Ibec submission to consultation on Government review of apprenticeships

Transcription

1 Ibec submission to consultation on Government review of apprenticeships September 2013

2 Ibec s main business sectors are: Alcohol Beverage Federation of Ireland Financial Services Ireland Food and Drink Industry Ireland ICT Ireland Telecommunications and Internet Federation Irish Medical Devices Association PharmaChemical Ireland Retail Ireland Small Firms Association Industrial Products.

3 Contents Recommendations Introduction Current apprenticeship system A new professional traineeship model The components of a new professional traineeship model Governance Range of occupations Duration, curriculum and award Funding Providers and delivery methods Examples of enterprise-led training networks Assessment... `26 5. Next steps Finance Pilot projects

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5 Recommendations Enterprise-led model of Professional Traineeships 1. An enterprise-led model offers the greatest potential on which to base a modern apprenticeship system. This will require a fundamental reform of governance structures, range of occupations covered and delivery mechanisms 2. Apprenticeships should be refined and rebranded under a new model of Professional Traineeships which will provide qualifications based on an interaction between work and education across Levels 5-9 of the National Framework of Qualifications. Governance 3. Employers should be at the centre of the new professional traineeship system. Therefore existing business organisations or professional associations should work with education and training providers in developing, traineeship frameworks, curricula and delivery mechanisms. 4. The State should retain oversight of the traineeship process and criteria against which qualifications are approved. Therefore Quality and Qualifications Ireland (QQI) should coordinate and monitor the standards that awarding organisations must meet when they design, deliver and award regulated qualifications. 5. A national professional traineeship committee is required to help facilitate, coordinate and provide advice to businesses organisations that plan to develop traineeship frameworks. This committee should include representatives from enterprise, further education and training, higher education and QQI. Range of occupations 6. The range of occupations covered by professional traineeships should be expanded to reflect the skill needs of the Irish economy. The practice of designating approved trades through legislation should be discontinued and the type of occupations available should be determined by business demand. 7. Five levels of Professional Traineeship could be considered: Foundation Traineeship (Level 5); Professional Traineeship (Level 6); Higher Professional Traineeship (Levels 7); Advanced Professional Traineeship (Level 8); and Postgraduate Professional Traineeship (Level 9). Levels available should depend on their appropriateness to the occupation. QQI should consider new award types to accommodate the professional traineeships on the National Framework of Qualifications. 8. The proposed professional traineeship model must involve sustained and substantial training, which is closely integrated with a real job. It should last for at least one year (and significantly longer if required by the job). 3

6 Duration, curriculum and awards 9. Occupational standards describe what an individual needs to do, know and understand in order to carry out a particular job role or function. Business organisations or professional bodies with the relevant expertise will be best placed to define occupational standards. They should work in partnership with education and training providers to develop the qualifications that are required to meet these standards. 10. Transferable skills should be embedded in the learning environment, curriculum and assessment of all Government supported professional traineeships. 11. The new model must systematically identify the literacy, numeracy and ICT skills of those who are considered for traineeships and provide basic skills support to those in need. Funding 12. The new model should incentivise quality, encourage the expansion of professional traineeship opportunities, and drive efficient use of both Government and private investment. Distribution of the cost should be shared by all three parties Government, employers and apprentices. 13. Government could vary how much it supports the scheme according to the size of the firm or the age of the trainee, in order to drive change in the supply of traineeships. It should only fund training that supports the trainee in reaching the agreed standard. 14. The funding system should be kept simple and accessible to the small employer 15. Public funding should be routed via the employer, in order to ensure relevance and drive up quality. Therefore Government should explore in detail a delivery mechanism to route professional traineeship support through employers. 16. Traineeship allowances should be determined by agreement between the trainee and the individual employer. Providers and delivery methods 17. The professional traineeship model should be based on an appropriate mix of public and private provision, adhering to the principle that public money should follow consumers rather than suppliers. SOLAS should incentivise ETBs to work with, and earn income from, employers by developing traineeships. The Higher Education authority should adopt a similar approach with IoTs and universities. 18. Education and training providers should be incentivised to provide the most complete and highest quality service in qualification design and off-the-job course delivery to individual companies and business networks. 4

