young
person’s pursuit’ has been one of long standing in the Australian labour market (Ray 2001;
Kirby 1985). However, researchers and key industry stakeholders also note that there has
been a perceptible shift in the profile of apprentices, with more women, and older workers
now ‘entering the trades’ (Karmel 2006).
It is this shift in the demographic profile of
apprentices to which we will discuss next, using electrical apprentices as the focus of our
analysis.
ABS Census data is used for the following analysis because it presents the most reliable
descriptive profile of electrical apprentice experience, available at the national level. The
following data demonstrates that, in a ten year period alone, the demographic profile of
electrical apprentices5 has changed greatly. In 1996, 92 per cent of electrical apprentices
were young workers (aged 15-24 years), with a similar proportion in this age cohort in 2001
(90 per cent). However, by 2006, the age profile of electrical apprentices across Australia
had changed dramatically, with around three quarters aged 15-24 years (74 per cent). It is
also notable that in 1996, only just over 8 per cent of electrical apprentices were aged 25
years and over, compared to over one quarter (26.1 per cent) in 2006. This is significant
because it means that in a ten year period, the age profile of electrical apprentices Australiawide shifted dramatically, from one largely compromised of young (20-24 years) and very
young workers (15-19 years) to a much more mixed aged profile.
5 Apprentices are defined as the Australian Standard Classification of Occupations (ASCO) 6 digit occupational codes:
apprentice electrician, apprentice electrical powerline tradesperson, apprentice electronic instrument tradesperson, apprentice
electronic equipment tradesperson, apprentice business machine mechanic, and apprentice communication linesperson. Not
included as electrical trades apprentices are apprentice lift mechanics and apprentice refrigeration and air conditioning
mechanic as these may include mechanical apprentices.
12
This is a particularly important observation, in the context of assumptions about the capacity
of apprentices to make a productive contribution to a workplace. While historically it may
have been reasonable to assume that apprentices had limited job readiness skills, the older
‘at entry’ age of many electrical apprentices now means that this assumption may have
become less credible over time. For instance, if an electrical apprentice is 18 years old at
entry, they will typically be 23 by the time they complete. For those electrical apprentices
commencing in their mid-twenties, full trade competency will be achieved by workers
approaching 30 years of age. As the following section will highlight, in many cases ‘older’
apprentices have held other jobs or participated in other forms of training before entering
the electrical field. This means that while technical competency in the electrical field may
still need to be attained, generic workplace skills and communication skills (and indeed the
maturity) of these apprentices is likely to be much more advanced than what might be
expected of a nineteen year old approaching trade qualification.
In the electrical trades, the issue of social and communication skills is particularly relevant
as the ability to work and communicate within a team is highly valued and indeed
considered a critically important job skill. Based on the ABS Census data available, it is
reasonable to argue that the ‘older’ age profile of electrical apprentices today, means that
many apprentices are better prepared for the demands of electrical trades work than what
might have been the case historically. The assumption that electrical apprentices now have
better baseline skill levels on entry is borne out by the entry requirements which now define
the field. Entry to electrical apprenticeships is often highly competitive and usually requires
HSC completion (grade twelve). From a recruitment standpoint, the ‘best’ of applicants are
generally selected so the standard of electrical apprentices (quality of applicant) is likely to
be higher overall.
13
Table 1: Electrical apprentices by age group, 1996, 2001 & 2006
Age group
1996
2001
2006
15-19 years
46.5%
44.5%
36.0%
20-24 years
45.2%
45.1%
37.9%
Over 25 years
8.4%
10.4%
26.1%
100.0%
100.0%
100.0%
Total 15+
Population: Electrical apprentices only
Based on ABS data: Australian Census of Population and Housing 1996, 2001, 2006
Changing household composition
Contextual information (e.g. household composition and living arrangements) on electrical
apprentices also helps to inform the development of reasonable assumptions about the
economic responsibilities and labour market position of these workers, and the
compensation structures that might reasonably be defined and derived from this evidence.
Historically, it has been assumed that apprentices, largely because of their young age, they
would still be ‘living at home with mum and dad’.
The 2006 Census data allows
examination of the living arrangements of electrical apprentices to give some insight on the
financial responsibilities and economic burdens typically juggled by these trainees and
workers. The 2006 Census data (Table 2) shows that many electrical apprentices are living
independently and are not supported by their parents. The majority of younger apprentices
aged 15 to 19 remain living in the family household, with only 7 per cent living in a nonfamily household (most likely a share arrangement). As these apprentices age however,
more live in non-family households, with just under 50 per cent of electrical apprentices aged
20 years and older living in non-family households. The increased proportion of apprentices
aged 30 years and over living in a one family household suggests a growing proportion that
are balancing apprenticeships with family responsibilities.
14
Table 2: Household composition and age group, 2006
One family
household
Multi family
household
Non-family
household
Total
15-19 years
91.9%
1.5%
6.5%
100.0%
20-24 years
82.2%
2.2%
15.5%
100.0%
25-29 years
78.3%
3.0%
18.7%
100.0%
30+ years
85.2%
1.4%
13.4%
100.0%
Population: Electrical apprentices only
Based on ABS data: Australian Census of Population and Housing 1996, 2001, 2006
In addition, the 2006 Census data also gives additional insights on the financial burdens and
work-associated costs derived from undertaking an electrical apprenticeship.
For the
purposes of this analysis, we use transport as an illustrative mini-case study. Electrical
apprentices need work transport which allows them to exercise a high degree of autonomy
over the use of that transport. Electrical trade services work can occur at atypical hours
(roster/shift work or early morning starts) and can occur in locations which are not typically
on a public transport route (eg workshops located on industrial or semi-industrial estates) or
on-call to job sites (where the location of work may vary from week to week. The Census
collects information on how people travel to work6, and the responses provided by electrical
apprentices are enlightening. As at 2006, 84 per cent of electrical apprentices arrived at their
work site in a private car. This illustrates that while electrical apprentices may seek to
contain living costs by ‘living at home’, other financial burdens come into play for these
workers. For example, the need for private transport is clearly critical in order to meet the
requirements of electrical apprenticeship work, and the repayment schedules associated
with car loans, maintenance costs, and fuel can be a significant undertaking for apprentices
on a limited income.
6
Customise data Australia Bureau of Statistics Census Data 2006: Employed persons aged 15 and over:
Selected Occupation by Age and Method of Travel to Work, Australia
15
Growth in apprentices with vocational qualifications
In addition to the changing age demographic of electrical apprentices, the Census data also
shows a steady increase in the number of electrical apprentices that hold skilled vocational
qualifications, on entry to the trade. The number of electrical apprentices with skilled VET
qualifications increased from 12 per cent in 1996, to 15 per cent in 2001 and 19 per cent in
2006. Thus, just under a fifth of electrical apprentices already hold a vocational qualification
of some kind.
It is important to note that the trend toward high school completions and growth in VET
qualifications is likely to increase in the coming decades, because of the impact of wider
Government initiatives in education and training.
The
Federal Government’s COAG
education initiatives has established a target of a 90 per cent completion of Year 12 or its
equivalent by 2020, and aims to halve the proportion of Australians aged between 20 and 64
without qualifications at the Certificate III level and above.7
The data which demonstrates that a growing number of apprentices have prior
qualifications is further corroborated by other research findings. In some sectors of the
building and construction industry in Victoria, and particularly in the electrical trades,
completion of a pre-apprenticeship (Certificate I-II level) is often a pre-requisite for entry to
an apprenticeship (Dumbrell, Schutz, Norton and Buchanan, 2010). The growth in preapprenticeship numbers is contributing to the changing demographics of apprentices, as
quality pre-apprenticeships courses enable students to start an apprenticeship with basic
introductory skills for a particular trade. Thus, while first and second year apprentices still
require the active support of more senior tradespeople to develop their technical skills, it is
important to note that a growing number of electrical apprentices commence their
apprenticeship with prior work experience which would have enabled them to develop at
least some technical, behavioural and cognitive skills that can be utilised in their first year as
an apprentice.
7
COAG National Partnership Agreement on Youth Attainment and Transitions
16
In summary, in this section we have used Census data to show that a significant proportion
of apprentices are older and possess VET qualifications. A significant number are now living
independently, without the support of their parents, and some are parents themselves. Thus,
the assumption that apprentices have lower work value because they are young people who
remain marginally or wholly dependent on their parents, and who have limited job-related
expenses requires revision. Indeed, if the award system is to remain relevant, it is important
that the wage structure and relativities acknowledge these broader demographic shifts and
the compensation arrangements remain commensurate to the changing demands and
responsibilities of the electrical apprenticeship role.
17
4 Labour standards of apprentices
In this section, we examine the labour standards of electrical apprentices as set out in the
award minima specifically relevant to electrical trades. In order to gain an understanding of
how the award compares to current going rates, we have examined wage rates and clauses
in ten strategically selected agreements in sectors where electrical apprentices are commonly
employed: power supply, lift maintenance and electrical contracting.
Modern Awards
The four most relevant modern awards covering apprentices working in electrical trades are:
•
The Electrical, Electronic and Communications Contracting Award 2010;
•
The Electrical Power Industry Award 2010;
•
The Building and Construction General On-site Award 2010; and
•
The Manufacturing and Associated Industries and Occupations Awards 2010.
