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‘Cruel hoax’: Hidden threat in Govt’s $28k wage subsidy

Anastasia Santoreneos
·3-min read
Group of young construction workers having problems during home renovation process.
‘Cruel hoax’: Hidden threat in Govt’s $28k wage subsidy. Source: Getty

The Government’s pledge to pay half the wages of 100,000 apprentices for the next 12 months has been slammed by a major construction body, which says it could see those same apprentices dumped after the subsidy period ends.

“If apprentices are engaged with the expectation of a full four-year apprenticeship but dumped after one year when the government subsidy ceases, it is a cruel hoax and a recipe for exploitation," CFMEU National Construction secretary Dave Noonan said.

“The government needs to redesign these flawed schemes and the CFMEU will take a hard line against the exploitation of apprentices or workers being sacked by unscrupulous bosses who take advantage of them.”

What is the apprentice wage subsidy?

As part of a $1.2 billion commitment to upskill and reskill Aussies into jobs, the Federal Government is going to pay 50 per cent of the wages of 100,000 new apprentices and trainees in their first year.

It’s capped at $7,000 per quarter, so $28,000 for the whole year, and will be available until the 100,000 limit is reached.

“Apprenticeships are an important pathway to get young people into jobs and to ensure there is a skills pipeline to meet the future needs of employers,” Prime Minister Scott Morrison said in announcing the package.

“Whether it’s the manufacturing, housing and construction, arts or mining sectors – this new wage subsidy gives businesses certainty to hire and provides a career path to aspiring, young tradies.”

It’s an extension of the Government’s existing Supporting Apprentices and Trainees Wage Subsidy, which was set to end on 31 March 2021.

Why are industry bodies slamming the apprentice wage subsidy?

The subsidy is only designed to support apprentice wages for the first 12 months of their employment, leaving apprentices vulnerable at the end of this commitment period, the CFMEU said.

But statistics also show that construction apprentices are failing to complete their apprenticeships, and the new subsidy won’t do much to stop it.

“Latest figures show 82,465 withdrew or cancelled their apprenticeship during the five years to March 2020, compared to only 53,115 who actually completed their apprenticeship,” Noonan said.

“The data also shows the rate of new apprenticeship commencements has slumped under this government by 21.5 per cent on the 2016 figures.

"The measures announced by the Treasurer do nothing to encourage businesses to take on and properly train apprentices for the long-term.”

Noonan said this, coupled with the Hiring Credit scheme, only incentivises businesses to churn through young, cheap, subsidised labour.

"The government is also yet to explain how it will protect the interests of existing workers who could be sacked by opportunistic bosses under these schemes,” he said.

What should the Government have done?

Rather than a wage subsidy, the Government should have ended the current ban on apprentice ratios on government jobs and changed procurement guidelines in the Building Code to require the employment of apprentices on federally funded projects, Noonan said.

“The government should also do more to support the TAFE system [to] continue its crucial role in training apprentices,” he said.

"Unless amended the one-year subsidy outlined in the budget creates an incentive for employers to replace existing workers on higher wages with apprentices for the 12 months it is available.

“It is a recipe for exploitation."

But other business groups have welcomed the subsidy.

Australian Chamber of Commerce and Industry chief James Pearson said the Government has done enough to encourage employers to develop apprentices long-term.

“This is the right prescription to restore the health of the apprenticeship system, given the considerable wage subsidy investment already made in apprentice retention,” he said.

“This move to breathe more life into the highly valuable apprenticeship model comes at a critical time.”

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