7 19. The Danish model of a learning plan which is developed between the employer, the provider and the apprentice, and is a binding agreement between all parties, should be considered. Assessment 20. Employers and experts from colleges or training institutions should conduct joint assessments using a multidimensional approach (e.g. practical projects, presentations etc.) to test whether trainees meet the required standard. 21. Tests should be graded as evidence of the trainee s ability and to maximise the usefulness of the qualification in the labour market. Next steps 22. The proposed national professional traineeship committee should seek support under the European Social fund for technical assistance to develop the new system. 23. The national committee should use EU support to help establish a competitive fund under which professional associations or business organisations would be invited to develop a small number of professional traineeship pilot proposals in collaboration with education or training providers. 5

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9 1. Introduction A highly skilled and flexible workforce is essential to boosting business productivity, driving private sector growth and competing globally. Apprenticeships and other work-based training have the potential to play a key role in boosting skill levels across our economy to meet this need, and supporting people into sustainable careers. In order to succeed, they must be based on the principle that businesses are best placed to identify and respond to their own skills and training needs. Government and industry should work together to identify practical mechanisms for harnessing this involvement that meet the needs of different sectors. Therefore commitment in the Government s Action Plan for Jobs to review the apprenticeship system and deliver an updated model of training is timely. It also coincides with unprecedented interest in apprenticeships and vocational training at a European level. Under the European Alliance for Apprenticeships, the European Commission has committed to provide technical assistance and many member states are expanding apprenticeship type arrangements. More recently the OECD 1 has argued that on-going structural change in the Irish economy requires a flexible apprenticeship system where the terms of the apprenticeship depends on the needs of the specific sector. The system should include real possibilities to create new apprenticeships rapidly enough to react to emerging needs and move resources and participants towards sectors with better prospects. The OECD also suggests that the key element of a successful apprenticeship and vocational system is to engage employers both in the design of the curricula and in the delivery of apprenticeship time. This is important because employers are aware of changing labour market needs. Scope of the Review This submission takes a broad interpretation of apprenticeship which extends beyond the current understanding of the term and its legal designation in Ireland. This is in line with the terms of reference of this Review which extends to apprenticeship and other work-based learning. However, for the sake of clarity and the scope of the review, it is important to establish some parameters around the term. EU policy-makers tend to differentiate between apprenticeships, which are characterised by a legislative framework, strong social partner involvement and robust quality assurance mechanisms, and traineeships which are more diverse in terms of type, focus, duration and regulation. In this submission, we use the terms apprenticeships and traineeships interchangeably. We are referring to a broader concept of a form of education that: is based on an interaction between work and education is based in the workplace where apprentices acquire skills, knowledge and understanding through on and off-the-job training; provides an opportunity to apply theoretical knowledge to the practical world of work, while also delivering transferable employability skills involves a new job role for the participant (as opposed to up skilling or accreditation of an existing role) is based on a contractual relationship between the employer and the apprentice. 1 OECD Economic Surveys: Ireland, September