Before examining the current labour standards of apprentices (defined by the above
awards), it is important to briefly take account of the changes to the national system of wage
determination that have occurred over the past two years. Through the modern award
process, the number and complexity of awards were significantly reduced in 2010. In the
next section it is demonstrated that the award rates specified in the Electrical, Electronic and
Communications Contracting Award 2010 are approximately 10-20 per cent lower than the
state or territory awards they were designed to replace. According to a key informant from
the Electrical Industry Stakeholder Consortium, this is because the electrical trades rate
(which the relativities are attached to) was decreased in the modern award process. Given
the already low rates of apprentice pay, there are strong grounds for FWA to assess the
impact of the transitional provisions on apprentice take home pay.
18
Relativities
Apprentices in the four above awards are usually paid as a percentage of the qualified
tradespersons rate (the Manufacturing and Associated Industries Award 2010 is also set in
reference to the National Training Wage). Historically, wages were set according to this
method to compensate the apprentice’s employer for their lower productivity in the early
years of the apprenticeship and the time needed for on the job training (Apprenticeships for
the 21st Century Expert Panel, 2011) An examination of those modern awards shows that
there are significant differences in the relativities paid to apprentices.
Table 3: Apprentice wage ratios by year for selected awards covering electrical apprentices –
non-adult
Award name
Year 1
Year 2
Year 3
Year 4
Building and Construction General On-site Award 2010
45
55
75
90
Four Year Apprenticeship Rate
45
55
75
90
Three Year Apprenticeship Rate
Electrical, Electronic and Communications Contracting
Award 2010 – Junior Apprentice Rate
Trainee Apprentice Rate (NSW)
Electrical Power Industry Award 2010
55
75
90
-
40
46
42
52
59
55
70
77
75
82
86
85
Table 4: Apprentice wage ratios by year, Manufacturing and Associated Industries Award
2010 – non-adult rate
Qualification level
Completed Year 10 or less
Completed Year 11
Completed Year 12
Year 1
42
Year 2
55
Year 3
75
Year 4
88
80% of the unapprenticed
award junior rate
for an 18 year old
The relevant
National Training
Wage for trainee
commencing after
year 12, Skill
Level A
55
75
88
The relevant
National Training
Wage for trainee
commencing after
year 12, plus one
year, Skill Level A
75%
C10
rate
C12
rate
19
In theory, the relativities outlined above are intended to reflect the different (i.e. improved)
productivity outcomes achieved by apprentices as they progress through the trade.
However as it stands, there appears to be a dearth of research evidence available to justify
this structure, nor the assumptions underpinning it. At this point in time, no industry level
body nor government research agency systematically collects nor collates the workplacelevel time series data which would be required to legitimise this structure, nor the wage
ratios assigned. Indeed the structure of these relativities appears to be driven by long
standing custom and practice in the industries which employ the majority of electrical
apprentices (e.g. building and construction, manufacturing).
In addition, other key information sources fail to shed light on this issue either. In the
industrial relations realm for example, legal test cases often provide important insights
around the emergence, and maintenance of particular wage relativities. Interestingly, there
appears to be no legal test case which definitively explains the relatives present in the
modern awards, nor their predecessor awards, outlined above.
The intersection between different industry awards, contracting awards, and the mandatory
requirements for electrical apprentices also creates a number of wage ambiguities, which
appear to be resolved to the detriment of the electrical apprentice. As discussed in the
previous section, many employers expect first year electrical apprentices to have undertaken
a pre-apprenticeship (often a Certificate I or II) and require that applicants have completed
year twelve (at a minimum).
It is thus unclear why the relativities in the Electrical,
Electronic and Communications Contracting Award 20108, Electrical Power Industry Award
2010 and Manufacturing and Associated Industries Award 2010 are set lower than that of
the Building and Construction General On-site Award 2010. Despite undertaking the same
trade in their apprenticeship, apprentices will often be covered by different modern awards
and therefore different minimum standards will apply. For example, an award-reliant
electrical apprentice working for a lift company would typically be covered by the Building
and Construction General On-site Award 2010 but if this same work was undertaken by an
employee of an electrical contracting firm the apprentice would be covered by the Electrical,
8
Excluding the Trainee Apprentice Rate NSW.
20
Electronic and Communications Contracting Award 2010. Despite doing exactly the same
apprenticeship, there is a 5 per cent difference in pay relative to the tradesperson rate.
Apprentice wages as a proportion of the minimum tradesperson rate
It is a long standing and labour market-wide practice that apprentice wages represent a
portion (percentage) of a fully qualified tradesperson’s rate of pay. This remains the case in
most awards.9 One of the first, and most influential cases in establishing this principle is the
1956 Ship Joiners Apprentices Case. In this decision, Commissioner Tonkin of the New
South Wales Industrial Relations Commission held that the rates of wages for apprentices
should be prescribed as percentages of the tradesman’s total wage:
In my opinion, the sole purpose of expressing the rate of an apprentice as a percentage of
the tradesman total wage, that is, basic wage plus a margin, is to ensure he will
automatically receive a percentage of such increase so as to keep his total wage on the
same percentage basis of the tradesman’s total wage, which he enjoyed before the increase
in the tradesman’s margin was granted.
An apprentice in his fourth year has derived considerable degree of skill and is of value to
his employer. If, by way of example, his wage is 70 per cent of that of the tradesman and
the tradesman receives a marginal increase of 15s per week, how could it justifiably be
denied that an apprentice should be entitled to 70s of that 15s?10
However, analysis of the statistical evidence available suggests that an alternative
methodology may represent a more realistic way to assess these relativities, which is
relevant to the contemporary needs and management systems of modern workplaces. For
this analysis, repeated cross-sections, drawn from the Australian Census data 1996 – 2006,
highlights that apprentice incomes may be meaningfully compared to the incomes of their
supervisors - many of whom are not-award reliant and earn incomes considerably higher
than the trades’ qualified rate identified in statutory minima.
9
Ship Joiners Apprentice Caw 1956 87 C.A.R 326 cited in Industrial Relations Commission of New South Wales, The
Apprenticeship System in New South Wales (1968) p. 296
10
Ship Joiners Apprentice Caw 1956 87 C.A.R 326 cited in Industrial Relations Commission of New South Wales, The
Apprenticeship System in New South Wales (1968) p. 296.
21
The ABS’ 2006 Census data show that supervisor electricians earned on average $1452.90
per week whereas the minimum wage for a trades qualified electrician (grade 5) in 2011 was
$686.20 per week.11 Unfortunately, at the time of writing the 2011 Census data was not
available, however it is reasonable to estimate that the average wage of a supervisor
electrician would have increased since the 2006 Census, given other upward wage
movements across the Australian labour market over the same period. As can be seen from
the table below, the gap between the average wages of apprentice electricians and their
supervisors has grown over the ten years forming the observation window for our analysis.
Table 5: Average electrical apprentice wages as a proportion of their supervisor’s wages
1996
2001
2006
Average electrical apprentice income* ($)/week
310.69
362
513.78
Average Electrician (Supervisor) income ($)/week
775
951
1452.9
Apprentice electrician wages as a proportion of
supervisor wages ($)/week
40%
38%
35%
Average wage of apprentice electricians across all stages of training and including junior and adult
rates of pay.
In undertaking the Modern Award Review of apprentice wages, close attention should be
paid to apprentice relativities. This Review provides the opportunity to rethink how the
relativities in the award can be set in order to:
a) create a level playing field amongst apprentices undertaking the same trade
training, irrespective of sectoral or industry location;
b) to recognise the demographic changes discussed earlier in this report; and
c) to examine how apprentice wages can be set in order to keep pace with the average
tradesperson’s wage (which is generally accepted to be much higher than the statutory
minima).
Adult apprentice rates
As noted by the Apprenticeships for the 21st Century Expert Panel report, there is a disparity
in modern awards with respect to adult apprentice rates of pay. This was borne out by a
close examination of clauses relating to adult apprentice rates:
11
Electrical, Electronic and Communications Contracting Award 2010 (excluding 2012 Minimum Wage increase)
22
Table 6: Apprentice wage ratios by year for selected awards covering electrical
apprentices – adult
Award name
Year 1
Year 2
Year 3
Year 4
Building and Construction General On-site Award 201012
Four Year Apprenticeship Rate
45
55
75
90
Three Year Apprenticeship Rate
55
75
90
-
Electrical, Electronic and Communications Contracting Award 2010
Junior Apprentice Rate
40
52
70
82
Adult Rate (QLD)
75
80
84
90
Trainee Apprentices (NSW)
46
59
77
86
70
80
85
90
C14
rate
C13
rate
C12
rate
Electrical Power Industry Award 2010
Adult Rate
Manufacturing and Associated Industries Award 2010
National Training
Wage Traineeship
Skill Level B exit rate
Adult Rate
As can be seen from table 6, adult apprentices are paid at the same relativities as junior
apprentices in the Building and Construction General On-site Award 201013, and the
Electrical Electronic and Communications Contracting Award 2010. Extensive review of the
relevant award content in this industrial space reveals only three exceptions to this
disparity.
In the state of Queensland, adult apprentice rates of pay are specified and
mandated. In addition, the Building and Construction General On-site General Award 2010
contain a continuity provision which addresses the issue of adult apprentices directly. This
award deems that, where an apprentice was employed by an employer in the metal and
engineering on-site construction industry immediately prior to becoming an adult apprentice
with that employer, such person will not suffer a reduction in the rate of pay by virtue of
becoming an apprentice. In these circumstances, the adult apprentice will continue to
receive the rate of pay that is applicable to the classification or class of work which the adult
apprentice was engaged immediately prior to entering into the contract of indenture. The
12
The rate of pay of an adult apprentice will be the rate prescribed for the lowest paid classification in
clause 19.1 or the rate prescribed by clause 19.7 for the relevant year of apprenticeship, whichever is
the greater.
13
ibid
23
clause in this award also states that the adult rate of pay
is either the lowest paid
classification (in clause 19.1) or the rate prescribed (by clause 19.7) for the relevant year of
apprenticeship, whichever is the greater. A similar continuity provision is contained in the
Manufacturing and Associated Industries Award 2010 and the Electrical Power Industry
Award 2010. It should be noted that there is no continuity provision in the Electrical,
Electronic and Communications Contracting Award 2010.
This means that, unless the
electrical apprentice is covered by one of the three provisions outlined above, which
generally represent the exception to the rule, adult electrical apprentices under the Electrical,
Electronic and Communications Contracting Award 2010 will most likely have to take a cut
in pay on entering the apprenticeship because of the woefully low rates of pay associated
with apprenticeships. The way in which this scenario plays out, is described in more detail
below.
The table below demonstrates the different provisions relating to adult apprentices in the
four key awards covering electrical apprentices:
Table 7: Adult apprentice and continuity clauses in selected modern awards
Modern Award
Building and
Construction
General On-site
Award 2010
Electrical, Electronic
and Communications
Contracting Award
2010
Electrical Power
Industry Award
2010
Manufacturing and
Associated Industries
Award 2010
Adult rate

Qld only


Continuity clause

14


These findings point to macro implications (at the industry level) and micro implications
(for the individual electrical apprentice). In order to understand the standard of living
implications for electrical apprentices, the changing age profile of electrical apprentices
(section one), must be considered in the context of the industrial instrumentation (described
Under the Electronic and Communications Contracting Award clause D.5.3, an employee
who was employed by an employer immediately prior to becoming a trainee with that
employer must not suffer a reduction in their minimum wage per week or per hour by
virtue of becoming a trainee.
24
14
above). Firstly, in the absence of specified ‘adult’ rates of pay in modern awards and/or
continuity clauses (described above) which would prevent a reduction of pay for those
adults already engaged in the industry, electrical apprentice pay rates as currently defined
are likely to have a pronounced and detrimental impact on the living standards apprentices
aged over 21 years.
At the macro level too, poor standards of pay will reduce the
attractiveness of the sector to new entrants, and reduce the desirability of entering the
electrical trade for those already working in the industry.
A forthcoming report by Yu, Bretherton and Schutz at the Workplace Research Centre and
commissioned by NCVER investigated the extent to which educational pathways from
lower skilled occupations such trades assistants to licensed electricians are accessed. The
quantitative analysis showed that despite the availability of educational pathways from nontrades (e.g. trades assistants) occupations to licensed trades that there was little mobility of
this nature. The qualitative research found that although some non-trades people would be
interested in undertaking an apprenticeship, it was not considered a viable career option for
many interviewees because of the low paid nature of the apprenticeship. The low skilled
workers in Yu et al’s study were most vulnerable to, and least able to overcome, barriers to
career development. This research suggests that there are strong grounds for Fair Work
Australia to consider how modern awards can incorporate minimum conditions to assist
people transition into apprenticeships.
The interaction between statutory minima and enterprise agreements
In this section, we discuss the interaction between the award minima and enterprise
agreements. It is important to recognise that the minimum standards set by the award
system are important as awards play a role in determining the wages and conditions for
many apprentices who are a) award-reliant and b) over-award (informal and formal).
Data published in a recent NCVER report showed that many apprentices are award-reliant.
For example, in the electro-technology and telecommunications industries, where many
electrical apprentices are employed, 72 per cent of trades workers are employed under
federal or state awards, 13 per cent under certified agreements, 1 per cent on AWAs, with
25
the remainder (13 per cent) in the ‘other’ category (NCVER, 2011). Unpublished data from
the Eastern Seaboard Industrial Relations Survey, conducted by the Workplace Research
Centre in 2006, also shows that awards are the dominant form of wage setting in a majority
of NSW workplaces employing apprentices (Oliver, 2008). While this survey data may now
be slightly out of date, it gives a good indication of the historical importance of the award
system in setting apprentice pay and conditions.
For those apprentices covered by enterprise agreements, it is reasonable to expect that most
apprentices would have access to conditions above the award, as Fair Work Act agreements
have to pass the better off overall test (‘BOOT’ test). However as the Apprenticeships for the
21st Century Expert Panel noted, it is still up to the parties to negotiate on provisions,
including, for example, recognition of training, tool allowances and penalty rates. Thus the
award minima is important in setting the ‘floor’ for bargaining. Furthermore as Oliver
(2008) points out, while many enterprise agreements may be comprehensive and detailed
instruments, many do not make adequate provision for apprentices and trainees, so by
default, apprentices remain largely award-reliant rather than covered by the relevant
enterprise agreement.
Apprentice award pay compared to strategically selected enterprise
agreements
In order to assess the appropriateness of current modern award rates, going rates of pay
must be considered comparatively against these instruments.
While ABS Census data can
provide important insights on going rates of pay for electrical apprentices, at the time of this
research, the most recent data (2011 Census) was not available. Previous Census data (2006)
on rates of pay were not used for this analysis, because it was considered too out of date. In
the absence of other data sources, the WRC has developed an alternative methodology
which compares pay rates identified by (relevant) agreement content, with (applicable)
modern awards. For this analysis, the wage rates in the applicable modern awards were
compared with ten strategically selected (industry significant) enterprise agreements, in
sectors where electrical apprentices are commonly employed. The EAs were strategically
26
selected on the basis of advice from key informants from the Electrical Stakeholder Industry
Consortium on the basis that they were a) representative of enterprise agreements in the
sector or b) covered a large number of employees. All of the agreements identified in this
report are publically available documents, available from the FWA website.
The analysis involved aligning the classification structures of the enterprise agreement with
the relevant modern award so a direct comparison for each level could be undertaken. The
WRC also compared allowances, hours of work clauses and training clauses in agreements
to the award.
Table 6 and appendix 1,2 and 3 in the appendices, show that there are significant differences
in the pay rates of apprentices on enterprise agreements in contrast to the applicable modern
awards. Most importantly the analysis reveals that wage rates in awards are not keeping
pace with going rates of pay. This finding is particularly significant to the considerations to
occur as part of the Modern Award Review, because recent research identifies that
employers who support their apprentices financially, and through mentoring, have higher
completion rates (Karmel and Roberts, 2012). Allowing the award standard to drop too far
behind going rates may therefore have flow on effects in terms of completion rates for
award-reliant apprentices and may have a future impact on EA-reliant apprentices as the
minima set the floor for bargaining.
27
Table 8: Comparison of enterprise agreement and modern award rates of pay, first year apprentices
Award/ Agreement
Difference
(EA> MA) Award/ Agreement
Electrical Power Industry
Award 2010, Current 2011
Ausgrid Agreement 2010
Ausgrid Agreement 2010 adult rates
Essential Energy Enterprise
Agreement 2011
Suzlon Energy Australia Pty
Ltd, Service Technicians and
CEPU Enterprise Agreement
2010
79%
Building and Construction General
On-site Award 2010, current 2011
Schindler Lifts Australia Pty Ltd
(WA) Enterprise Agreement 20102013
59%
Schindler Lifts Australia Pty Ltd
(Queensland) Enterprise Agreement
2011-2014
79%
198%
Thyssenkrupp Elevator Australia
Pty Ltd Enterprise Agreement 2011
Difference
(EA> MA) Award/ Agreement
Difference
(EA> MA)
Electrical, Electronic and
Communications Contracting
Award 2010, current 2011
58%
ADJ Contracting Pty Ltd Enterprise
Agreement 2010-2014 – Base rate
73%
84%
ADJ Contracting Pty Ltd Enterprise
Agreement 2010-2014 – base rate,
adult
121%
70%
Wiltech Electrical & Security Pty Ltd
and ETU Enterprise Agreement
2010-2014 (Service Maintenance
Installation)
73%
Wiltech Electrical & Security Pty Ltd
and ETU Enterprise Agreement
2010-2014 (Service Maintenance
Installation), adult
121%
28
3.1 Clauses covering apprentices in enterprise agreements
In addition to the wage rates contained in enterprise agreements, it is also important to
consider other clauses contained in agreements that shape apprentice working conditions,
job quality and training. Research by Gallacher (2004) identifies that these clauses are
pivotal to apprentice experience in the workplace because they deeply shape workplace
culture and the level of support extended to apprentices. Gallacher’s findings are echoed in
the observations made by the apprentices interviewed for this study who overwhelmingly
identify that both
financial and non-financial supports are important and necessary
preconditions for achieving training completion.
While it must be noted that the ten
agreements do not represent the experience of all electrical apprentice employees, the degree
of variation (even within this small sample) was considerable. It is important to note that
the impact of agreement clauses on the working environment and working life of electrical
apprentices is likely to be profound, yield a wide range of very diverse impacts, and given
the dearth of information surrounding this issue, is likely to be underestimated.