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11 2. Current apprenticeship system The Department of Education and Skills Background Issues Paper 2 (henceforth referred to as the Issues Paper in this submission) and OECD analysis 3 highlight the significant challenges to the current Irish apprenticeship model: Designated apprenticeship trades are limited to 26 occupations in the construction, engineering, electrical and print sectors. These occupations do not reflect the broader skill needs of the Irish economy. A fixed legislative structure makes it difficult for the apprenticeship system to adapt to economic and technological developments The system cannot react to sudden or rapidly shifting economic cycles, leaving the State with uncontrollable spending commitments and/or over-provision. Between 2004 to 2006, construction apprentices formed around 85% of all recruitment. Following the collapse in the construction sector, recruitment in these trades reduced to just 10% of their peak values In 2012, there were just 1,434 new apprentices registered Even taking the most optimistic labour market forecast, overall apprentice recruitment in 2016 for both construction and non-construction related trades is expected to be just 22% of peak recruitment. Fixed duration (four years in most cases) and fixed award regardless of the learning outcome creates inefficiencies. There is insufficient balance within the curriculum of literacy, numeracy and ICT, along with other transferable skills, which are not specific to the particular trade. Costs are higher than apprenticeship systems in other countries. Female participation is negligible As the OECD concluded, the downside of the apprenticeship arrangement in Ireland is that it may be inflexible and difficult to amend in response to emerging demands or to the varying requirements of different occupations. There is also a more fundamental challenge facing the apprenticeship model and Irish vocational education and training (VET) in general. The Issues Paper claims that a strength of the current system is that apprenticeship provides a practical and attractive alternative route to higher education. In fact, apprenticeships and VET do not share parity of esteem with traditional academic education routes amongst young people, their parents, employers or, indeed, Irish society. This attitude has been reinforced by government policy. The National Skills Strategy 4 set a target that 72% of school leavers progressing to third level education by Ireland already has the highest percentage of young people progressing to higher education in the EU. At one level, this is extremely positive given the trends towards knowledgeintensive employment. However, it is only positive if institutes of technology and universities equip 2 Issues-Paper.pdf 3 Learning for Jobs, OEC Review of Vocational Education and Training, 4 Tomorrow's Skills: Towards a National Skills Strategy, wwww.skillstrategy.ie 9

12 students with the skills needed in the jobs market and work with business to bring the learning experience closer to the world of work. Apprenticeship should offer an effective pathway for highly skilled work, including professional and senior job roles. Therefore higher education should be an integral component of any future apprenticeship model. The under-developed nature of the Irish apprenticeship system is illustrated by Table I. Table 1; Number of Apprentices per 1,000 employees Australia (2010) 40 Austria (2010) 32 England (2011) 33 France (2009) 17 Germany (2010) 39 Ireland (2010) 10 Switzerland (2010) 44 Source: This presents an opportunity to radically overhaul the current apprenticeship model and create a system that addresses future skills needs across different sectors The Review is being conducted at a time of huge change in both further education and training (FET) and higher education. Therefore it is important that its recommendations reflect the realities of these ongoing developments Some 900m is invested by the state each year in further education and training. Roughly half goes to FÁS and half to the VECs who either use it themselves or purchase training from others. New state bodies, SOLAS, regional Education and Training Boards (ETBs) and QQI (the single agency that monitors the quality and relevance of qualifications) are designed to bring stronger coherence and effectiveness to what the state is doing. Crucially, this involves ensuring a greater employer say in what is taught and how it is taught; unless FET ensures learners make good employees, it will not deliver for them A similar theme emerges in the reform of higher education where regional clusters of universities and IoTs will be measured on their ability to engage with business in a way that informs curriculum, teaching, learning and assessment The proposed technological universities will also be required to provide vocationally/professionally oriented programmes that incorporate structured work placement across National Framework of Qualifications (NFQ Levels 6 to 10). The Apprenticeship Review may appear a very specific item on this huge reform agenda. However IBEC believes that if a sufficiently broad approach is taken, it could be a catalyst to transform some of the policy rhetoric that surrounds business-education engagement into reality. 10