Our analysis found that it was common for the agreements to contain clauses stipulating
that apprentices be reimbursed the costs of TAFE fees (upon a satisfactory pass grade) and
that time spent at TAFE should be paid at normal apprentice rates of pay. Clauses such as
these mirror the award standards. Some agreements contained more generous provisions
and included a TAFE achievement allowance to be paid when the apprentices has recorded
not more than one ‘not completed/failed’ module result on their Apprenticeship Course
record. One of the agreements also contained a clause deeming that apprentices be paid a
travel time allowance for travel to TAFE. Two of the agreements also contained clauses
aimed at supporting female apprentices in the workplace, while another two contained
provisions identifying appropriate supervisor to apprentice ratios. Provisions such as these
(if they are indeed actually enforced and in operation at workplaces) lay positive
foundations that are likely to facilitate mentoring and development of apprentices, and
ultimately contribute to a quality apprenticeship system.
29
While this is only a small sample of agreements, it illustrates that the labour standards of
electrical apprentices in enterprise agreements are not uniform. Some will receive a greater
income and training support than others. In reviewing modern awards, consideration
should be given to the consistent implementation of clauses that lay strong foundations to
promote the mentoring and training needs of apprentices, help to develop a quality and
responsive apprenticeship system, and build a skilled and adaptive workforce in the long
term.
30
5 Living standards of apprentices
To evaluate whether the electrical apprentice wage sufficiently meets the changing needs of
apprentices, we examined whether the apprentice wage supports a standard of living
acceptable to the Australian community. Using Indicative Budget Standards modified for
apprentices, we compared scenarios modelled on three different stages of the life course:
•
the traditional apprentice or apprentice as ‘dependent child’;
•
the independent apprentice living in shared rental accommodation; and
•
the apprentice breadwinner who supports their own family.
We tested whether the apprentice wage is sufficient to meet the needs of either a low cost
budget or a modest-but-adequate budget.
The low cost budget is defined as: “one which may require frugal and careful
management… It represents a lower bound, below which it would become increasingly
difficult to maintain an acceptable living standard because of the increased risk of
deprivation and disadvantage” (Saunders et al, 1998: 62).
The modest-but-adequate standard is a standard comparable to broad community
expectations. In other words, it is based on the income required to sustain the consumption
patterns typical of ‘middle Australia’ and “affords full opportunity to participate in
contemporary Australian society and the basic options it offers”. The modest-but-adequate
standard lies “between the standards of survival and decency and those of luxury, falling
somewhere around the median living standards experienced within the Australian
community” (Saunders et al, 1998: 62).
In addition, we drew on qualitative interviews with apprentices drawn from the Workplace
Research Centre’s Australia at Work study, to illustrate the experience of living on the
apprentice wage in the three different demographic groups.
31
Table 4 in the appendix describes the key characteristics of the interviewees who
participated in the study. Pseudonyms have been used to preserve the confidentiality of
participants. Reflecting the composition of the workforce, only one interviewee was female.
Three of the participants were award-reliant and the remainder were either paid on an
enterprise agreement or on above- award arrangements. All of the interviewees had
completed HSC, four had undertaken a pre-apprenticeship, two had previously studied at
university and one had studied at TAFE.
Adapting and Modifying Indicative Budget Standards for Apprentices
In calculating Budget Standards for the three apprentice scenarios analysed in this report,
some expenditure is individual (clothing) and some is a share of goods and services
available to all members of the household (for example, shares of energy consumption). In
contrast to “living with parents” scenarios, the living independently scenarios provide less
opportunity to share in the costs of jointly provided goods and services.15
The Indicative Budget Standards for Australia were developed for the Commonwealth
Department of Family and Community Services in 1997. This highlights two factors relevant
to calculating a Budget Standard in 2012 – (1) updating the prices of goods and services and
(2) taking account of change in commodities or in their significance.
The Australian Bureau of Statistics (ABS) publishes the Consumer Price Index (CPI), which
captures changes in the prices of commodity every quarter for each of Australia’s eight
capital cities. This Index is used to bring important historical insights to bear in this analysis.
However, it must be noted that the ABS modifies its practices surrounding this index in
order to make sure it reflects current Australian consumption. This includes changes in both
prices and the kinds of commodities consumed, as well as the relative proportions of income
spent on these commodities. Some examples of updates to the basket of commodities
include:
15
An earlier adaptation of these Commonwealth Budget Standards can be found in Bittman et al,. (2007) The
Living Standards of Apprentices.
32
•
private motoring in the September quarter 1952
•
television (1960)
•
snacks (1974),
•
take-away food (1976)
•
restaurant meals (1982)
•
overseas holiday travel (1982)
•
child care fees (1982)
•
domestic services (1998)
•
home computers (1998)
As well as new commodities included during review of the CPI, the basket is also
reweighted on a regular basis to reflect the changing proportion of household income
expended on these items. Weights have been changed in 1963, 1968, 1973, 1974, 1976, 1982,
1987, 1992, 1998, 2000 and 2005. This reweighting process is an important way of keeping the
CPI up to date and relevant. An example of the need to update and review the inclusions
relevant to this Index is illustrated by the case of mobile phones, which have proliferated in
recent years. The updated budget standard used in this report is
based on the CPI
information for the March quarter 2012, in each of the eight capital cities of Australia,
excluding housing costs.
CPI estimates of housing costs have been excluded for the purpose of the current analysis.
The issue of incorporating housing costs into assessments of income adequacy has posed a
long standing challenge for researchers because of the regional complexity associated with
comparative research in this realm. Consequently, much of the research using the
Henderson poverty line has been conducted without including housing costs (Saunders,
1994). Similarly, an investigation of items included in the basket of goods used to estimate
the CPI shows some uncertainty in the treatment of housing costs. Among the very few
items ever dropped the basket was “mortgage interest charges”, first introduced in 1987 but
dropped in 1998, which was replaced with ‘house purchase’ in the same year.
33
Taking into account the demographic profile outlined earlier in this paper, the following
income adequacy hypotheticals are broadly modelled around ‘family of origin’ (very young
apprentices who pay board) versus ‘independent dwelling’ electrical apprentices. For the
purposes of this analysis, rental costs are an appropriate costing measure on which to base
housing cost scenarios for ‘independent dwellers’ for a number of reasons. While it is noted
that a growing number of apprentices appear to older, the majority remain in younger
workers (aged 30 years or under) and so are less likely to be engaged in the process of
buying their own home. Indeed the average age for first home buyers in Australia is 34
years old (ABS Housing Occupancy and Costs Nov 2011 catalogue no 4130), so it is
reasonable to assume that the majority of electrical apprentices are not home owners or
home purchasers.
For the purposes of this research, independent dwelling electrical
apprentices are captured in two broad scenarios (those in ‘share houses’ with no dependants
versus those renting their own home, while caring for dependants). The quarterly data on
rents used in this report are drawn from information available through the Real Estate
Institute of Australia (REIA). The REIA quarterly data is based on the weekly rents recorded
on rental bond lodgement forms submitted to appropriate state and territory rental bonds
agencies.
34
6 Apprentices under various housing scenarios
The information about apprentices’ costs of living is presented for three scenarios:
Scenario One - the apprentice continues to live with his family of origin, who meet all
the apprentice’s costs of living in return for $100 board.
Scenario Two - the apprentice lives independently of their family of origin by sharing a
two bedroom home unit with another person.
Scenario Three - the apprentice has a family of their own, a spouse and a six year old
daughter – and must meet all the expenses for this family alone.
Scenario One – the apprentice as a dependent child
Scenario one considers the financial situation of the traditional apprentice – one who has left
school at fifteen, taken up an apprenticeship, is single and who lives at home supported by
parents until he or she fully qualifies in a trade.
In Table X below, the amount required to maintain a standard of living at either the low cost
or modest-but-adequate standard is compared with the income of a first year electrical
contractor apprentice paid on award rates. This data is repeated across the state capitals.
Table 9: Scenario 1 – Apprentice living with family or origin
Sydney
Melbourne
Brisbane
Adelaide
Perth
Hobart
Darwin
Canberra
Low cost - no car
165.15
159.78
168.41
167.72
164.88
159.78
157.68
165.06
Low cost - own car
Modest but adequate
(own car)
Newstart allowance
(single)
214.82
207.84
219.06
218.16
214.47
207.84
205.10
214.70
301.99
292.17
307.95
306.69
301.50
298.14
288.32
301.82
244.85
244.85
244.85
244.85
244.85
244.85
244.85
244.85
201.35
201.35
201.35
201.35
201.35
201.35
201.35
201.35
274.48
274.48
274.48
274.48
274.48
274.48
274.48
274.48
Austudy
1st year electrical
contractor
apprentice
16
16
http://www.humanservices.gov.au/customer/enablers/centrelink/austudy/austudy-payment-rates
35
It is important to note that in this scenario, the apprentice’s weekly earnings of $274.48 is
slightly above their comparable income under the Newstart Allowance ($244.85), but is still
beneath the income required to live by a ‘modest-but-adequate standard’ in any of the state
capitals. This means that the living standard typical of ‘middle Australia’ is unattainable for
first year apprentices even if they are wholly dependent on their parents for
accommodation.