13 3. A new professional traineeship model The starting point for any consideration of apprenticeship models usually includes a reference to the well-established dual systems of countries such as Austria, Denmark, Germany, the Netherlands Norway and Switzerland. However, much of the commentary tends to ignore the fact that Ireland cannot simply adopt systems that have been built over generations, upon very different economies, labour markets and social partnership arrangements. This is not to say that we don t have much to learn from these systems. Indeed, this document has tried to distil some of the principles on which they are based to inform a model that could work in an Irish context. They include the following: Employers and professional bodies are best placed to determine the content, outcome and demand for apprenticeships Expertise provided by education and training providers must also be at the heart of their design and delivery. Apprenticeships must be able to respond flexibly to changing technology and market needs Apprenticeship development must be based on transferable skills including literacy, numeracy. Different packages of work and learning, with distinct structures, curricula and pedagogy, may provide equally valid routes to enabling an apprentice to become competent in a job Distribution of the cost of training should be shared by all three parties employers, apprentices (through the acceptance of a lower wage) and Government Apprenticeships should be available at all skill levels from school leaving (Level 5) to advanced degree (Level 9) Governance or training delivery should not be predominantly within the domain of either further education and training (FET) or higher education. They should cross both levels The system should be underpinned by a robust and independent quality assurance regime. The Issues Paper suggests three broad approaches to a future scheme of apprenticeship based on one, or a combination, of the following: a modified dual system of the apprenticeship formation (retention of the existing model with an expanded range of occupations and some form of supply/demand smoothing) a pre-apprenticeship model where State input takes place in an initial vocational education context (either Fas training centres/further education colleges or Institutes) an industry-provided model, possibly through business associations or an expansion of Skillnets. IBEC believes that the industry-provided model offers the greatest possibility of reflecting the principles set out above. Therefore we are proposing a fundamental reform of structures, range of occupations, funding and delivery based on this model. We also need a model which challenges the perception that young people who choose apprenticeships, or a vocational education route, are the ones who do not have the skills to progress 11

14 to a higher secondary education. Companies need vocationally trained staff, not least at the highest levels. This is already the case in professions such as law, accountancy and nursing. Therefore apprenticeships should be redefined, to focus where they can add value for learners and employers. A new model of professional traineeships, which will provide qualifications at school leaving level (NFQ level 5) to masters degree level (NFQ level 9), is required. Recommendations: An enterprise-led model offers the greatest potential on which to base a modern apprenticeship system. This will require a fundamental reform of governance structures, range of occupations covered and delivery mechanisms Apprenticeships should be refined and rebranded under a new model of Professional Traineeships which will provide qualifications based on an interaction between work and education across Levels 5-9 of the National Framework of Qualifications. 12

15 4. The components of the new professional traineeship model Governance The most effective European dual systems are based on industry standards that are widely recognised, easy to understand and trusted by employers. This is achieved by empowering employees and placing them at the heart of the apprenticeship system. Increased involvement by employers in assessment helps to build trust in the credibility and rigour of the process. Positioning the employer as the customer also increases providers incentives to respond to businesses needs. However, governance of an industry-led system, in the absence of more deeply embedded social partnership arrangements and corporatist structures that characterise many northern European states, poses a particular challenge. The UK addressed this challenge through the establishment of Sector Skills Councils (SSC), employer-led state-sponsored networks that contribute to the development of national occupation standards and the design/approval of apprenticeship frameworks. Some SSCs work effectively and deliver good outcomes for employers and apprentices. But these networks also have their critics. The Richards Review 5 warned that the system is far too complex and in practice, SSCs and awarding organisations rather than employers themselves were the ones in the driving seat for many employers the process of defining an apprenticeship is too far removed from them, too opaque and too much in the hands of skills professionals rather than real employers. There is obviously another side to this debate. But, whatever the merits or limitations of the SSCs, it makes little sense (in terms of cost or bureaucracy) to introduce another layer of state-sponsored skills networks in an economy as small as Ireland. The OECD has also pointed out that it is essential to involve SMEs, since they account for 70% of private employment. It suggests that co-ordinated shared training structures should be put in place to allow that smaller companies, with more limited training capabilities, can become engaged and participate in the system. The most practical approach, as suggested in the Background Issues Paper, is a structure based on existing professional associations or business organisations that are owned by enterprises, who determine their role, shape, structure and functions according to their needs. Most sectors of Irish business already have such a body. Therefore, the enterprise-led body could be an existing organisation or it could be a new collaboration, set up by businesses to address specific needs for the sector, through apprenticeships or other forms of training (in much the same way as Skillnets networks currently operate). Where possible they should build on, and not duplicate, the existing business association infrastructure in the sector. The nature and scope of the body must be determined by businesses themselves if they are to be truly effective. And, there is no need for a one size fits all model - rather, the role, shape and structure of enterprise-led bodies may vary according to the sector needs. If 5 The Richard Review of Apprenticeships in England, November 2012, https: government uploads... richard-review-full.pdf 13