Indeed, if this hypothetical includes a contribution of $100 a week in board, the same
apprentice would fall short of the low cost standard. For illustrative purposes, an apprentice
living at the low cost standard: cannot afford to own or run a car of a standard typical of
their peers; can afford the purchase of generic brands only; has no access to luxury food
items (take away food at a bare minimum); has a small weekly ration of alcohol; has few
goods and services; takes most of their leisure at home or in very cheap pastimes; spends
less than most Australians on personal care and must stay healthy and have good teeth. The
smallest misfortune is likely to tip someone living at this standard into debt. The modestbut-adequate standard is not a luxury standard and is achieved by more than 50% of the
Australian population.
6.1
Apprentices as dependants: Grant and Craig
While contemporary apprentices are much more likely to have finished year 12 and
therefore be older when they start their apprenticeships, many still find themselves highly
dependent on their parents. During the qualitative interviews conducted for this study, the
majority of apprentices interviewed lived at home with their parents at some point during
their apprenticeship and many more relied on other forms of financial support from family
members. Of the few apprentices who paid board, they typically paid between $50 and $80 a
week. Grant and Craig were typical in this regard; both were single and living at home until
they completed their apprenticeship because their wages were not enough for them to live
independently.
Grant is 25 and currently in his fourth year of his apprenticeship. Unlike the traditional
apprentice, Grant finished year 12 and undertook some prior TAFE study before embarking
36
on his apprenticeship. He is completing his apprenticeship through a group-training
organisation (GTO) and receives wages determined under the modern award. He is single,
lives at home with his parents and pays them $80 a week in board. Although his parents
provide all his meals, he is able to buy his own lunch every third day or so and explains that
he can get by if he keeps to a budget. However, he will stay living at home until he
completes his apprenticeship because his wage does not provide enough income to live
independently.
I’d have to finish the apprenticeship before I could move out because I don’t think I’d be
able to pay all the bills on my current wage... renting would probably wipe out a good
three-fifths of my income and that’s not including food and paying all the other bills that is just the actual rent itself (Grant, 25, 4th year apprentice).
Craig is 19 and is a second year apprentice. Although he started his apprenticeship at a
younger age than Grant, Craig was still substantially older than a traditional apprentice
would have been, having also completed high school as well as pre-apprenticeship training.
Like Grant, Craig lives at home with his parents but he does not have to pay board. In his
first year as an apprentice he started on around $11 an hour and currently earns $16.58 an
hour. He describes his income as providing for a budget which just about “covers it, but
only just enough to get through.” Like Grant, Craig is required to “plan quite a bit in
advance to have money saved up” and is therefore likely to encounter financial stress in the
case of an emergency. As a result of this vulnerability, Craig feels that living independently
is out of his reach – “If I were to move out it would be a big struggle”.
Scenario Two – The apprentice living independently
Scenario two corresponds with a hypothetical apprentice who is living independently. Here
the amount required to maintain a low cost or modest-but-adequate cost of living is
calculated based on the cost of living generally associated with someone living ‘out of home’
and paying rent on a two-bedroom unit shared with one other co-tenant.
37
Table 10: Scenario 2 – Apprentice sharing a 2 bedroom unit
Low cost, own car
Modest but adequate
Newstart (+ rent
assistance)
2nd year electrical
contractor apprentice
3rd year electrical
contractor apprentice
4th year electrical
contractor apprentice
Sydney
443.02
566.05
Melbourne
390.93
509.97
Brisbane
404.82
530.29
Adelaide
358.91
483.86
Perth
417.66
540.50
Hobart
357.74
479.21
Darwin
407.65
525.12
Canberra
440.40
563.37
284.85
284.85
284.85
284.85
284.85
284.85
284.85
284.85
356.82
356.82
356.82
356.82
356.82
356.82
356.82
356.82
480.34
480.34
480.34
480.34
480.34
480.34
480.34
480.34
562.68
562.68
562.68
562.68
562.68
562.68
562.68
562.68
As shown in the table above, the prospects of living independently away from the parental
home, even at a meagre low cost standard is beyond the reach of most second year
apprentices. While fourth year apprentices may fair better with their higher earnings,
depending on where they live, they may still fall below the standard typical of ‘middle’
Australia.
6.2
Apprentices living independently: Stewart and John
Unsurprisingly, given the experiences of apprentices such as Grant and Craig, few of the
apprentices involved in the qualitative study were able to live independently while
undertaking their apprenticeships. Those who did live out of the family home during their
apprenticeship were much more likely to do so in their third or fourth year when they had a
substantial increase in income and then were likely to be living in shared rental
accommodation.
Stewart is 25 and currently in the third year of his apprenticeship. He completed year 12 and
18 months of a university degree prior to taking up his apprenticeship. Although Stewart
works for a large company and feels he is better paid than some other apprentices he knows,
he still lives on a very limited budget while he completes his apprenticeship. For example,
although recently married, Stewart lives with his wife in shared rental accommodation with
several others. He says: “I’d like to [live with my wife], but that’s going to happen when I get fully
qualified”.
38
John started his apprenticeship when he was 25. During his apprenticeship he lived in a
rental house he shared with some of his siblings. Even though he was living out of home
and had a small amount of rental assistance from the government, he still required financial
support from his family. In the quote below, John describes how he ‘got by’ on the
apprentice wage:
Well at the start, I remember pretty well, because it was pretty bad. It was about $320 net
a week, about $7 something an hour. I had some government assistance, like rent
assistance. I was living with my sisters; I had to borrow money from them a lot or from
the eldest one and a bit from my parents (John, 30, completed apprenticeship in
2010).
It was only on completion of his apprenticeship in 2010, when John could move in with his
girlfriend. While he and his girlfriend have since married and now have a child under two
years old, he describes this as something he could not have managed on the apprentice wage
– “Not in the first couple of years, definitely not”.
In the final scenario below we look at the situation for apprentices who are supporting their
own family.
Scenario Three – The apprentice breadwinner
Scenario Three corresponds to a situation of an apprentice as a family breadwinner. The
budget standard is calculated based on an apprentice who supports his or her own family - a
spouse and a six-year-old girl living in rental accommodation.
Table 11: Scenario 3 – Apprentice breadwinner
Low cost, own car
Modest but adequate
Newstart allowance
(partner +child rent*
Austudy (partnered, with
children)
1st year power industry
adult apprentice
2nd year power industry
adult apprentice
Sydney
903.11
1169.29
Melbourne
798.39
1055.91
Brisbane
827.06
1098.50
Adelaide
735.16
1005.48
Perth
852.38
1118.13
Hobart
732.34
995.13
Darwin
831.61
1085.75
Canberra
897.87
1163.90
291.49
291.49
291.49
291.49
291.49
291.49
291.49
291.49
221.05
221.05
221.05
221.05
221.05
221.05
221.05
221.05
480.62
480.62
480.62
480.62
480.62
480.62
480.62
480.62
549.28
549.28
549.28
549.28
549.28
549.28
549.28
549.28
39
3rd year power industry
adult apprentice
4th year power industry
adult apprentice
583.61
583.61
583.61
583.61
583.61
583.61
583.61
583.61
617.94
617.94
617.94
617.94
617.94
617.94
617.94
617.94
* Excluding family benefits – e.g. Family Tax Benefit Part A or B
As Table 9 above shows, even when the higher adult award rates under the Electrical Power
Industry Award 2010 are factored in, the apprentice wage falls substantially below what is
required for even a low cost budget. Therefore, without substantial financial help, an
apprentice is unlikely to be able to support a family throughout his or her training.
6.3
The apprentice breadwinner: Ben
Ben completed his apprenticeship in 2011 and lives with his wife and their three children
who are all under the age of 12. Ben started his electrical apprenticeship after more than 20
years work experience in another trade. Although Ben is not a typical apprentice, having
started when he was almost 40, he represents an emerging trend whereby people are older
when they take up an apprenticeship. Unlike the traditional apprentice, older apprentices
are more likely to have greater family responsibilities. During his apprenticeship Ben relied
on substantial support from his large, ‘family-friendly’ employer who provided his family
with subsidised housing in the remote area where they operate. However, as his comments
below indicate, his family was still living on a low cost budget, unable to afford regular
meals outside the home or an annual holiday.
We struggled. Luckily [the company] who I work for supply you with a house. It's
pretty much rent-free. So I wouldn’t have been able to complete the apprenticeship unless
I had that advantage of not having to pay a mortgage or anything like that. We just pay
$50 a week rent. I was sort of taking home about $500 a week. So we had rent of $50 and
our food bills were about $350 a week. We didn't do a lot, like holidays and things like
that. We stayed home and managed that way. We didn't eat a lot of takeaway, didn't
have the family takeaway nights or anything (Ben, 43, recently completed
apprenticeship)
The indicative budget standards show that apprentices cannot meet a moderate-butadequate budget standard based on award rates of pay. Apprentices cannot afford to live
independently, particularly in the early years. This extends the period under which
40
apprentices are dependent on their parents and therefore risks making them feel
insufficiently autonomous for their age and working status. Those who did live
independently in the later years of their apprenticeship were still reliant on financial support
from their families. Those without access to family resources, such as Sarah (27, recently
completed apprenticeship), resorted to unsustainable use of credit to pay for everything
from emergencies to day to day expenses.
For apprentices who are also family breadwinners, living on the apprentice wage means that
even where they have substantial financial assistance from non-wage sources, they do
without things that meet broad community expectations such as eating meals outside the
home and taking annual holidays.
While the budget standards are calculated based on the award rates, clearly not all
apprentices are award-reliant with some apprentices being paid substantially higher rates
under enterprise agreements. However, interviews with apprentices indicate that even with
the higher rates of pay that characterise over-awards, apprentices were still struggling to live
independently without substantial financial support from either their families or from nonwage financial support from their employers in the form of subsidised housing.
While many clearly struggle on the apprentice wage, there were clearly other factors which
also contribute to the recruitment and retention of apprentices which will be explored in the
following section.
41
7 Recruitment and retention of apprentices
Having explored the living standards of electrical apprentices in the above section of the
report, we now consider those factors other than wages that are also likely to impact on
recruitment and retention. As outlined in section 3, the working conditions and training
supports that are enshrined in modern awards and enterprise agreements vary considerably
and this has flow on effects to the quality of life experienced by apprentices both on and off
the job. The factors affecting recruitment and retention of apprentices has been the subject of
much investigation (see Karmel et al, 2010; Corney and du Plessis, 2010; Gow et al, 2008;
Misko et al, 2007; Corney and du Plessis, 2010; Harris et al, 2001). The extant literature
supports the notion that the recruitment and retention of apprentices is influenced by a
range of structural factors including, but not limited to training and completion wages
(Karmel et al, 2010; Gow et al, 2008). A decision to undertake an electrical apprenticeship is
affected by the attractiveness of alternative employment or study options, including fulltime
work in unskilled employment, the option of university pathways and the wages and
conditions in other trades. Recruitment of electrical apprentices is also affected by both the
level of the apprentice wage as well as the wage anticipated on completion. Studies of
Australian students and apprentices have shown that financial considerations form the main
concern for students who decided not to pursue the path of an apprenticeship (Misko et al,
2007:20). That is, financial disadvantage acted as a strong disincentive to take up an
apprenticeship with students perceiving ‘more money being available in other jobs’ and the
‘training wage not being much more than the dole’ (Misko et al, 2007:20).
Retention and apprenticeship completion is affected by the availability of financial support
from family but also the supports and opportunities available in the workplace. For
example, Karmel et al (2010) draw attention to factors of non-completion such as
dissatisfaction with the provision of training, unsatisfactory work relationships, personal
factors as well as circumstances such as redundancy. The section below draws on
comparative wage data illustrated with perspectives drawn from interviews with electrical
apprentices about their motivations for starting and staying in their apprenticeship and the
kinds of supports they needed on the pathway to completion.
42
Recruitment
In this section we evaluate the attractiveness of embarking on an apprenticeship in the
context of available alternative employment options, that is full-time employment in
unskilled work, or full-time university study.
7.1
Unskilled work
As noted in the previous section, the Electrical, Electronic and Communications Contracting
Award 2010 provides wages that are insufficient for meeting even the low-cost budget
standard for an apprentice that does not have substantial financial support from family or
others to subsidise their income. In this way, the award minima automatically exclude some
potential apprentices who would instead take up unskilled employment. As shown in table
12
below, a comparison of the Electrical Power Industry Modern Award with the
McDonalds Enterprise Agreement indicates that an 18 year old would earn around $250
more each week working full-time at McDonalds than they would as an apprentice on the
Modern Award.
Table 12: Comparison of Electrical Power Industry Modern Award and
Equivalent unskilled wage
Modern Award $
McDonalds EA $17
First year apprentice
288.37
Trainee
540.14
Adult apprentice
480.62
Level 1
647.3
However, the relative attractiveness of unskilled work as an alternative to an apprenticeship
diminishes for those who have the advantage of family support and who, with strict
budgeting can absorb the initial opportunity cost of foregone wages. For these apprentices,
the higher income paid to the unskilled worker does not compensate for other factors. For
example, the insecurity, lack of training and paucity of pathways into more interesting work
which characterises much of the unskilled work available to their peers, makes this work
appear relatively unattractive. Several apprentices commented that although their friends
17
MCDONALD'S AUSTRALIA ENTERPRISE AGREEMENT 2009
43
working in retail and hospitality earned higher hourly rates, their income was irregular and
their jobs insecure - most likely because of the high rates of casualisation in these industries.
In their study of students and apprentices, Misko et al (2007) found that job security was a
primary motivating force for young people taking up their apprenticeship and this was
supported in our interviews with electrical apprentices.
“Yeah it was comparing my job to friend's ones. It was job security and also earnings as
well.” (Roger, 27, recently completed apprentice)
For Gary, the stability of the apprenticeship was attractive in comparison to his friends
working in short-term jobs that had no sense of progression. Comparing his experience
with his peers he says The whole time I've been doing my apprenticeship they've gone from job to job (Gary, 25, 4th
year apprentice)
For Grant who had previously worked in retail, there was a sense of achievement in
working towards his tradesman’s qualification, which he says, varied markedly from the
experience of people working in unskilled jobs - “Once I get my trade, I’ve got my trade, you
can’t take it away from me” (Grant, 25, 4th year apprentice)
For those who can afford it, foregoing pay during their apprenticeship was not as important
as the prospect of the potential for earning better money as a fully qualified electrician. Ross,
for example compares his experience with that of his friends employed in white collar jobs Well at the time they were earning $500 or $600, or $700 a week, and they were working in
offices. But now - as you're an apprentice the first four years are hard but after that when
you get your license your pay goes [up] more than that, after that you're earning $1000 a
week. (Ross, 28, recently completed apprentice).
7.2
University study
As an electrical apprenticeship is training towards a skilled occupation, the comparison
between the apprentice wage and university subsidies is also relevant. Table 13 below
44
shows that the weekly wage of someone on the Electrical Power Industry Modern Award is
higher than the Austudy allowance. This is partly in recognition that apprentices are
training on the job and therefore partly contributing to productivity.
Table 13
Electrical Power Industry Modern Award and Austudy
First year
First year adult
Modern Award $
288.37
480.62
No rent assistance
Rent assistance ($40.06)
Rent assistance ($70.49)
Austudy $
$201.35
$241.41
$291.59
Several of the apprentices interviewed in the study had made the transition from university
programs into an electrical apprenticeship. John, who had previously been enrolled in a
health science degree, discontinued his university studies because he could not see himself
working in the field. Stewart left his university studies after 18 months because he felt that
“there were no jobs in it”. He describes the relative benefit of his apprenticeship as a way of
being paid during your training which also has the advantage of being a pathway towards
what he felt is guaranteed employment:
...so you finish your four-year [apprenticeship], you’re learning how to do the job, and then
you get a job where you are. For me, it’s guaranteed and at least you’re getting paid to work.
At uni, you’re scrambling around for cash here and there (Stewart, 25, third year
apprentice)
Others, for example Tim, who had himself not attended university, observed the graduate
incomes as unattractive when compared with his earning potential as a fully qualified trades
person. He described his standard of living in the following way:
It was a lot better than uni students. Yeah, and a lot better than the first couple of years
when mates who were at uni were out getting jobs (Tim, 30 recently completed)
45
7.3
Other trades
Recruitment to the electrical trades is also influenced by the relative attractiveness of other
trades. Tim, for example, started out in cabinet making but found the pay so low that in
order to ‘make ends meet’ he had to work a part-time pub job. Between his apprenticeship
and his work in the pub, he was working 70 hours a week. While at TAFE, Tim became
friends with other apprentices and decided to change his apprenticeship upon learning
about the higher rates being paid to over-award apprentices in the electrical trade. Ben who
had previously completed an apprenticeship in the food trades was attracted to an electrical
apprenticeship because of the higher rates of pay on completion as well as the more sociable
hours of electrical work when compared to his work in the food industry.
Retention of electrical apprentices
The cost of non-completion to employers, apprentices and to national productivity is
substantial (Bilginsoy, 2003). Studies of Australian apprentices have shown that ‘intrinsic
motivation, satisfaction and work conditions were all significant predictors of apprentices’
thoughts towards remaining in their trade’ (Gow et al 2008:227). Others such as Corney and
du Plessis (2010:24) have shown that apprentices are more likely to complete when they
have a network of supportive ties. These ties can come in the form of formal and informal
mentors, supportive co-workers and as well as supportive family members. Harris et al
(2001) identify a range of factors that cumulatively affect the likelihood of completion. They
highlight: personal conditions (an interest in the trade); a high level of maturity and high
levels of social support; the social esteem attached to the occupation as well as the relative
attractiveness of alternative employment; workplace factors, including working conditions
and supportive relationships with co-workers and supervisors; and training, including the
quality and relevance of the learning experience and availability of career pathways (Harris
et al, 2001:4-6).
In the following section we analyse the financial and non-financial factors which influenced
apprentice completion among the electrical apprentices in our study.
46
Financial supports and incentives for completion
For most of the interviewees, remaining in their apprenticeship, particularly in the first few
years was dependent on the kind of financial support they could access to subsidise their
apprentice wage. This is unsurprising given the analysis of budget standards above.
7.4
Parental support
Previous studies of apprentices found that an apprentice needed family support in order to
complete their training. For example, Harris et al (2001) found:
“Virtually all those in training or recently completed training cited family support as a
significant factor in allowing them to undertake and complete their training. The low
wages paid to those under training contracts meant that family financial and material
support was essential - both in starting training and in meeting any unexpected financial
difficulties (such as car repairs) while under contract”.