16 these bodies are going to support and deliver the skills that employers need, it is important that employers own them directly, as well as offer visible leadership to them. IBEC agrees with the suggestion in the Issues Paper that the development and management of a robust regulatory system would also be essential to ensure system quality. While we propose that State relinquishes its direct control over some aspects of apprenticeship such as prescribing curricula and delivery methods, it is critical that it retains close oversight of the process and criteria against which qualifications are approved; quality assuring apprenticeship qualifications will be vital to ensuring the quality and value for money of the whole programme. Therefore Quality and Qualifications Ireland (QQI) should coordinate and monitor the standards that awarding organisations must meet when they design, deliver and award regulated qualifications. A national professional traineeship committee is also required to help facilitate, coordinate and provide advice to businesses organisations that plan to develop traineeship frameworks. This committee should include representatives from enterprise, further education and training, higher education and QQI. Recommendations: Employers should be at the centre of the new professional traineeship system. Therefore existing business organisations or professional associations should work with education and training providers in developing, traineeship frameworks, curricula and delivery mechanisms. The State should retain oversight of the traineeship process and criteria against which qualifications are approved. Therefore Quality and Qualifications Ireland (QQI) should coordinate and monitor the standards that awarding organisations must meet when they design, deliver and award regulated qualifications. A national professional traineeship committee is required to help facilitate, coordinate and provide advice to businesses organisations that plan to develop traineeship frameworks. This committee should include representatives from enterprise, further education and training, higher education and QQI. 14

17 Range of occupations The most striking difference between the apprenticeship system in Ireland and other is the limited number of occupations that are covered. The FAS designated trades are limited to the 26 construction, engineering, motor, electrical and printing occupations. These trades are traditionally male occupations. While Ireland is not unusual in the concentration of males in the traditional manual trades, it is unusual in having a relatively generously funded apprenticeship system whose beneficiaries are almost entirely male. Therefore an extension of the number of occupations would be more equitable on gender grounds. Other countries offer a much broader range of apprenticeship activities. In Australia, for example, more than 500 occupations are covered at a variety of qualification levels. In Germany, there are 342 recognised business, administrative, trade and craft professions. There are currently 181 apprenticeship frameworks available in England, based on occupation, some at multiple levels, with over 100 others in development. Sectors include agriculture, horticulture and animal care; arts, media and publishing; business, administration and law; construction, planning and the built environment; education and training; engineering and manufacturing technologies; health, public services and care; ICT; leisure, travel and tourism; and retail and commercial enterprise Apprenticeship in the UK are offered at three levels: Level 2 equivalent to good intermediate school leaving certificate (GCSE Grades A-C); Level 3 equivalent to advanced school leaving certificate (A- Levels), which offers the possibility of access to higher education; and Level 4 equivalent to first year of tertiary/university education with the option to continue to Bachelor degree. Despite the huge growth in the number of apprenticeships over the last five years, the British government has identified insufficient growth at higher skill levels (Levels 3 and 4) and failure to improve progression from lower to higher competence levels as two significant challenges. In order to widen the understanding of apprenticeships and meet the increasingly knowledgeintensive demands of Irish business, five levels of Professional Traineeship could be considered. : Foundation Traineeship (NFQ Level 5) Professional Traineeship (NFQ Level 6) Higher Professional Traineeship (NFQ Levels 7) Advanced Professional Traineeship (NFQ Levels 8) Postgraduate Professional Traineeship (NFQ level 9) The levels available would depend on their appropriateness to the occupation. QQI should consider new award types to accommodate the professional traineeships on the National Framework of Qualifications. The Foundation Traineeship would be primarily designed for year olds. It is envisaged that there would be heavier State involvement in curriculum design and delivery at this level (see section below on Providers and delivery Methods). 15