For the apprentices in our study, the main source of financial support came from parents.
Many of the apprentices could not afford to live independently on the apprentice wage and
therefore their continued training was reliant on being able to live in the family home.
The level at which parents subsidise an apprenticeship through financial support is
calculated using the Indicative Budget Standard in Table 15 below. This calculation assumes
that the parents own their house outright, and that they are responsible for meeting the
needs of the apprentice including: accommodation; food; clothing and footwear; transport,
personal care products, household energy and even leisure (televisions, DVD hire, family
outings, etc.) It shows that even where an apprentice contributes $100 a week in board, there
is still a substantial shortfall. This shortfall is likely to be even more substantial given the
calculation overestimates the amount apprentices appear to be paying in board. For
example, apprentices participating in the qualitative study were paying less than $100 a
week board. Many of the apprentices reported paying no board while several paid between
$50 and $80 a week.
47
Table 14 : Apprentice lives with family of origin (pays board $100)
Scenario 1 - Apprentice lives with family of origin (pays board $100)
Sydney Melbourne Brisbane Adelaide
Perth
Hobart Darwin Canberra
Low cost - no car
-65.15
-59.78
-68.41
-67.72
-64.88
-63.04
-57.68
-65.06
Low cost - own car -114.82
-107.84
-119.06 -118.16 -114.47 -112.08 -105.10 -114.70
Modest but
-201.99
-192.17
-207.95 -206.69 -201.50 -198.14 -188.32
301.82
adequate (own car)
7.5
Government assistance and other subsidies
Several apprentices mentioned the financial assistance provided by government incentives
and allowances as an important form of financial support throughout their apprenticeships.
While electricians remain on the Australian Government’s National Skills Shortage List18
electrical apprentices who are over the age of 25 on commencement will have access to the
Australian Apprenticeships Incentives Program. According to the Australian Apprentices
website:
“The purpose of the Support for Adult Australian Apprentices payments is to either boost
the wage of the Australian Apprentice or to subsidise the wage costs of the employer,
depending on the Australian Apprentice’s actual wage”.19
Under the program the apprentice or their employer can receive payments of up to $13 000
during the first two years of their apprenticeship. For an eligible full time apprentice (or
their employer) this means $150 a week in the first year and $100 a week in their second
year. Apprentices such as Gary were using these ‘lump sums’ to pay for upfront course fees
and expressed their fear in continuing to ‘make ends meet’ when the access to these
payments were no longer available.
Depending on school fees especially now with the government grant or government
incentives gone it's probably - I know this year I've probably spent about six or seven
hundred [dollars] (Gary, 25, 4th year apprentice)
18
19
http://www.deewr.gov.au/Employment/LMI/SkillShortages/Documents/SSL_AUS.pdf
http://www.australianapprenticeships.gov.au
48
Eligible apprentices may also have access to a living away from home allowance if they are
required to relocate to undertake their apprenticeship. The Australian Apprentices website
states that “Australian Apprentices who are eligible to receive the allowance will receive $77.17 a
week for up to 12 months, $38.59 a week for a further 12 months and $25.00 a week for a third 12
month period”.20
For some, such as John, who lived in a shared house for part of his apprenticeship,
important support was supplied in the form of standard rental assistance. While others such
as Ben who has a wife and three children, the subsidised housing provided by his
Government employer was the main way in which he could complete his apprenticeship.
7.6
Wages on completion
Studies of apprentices have found that the training wage has an impact on the decision to
not continue with an apprenticeship in the first six to twelve months of the apprenticeship.
After this, it is likely to be the ‘premium associated with becoming a tradesperson that
counts, not the training wage’ (Karmel & Mlotkowski, 2010:34).
It was clear that many apprentices in our study struggled to make ends meet while on the
apprentice wage. But, like Karmel & Mlotkowski (2010) we also found that the prospect of
higher wages on completion was a strong motivating factor providing that apprentices had
survived the first couple of years on the apprentice. For 30-year-old Roger, a recently
completed apprentice, living on the apprentice wage was a struggle but knowing his income
would dramatically increase once he was licensed meant that “there was a light at the end of
the tunnel”. For Sarah, the wages on completion were the single most important factor in
continuing with her apprenticeship:
the wages do help a lot with keeping me in the job because it's not something I'm really
passionate about. Yeah I have to be honest and say the wages is or are the biggest draw
card to continuing on with the trade I suppose (Sarah, 27, recently completed
apprenticeship)
20
http://www.australianapprenticeships.gov.au/FAQ/Publications.asp#Factsheets
49
7.7
Non-financial factors
Interviews with apprentices also identified non-wage factors such as job quality and pastoral
care as key factors in the level of support they had for their completion. For apprentices, job
quality meant a quality learning environment where they were exposed to a broad range of
skills and tasks, where work was interesting and varied and where they experienced
increasing levels of autonomy as they progressed through their apprenticeships.
Conversely apprentices described poor job quality as diminishing their job satisfaction.
Apprentices who did not have access to a broad range of tasks or opportunities to develop
their skills often cited this as the worst part of their apprenticeship just the monotony of it; just the same thing. It doesn't change, ever - just constantly the same
thing (Craig, 19, 2nd year apprentice)
getting all the shit jobs because you're an apprentice (Mark, 21, 3rd year apprentice)
some jobs it's just like labourers work, like just digging and moving stuff (Ross, 28, recently
completed apprentice)
This experience may influence apprentices who are considering leaving their apprenticeship
or their current employer. As Craig, who found the monotony of tasks assigned to the
apprentice at his current workplace disheartening, comments:
“I have considered perhaps moving elsewhere. Still the same apprenticeship but just
elsewhere” (Craig, 19, 2nd year apprentice).
Some apprentices had their experience recognised and were gradually given more and more
responsibility within their apprenticeship. In some cases this was formally recognised
through access to recognition of training, higher pay and in some cases apprentices were
encouraged to continue their studies through undertaking an electrical engineering degree.
50
For others, the lack of access to recognition of advanced training was a source of frustration.
For example, for Tim, the worst part of his apprenticeship was Probably the fact that it was - well it took four - well, it took me 3½ years when after two
years doing all my work I was as competent as most of the tradesmen there. So a bit more that's because I was older and none of the TAFE work worried me really. Yeah, I felt as if I
could have done it a lot sooner (Tim, 30, recently completed apprentice)
Supports also included good working relationships, particularly good mentors and
instructors. This was reflected in comments by apprentices below citing some of the best
things about their apprenticeship I guess having good employers or good people to work with, they've kind of been through it
before... every now and then you would get someone coming to check up and see how you're
going and stuff like that, especially the lower year guys. (Gary, 25, 4th year apprentice)
Very good mentors, yes. A lot of them have been in the industry for about 25, 30 years. (Ben,
43, recently completed)
They took care of everything and made sure everything was all above board...we had field
officers [who] would come and check up on you and make sure everything's going all right
and if you had any problems they'd try and sort it out for you. (Roger, 27, recently
completed).
This was compromised in some companies where there was a shortage of qualified
tradesmen to supervise the work of apprentices and serve as mentors and instructors
when I first started it was a bit worse because their apprentice to A-grade ratio was way off
because we had a few more apprentices. Like a few guys who'd just got their A-grade or just
got some new A-grade guys coming in. (Gary, 25, 4th year apprentice)
Likewise, poor working relationships could contribute to an apprentice leaving his or her
employer or giving up their apprenticeship altogether. For example, Gary left his first
51
apprenticeship because his boss regularly antagonised him, while Grant was forced out of
his electrical apprenticeship because he did not get along with his boss. He is now
completing his apprenticeship in electronics.
I was there for about a year and a half and I didn't get along really well with the other guy. So
there's a bit of drama so I ended up leaving. (Gary, 25, 4th year apprentice)
I went through a skills training organisation.
They got me a job and then eventually
shenanigans happened and I ended up getting kicked out. (Grant, 25, 4th year apprentice)
Our interviews with electrical apprentices have confirmed earlier research findings about
the factors of recruitment and retention for trade apprentices and trainees. Like many other
studies, our retention analysis was limited because we did not have access to those who had
left an apprenticeship prior to completion, however we were able to gain the perspectives of
those apprentices who had changed their employer as well as those who had made
transitions in and out of their apprenticeships before completion. Our interviews
demonstrated that there are both financial and non-financial factors that influence
recruitment and retention. When analysed in the context of budget standards data presented
above, it would seem that some potential apprentices will be automatically excluded by low
training wages. For those apprentices who can marshal substantial financial support from
their families, non-financial factors such as access to recognition of training, quality
mentorship and opportunities to develop a broad range of relevant skills will be an
important consideration alongside the critical issue of the apprentice wage under the award.
52
8 Conclusion
The objective of this report has been to provide Fair Work Australia with information to
assist in the Modern Award Review process for awards that cover electrical apprentices. The
research adopted qualitative and quantitative research methods to answer the following
guiding research questions:
1) Are electrical apprentice wages, particularly those set in Modern Awards,
appropriate in light of the changing age demographics of apprentices?
2) What role do wages, amongst other factors, contribute to apprentice completion
rates?