18 Recommendations: The range of occupations covered by professional traineeships should be expanded to reflect the skill needs of the Irish economy. The practice of designating approved trades through legislation should be discontinued and the type of occupations available should be determined by business demand Five levels of Professional Traineeship could be considered: Foundation Traineeship (Level 5); Professional Traineeship (Level 6); Higher Professional Traineeship (Levels 7); Advanced Professional Traineeship (Level 8); and Postgraduate Professional Traineeship (Level 9). Levels available should depend on their appropriateness to the occupation. 16

19 Duration, curriculum and award The growth sectors in the Irish economy are technologically based and constantly evolving. Therefore it is critical that a new apprenticeship framework accommodates new occupations and allows for rapid inclusion of new techniques or procedures into content and qualifications. All of the FAS trades (with the exception of print media) have a fixed duration of four years. This is no longer appropriate. Successive reports from the OECD and Forfas 6 have questioned why duration is not matched to the learning outcomes which are determined by the occupation standards and on the prior learning of the applicant. Notwithstanding this, the proposed Professional Traineeship model must involve sustained and substantial training, which is closely integrated with a real job. It should be differentiated from some of the shorter FAS traineeships that are currently available and last for at least one year (and significantly longer if required by the job).) Qualifications and occupational standards The new model should not have overly detailed specifications for each qualification and occupational standard, and an apprenticeship structure which is rigidly enshrined in law. If award systems encourage a focus on continuous bureaucratic box-ticking and assessment, they obscure the real task of an apprenticeship to teach new knowledge and skills, and demonstrate to future employers that an apprentice can do his/her job. An overly prescriptive approach also constrains innovation and flexibility in curricula and teaching methods. Business does not require extremely detailed occupational standards, describing every component of every task an employee in a given job role may be expected to do. It is the outcome that matters. Organisations also have distinct approaches to work and learning. What works best will change over time, for example through technological innovation. Therefore the model should be able to accommodate different packages of work and learning. It is important that the new professional traineeship model: is based on recognised industry standards which clearly set out what trainees should be able to do at the end of their traineeship, at a high level which is meaningful and relevant for employers. acknowledges that there are equally valid pathways to getting a trainee to become competent in any given job. has widespread buy-in from businesses from across the sector including small firms; utilises the expertise within the education and training system to develop transferable skills that are relevant and valuable outside a narrow group of occupations and are not limited to training for a narrow job role; is available to adults (with arrangements to recognise prior learning) as well as school leavers: qualifies someone to do a real specific job; meets the standards for professional registration in sectors where they exist and are wellrecognised

20 In short, qualifications should define what a trainee is capable of doing upon completion and this must reflect the needs of the sector and real jobs within it. This means that business organisations or the professional bodies with the relevant expertise will be best placed to define the standard for the qualification. They should work in partnership with education and training providers to develop the standard for the qualifications that are required to meet these standards. Transferable skills While the proposed traineeships are designed to train for people for specific skilled occupations, they must also be broad enough to equip candidates with genuinely transferable skills. These are skills which that they will need in any job and skills which will enable them to be competent beyond the confines of their current job. While this seems to emerge as an issue in much of the international commentary on apprenticeship formation, we do not believe this should pose an insurmountable challenge in an Irish context. In fact, successive IBEC surveys have 7 identified key transferable skills (e.g. communication, teamworking, critical thinking, time management, adaptability, creativity and information management) as a critical education outcome. The challenge is to embed these skills in the learning environment, curriculum and assessment at all levels of education and training. Literacy and numeracy As international competition intensifies, it is more important than ever that the Irish workforce should not lag behind in terms of basic skills in reading, writing, communicating, making practical use of maths and ICT. Poor basic skills damage people s lives and their employment prospects. Weak functional skills are associated with higher unemployment, lower earnings, poorer chances of career progression and social exclusion. They also inhibit the ability of employees to contribute to business performance. The Government s Literacy and Numeracy Strategy 8 acknowledges the systemic issues in the Irish system and has proposed a robust response which is currently being implemented. However the challenge is not confined to the school system. The OECD s 2010 review of Irish vocational education (see above) suggested that people who come into contact with training services are not systematically screened for potential literacy and numeracy problems. This means that some people may start their training despite literacy and numeracy problems, and as they are not identified for targeted support, they may not be able to complete their course