Key findings
8.1
Demographic Profile
A review of ABS Census data (2006) shows that the demographic profile of electrical
apprentices has changed greatly in the past ten years:
•
just over one quarter of apprentices are over 25 years of age,
•
just under 20% possess VET qualifications,
•
many are living independently and are not supported by their parents and
•
a growing proportion of apprentices aged 30 years and over are living in a one family
household, suggesting that a growing number are balancing apprenticeships with
family responsibilities.
The assumption that apprentices have lower work value because they are untrained young
people who remain marginally or wholly dependent on their parents, and who have limited
job-ready experience requires revision. Many apprentices enter their training with deeper
cognitive, technical and behavioural skills than their predecessors.
53
8.2
Labour Standards
•
The award minima play a significant role in shaping the wages and conditions of
apprentices who are both award and over-award reliant. Apprentices, by virtue of
their training status, age and lower bargaining power, are not well placed to
negotiate for better wages and conditions.
•
An examination of four key modern awards covering electrical apprentices showed
that there are significant differences in the relativities paid to apprentices and the
provision for adult apprentice rates of pay.
•
Electrical apprentices undertaking the same training can fall in the scope of more
than one award and therefore different wages and conditions can apply.
There are strong grounds for the structure and contents of these awards to be reviewed to
ensure greater consistency in the relativities, adult rates of pay and continuity clauses to
reflect the changing demographic situation of electrical apprentices that has occurred over
the last ten years.
8.3
Living standards of apprentices
We compared apprentices’ income with the Indicative Budget Standards for Australia to
examine if apprentice income supports a standard of living acceptable to the Australian
community. This research looked at apprentices’ costs of living in the following three
scenarios: (i) the traditional apprentice living as ‘dependent child’; (ii) the independent
apprentice living in shared rental accommodation; (iii) the apprentice breadwinner who
supports their own family.
•
Under Scenario 1 (the traditional apprentice as ‘dependent child’) the costs of the
early years of apprenticeship are shifted to parents. Apprentices’ disposable income
is typically only 58 per cent of the income of an unskilled worker at McDonalds,
falling below the Henderson Poverty Line. This leaves apprentices vulnerable to any
small misfortunes which can tip them into deprivation.
54
•
Living in shared rental accommodation (scenario 2) is out of reach for most
apprentices in their early years. Only third year apprentices, whose earnings are
typically 75-85 per cent of the award for a fully qualified tradesperson, are
comfortably above the poverty line and approach the income required to live in this
situation comfortably.
•
Scenario 3 (the apprentice breadwinner who supports their own family) - although
this category of apprentices has been growing most rapidly over the last ten years,
adult apprentices are treated inconsistently under the Modern Award system. Not all
awards contain continuity clauses or adult apprentice rates of pay.
•
The housing costs of raising a family in a single family dwelling are generally twice
as high as raising a family when sharing with non-family member, making it
untenable for many adult apprentices to transition onto low apprentice wages
without assistance from family and friends.
The wage rates contained in modern awards are insufficient to meet community
expectations of a reasonable standard of living. The prevalence of financial resource
constraints associated with undertaking an adult apprenticeship makes it unattractive and
difficult to commence and complete apprenticeship training.
In summary, apprentices in 2012 are unlikely to be dependent ‘children’, they are more
likely to be independent adults who enter apprenticeships with deeper skills and maturity
than their predecessors. Our analysis shows that apprentice rates of pay are barely above
welfare payments, often below the Henderson Poverty Line and do not meet community
expectations of reasonable living standards. The current architecture of awards covering
electrical apprentices does not reflect the changing age and demographic situation that has
occurred over the last few decades.
The FWA Modern Award Review is therefore an
opportune time to examine:
•
the adequacy of wage rates;
•
the wage relativities within and between modern awards;
•
provision for adult apprentice rates of pay;
55
•
the existence of continuity clauses for workers that have already worked in the
industry and
•
conditions that support mentoring, training and supervision of apprentices.
56
Appendix Table 1: Comparison: Contracting Agreements and Modern Award*
1st Year
Weekly
$ difference
rate difference (EA> MA)
Electrical, Electronic
and Communications
Contracting Award
2010**
ADJ Contracting Pty
Ltd Enterprise
Agreement 2010-2014
– Base rate
ADJ Contracting Pty
Ltd Enterprise
Agreement 2010-2014
– base rate, adult
Wiltech Electrical &
Security Pty Ltd and
ETU Enterprise
Agreement 2010-2014
(Service Maintenance
Installation)
Wiltech Electrical &
Security Pty Ltd and
ETU Enterprise
Agreement 2010-2014
(Service Maintenance
Installation), adult
274.48
2nd Year
Weekly
$ difference
rate difference (EA> MA)
356.82
3rd year
Weekly
$ difference
rate difference (EA> MA)
480.34
4th year
Weekly
$ difference
rate difference (EA> MA)
562.70
474.96
200.48
73%
475.67
118.85
33%
714.81
234.47
49%
874.17
311.47
55%
606.38
331.90
121%
714.81
357.99
100%
874.17
393.83
82%
913.97
351.27
62%
474.96
200.48
73%
475.67
118.85
33%
714.81
234.47
49%
874.17
311.47
55%
606.38
331.90
121%
714.81
357.99
100%
874.17
393.83
82%
913.97
351.27
62%
* Rates do not include 2012 National Minimum Wage Increase
** NB this rate is based on the Junior Apprentice Rate and not the Trainee Apprentices (NSW) rate. (Adult apprentice rates apply in Qld only)
57
Appendix Table 2: Comparison: Powers Supply Agreements and Modern Award*
1st Year
Weekly
$
rate difference
Electrical Power
Industry Award
2010
Rate
Adult rate
Ausgrid
Agreement 2010
Ausgrid
Agreement 2010
- adult rates
Essential Energy
Enterprise
Agreement 2011
Suzlon Energy
Australia Pty
Ltd, Service
Technicians and
CEPU
Enterprise
Agreement 2010
difference
(EA> MA)
288.20
480.62
2nd Year
Weekly
$
rate difference
difference
(EA> MA)
377.63
549.28
3rd year
Weekly
$
rate difference
difference
(EA> MA)
514.95
583.61
4th year
Weekly
$
rate difference
difference
(EA> MA)
583.61
617.94
516.47
228.27
79.2%
627.51
249.88
66.2%
726.65
211.70
41.1%
797.16
213.55
36.6%
762.76
474.56
58.7%
797.16
247.88
45.1%
828.29
244.68
19.4%
860.82
242.88
39.3%
516.27
228.07
79.1%
627.24
249.61
66.1%
726.37
211.42
41.1%
813.94
230.33
39.5%
859.42
571.22
198.2%
1002.65
625.02
165.5%
1145.89
630.94
122.5%
1289.13
705.52
120.9%
Rates do not include 2012 National Minimum Wage Increase
58
Appendix Table 3: Comparison: Lift maintenance enterprise agreements and Modern Award*
Weekly
Rate
1st Year
$
difference
difference
(EA> MA)
Weekly
Rate
2nd Year
$ difference
difference (EA> MA)
Building and
Construction
General On-site
Award 2010
308.79
377.41
Schindler Lifts
Australia Pty Ltd
(WA) Enterprise
Agreement 20102013
486.78
177.99
58%
636.88
259.47
Schindler Lifts
Australia Pty Ltd
(Queensland)
Enterprise
Agreement 20112014
569.52
260.73
84%
696.24
318.83
Thyssenkrupp
Elevator
Australia Pty Ltd
Enterprise
Agreement 2011
524.21
215.42
70%
686.47
309.06
Rates do not include 2012 National Minimum Wage Increase
Weekly
Rate
3rd year
$ difference
difference (EA> MA)
514.65
Weekly
Rate
4th year
$
difference
difference
(EA>
MA)
617.58
Weekly
Rate
Adult
$
difference
difference
519.64
84%
(EA> MA)
619.4
69%
863.74
349.09
68%
1011.56
393.98
64%
84%
949.32
434.67
84%
1,139.04
521.46
84%
82%
936.09
421.44
82%
1098.35
480.77
78%
1,139.04
59
Appendix Table 4: Characteristics of qualitative research participants
Current
Interviewee age
Gary
25
John
30
Ross
28
Sarah
27
Craig
19
Roger
27
Tim
30
Mark
21
Grant
25
Ben
43
Stewart
25
Stage of
apprenticeship
4th year
Completed 2010
Completed
Completed 2011
2nd year
Completed 2009
Completed 2008
3rd year
4th year
Completed 2011
3rd year
Region
Outer-metro
Metro
Outer-metro
Metro
Regional
Outer-metro
Regional
Regional
Outer-metro
Remote
Regional
Highest
schooling
Year 12
Year 12
Year 12
Year 12
Year 12
Year 12
Year 12
Year 12
Year 12
Year 12
Year 12
Pre-apprenticeship
training
No
No, but prior uni
No
Yes
Yes
Yes
No
Yes
No, but prior TAFE
No, prior trade qual
No, but prior uni
GTO
employer
No
Yes
No
No
Yes
Yes
Yes
Yes
No
No
No
Union
member
Not sure
No
No
Yes
No
No
No
Not sure
No
No
Yes
Pay setting
Over-award
Over-award
Award
Over-award
Over-award
Award
Award
Over-award
Award
Over-award
Over-award
Study
allowances
Yes
Not sure
No
Yes
Yes
Yes
Not sure
Yes
Yes
Yes
Yes
60
9
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