21 Recommendations: The proposed professional traineeship model must involve sustained and substantial training, which is closely integrated with a real job. It should last for at least one year (and significantly longer if required by the job) Occupational standards describe what an individual needs to do, know and understand in order to carry out a particular job role or function. Business organisations or professional bodies with the relevant expertise will be best placed to define occupational standards. They should work in partnership with education and training providers to develop the qualifications that are required to meet these standards. Transferable skills should be embedded in the learning environment, curriculum and assessment of all Government supported professional traineeships The new model must systematically identify the literacy, numeracy and ICT skills of those who are considered for traineeships and provide basic skills support to those in need. 19

22 Funding The Issues Paper suggests that apprenticeship costs are high relative to other Irish education/training and similar apprentice formation programmes internationally. In 2011, the net cost to the State of training 13,000 apprentices was 86.9m. By comparison, total state expenditure on the Skillnets programme was 14.5m. The 2010 OECD review of vocational education (see above) pointed out that in 2007 spending on construction related apprenticeships represented 70% of all FÁS in-employment training expenditure. It argued that more equally distributed provision of publicly funded programmes with workplace training across different sectors would better reflect companies contribution to the national training fund. It also argued that, the given extreme gender imbalance in current apprenticeship arrangements, this distortion in funding was inconsistent with gender equity. While we require a system that makes economic sense, it is also important that a new model incentivises quality, encourages the expansion of professional apprenticeship opportunities, and drives efficient use of both Government and private investment. Distribution of the cost should be shared by all three parties Government, employers and apprentices. Employers Employers benefit directly from apprenticeships but they also contribute significantly to the cost of apprenticeships. They make a direct contribution of 0.7% of payroll costs through the National Training Fund Levy 9. They also accept the individual s reduced productivity while they are training; take on someone who is more of a risk than an individual who was already trained, and provide use of their facilities, or internal supervision and training. Therefore, while it is important that the employer pays something towards the cost of training, this should not necessarily mean more employer investment overall. The funding system should encourage and not deter employers from participating. Government The Government needs to recognise employers role as trainers and educators, and therefore contribute significantly to the costs of training. While employers benefit from apprenticeships, this must not detract from the fact that the Government should want more employers to offer more apprenticeships and will need to contribute to make this happen. The state has a strong interest in the benefits apprenticeships bring to individuals, particularly to young people. The economic benefits of enabling young people to undertake a quality apprenticeship are very evident as are the potential social and economic costs and risks if they cannot. Therefore Government must continue to contribute to the cost of apprenticeship training; otherwise there is a risk of failing to encourage a sufficient number of businesses to offer training, or at least from offering training opportunities that are sufficiently tailored to the longer term needs of the trainee and the wider sector. 9 Some 362m was paid into the fund by employers in 2012 and similar amount is budgeted for in

23 Therefore, while employers should contribute, because this is vital to having them drive the system and ensure efficiency and relevant use of resource, this should not mean less Government investment overall. It should be higher quality and better directed investment. Funding is the major lever government has to drive change in supply of apprenticeships. For example, smaller employers could be funded more generously, as they take on a greater proportionate risk in employing an apprenticeship. They may also be more cash constrained and less likely to have established training programmes. Government should also fully fund the year age group who require significant support and mentoring. Apprentices An underlying principle of apprenticeship is that the apprentice accepts a lower wage. According to the Issues Paper, one major difference with much of Europe is the value of the training allowance paid to apprentices, which is based on industrial wage agreements. These wage-related costs drive up the current cost of apprenticeship for both the State and employers, and present a significant obstacle to recruitment. Therefore the traineeship allowance should be determined by agreement between the trainee and the individual employer. Funding method Employers are best placed to judge the quality and relevance of training and demand the highest possible standards from training providers. Therefore the purchasing power should lie in their hands. The experience with the most successful Skillnets networks would suggest that employers should be both in control of Government funding and they should have skin in the game - by contributing to the cost of training - in order that they demand the highest quality and most cost effective training. A significant concern expressed in the Issues Paper is that It is near impossible for the State to stabilise State provision based on a free market industrial demand model. The current model could not be described as free market. The supply side is controlled by a single agency. By putting purchasing power in the hands of employers, it should be possible to free-up the price in the market, so that it responds to this demand, thereby acting as a signal to both public and private training organisations for where the greatest value lies. This is, in effect, an expansion of the Skillnets model with industry standards agreed through business organisation based on input from QQI and training providers and employers being made the real customer. Development of this funding model will be challenging. Government will need to test and develop the right balance between funding in stages throughout the apprenticeship, to support employers and providers with their costs, whilst making a proportion of funding dependent upon successful achievement of the standard. Putting funding directly into the hands of businesses also presents challenges. There is the obvious challenge for the State of ensuring probity of public spending while for small businesses, in particular, there is the challenge of minimising bureaucracy. This also reflects a debate in the UK where apprenticeship funding is currently routed through training providers. Recent labour market 21

24 initiatives in Ireland, such as Momentum and Springboard, have adopted a similar approach on a much smaller scale. In the UK, the recent Richard Review (see above) has suggested apprenticeship funding drives a system which is too provider-driven and not sufficiently responsive to employers, and which does not promote efficiency or adequately incentivise quality. It concludes that government could fund apprenticeships through a tax credit. Employers would record how much they spent on eligible training for apprentices, and claim the Government contribution through their tax return. It argues that such an approval need not be complicated or unduly bureaucratic and employers of all sizes are used to using accountants for such purposes. Some Irish companies use a similar approach with the R&D tax credit and this mechanism is worth further consideration. However there are also other approaches (e.g. a direct payment to employers, which reimburses a proportion of their expenditure towards apprenticeship training at the end of the apprenticeship, or a voucher system). The system should be as simple as possible for employers, particularly small ones and provide strong incentives to provide traineeships. Therefore Government should explore and test in detail a delivery mechanism to route professional traineeship support through employers. Recommendations: The new model should incentivise quality, encourage the expansion of professional traineeship opportunities, and drive efficient use of both Government and private investment. Distribution of the cost should be shared by all three parties Government, employers and apprentices. Government could vary how much it supports the scheme according to the size of the firm or the age of the trainee, in order to drive change in the supply of traineeships. It should only fund training that supports the trainee in reaching the agreed standard The funding system should be kept simple and accessible to the small employer Public funding should be routed via the employer, in order to ensure relevance and drive up quality. Therefore Government should explore in detail a delivery mechanism to route professional traineeship support through employers. The traineeship allowances should be determined by agreement between the trainee and the individual employer. 22

25 Providers and delivery methods The Issues Paper suggests that the risk with an industry provided model is the possibility of the apprenticeship system becoming disconnected from mainstream education and training provision. Given the scale of State investment in higher and further education this must not happen. There are already numerous examples of businesses working with higher education sector to source their training provision (see box) and many third level institutions regard the provision of incompany training as an important revenue stream. Indeed the IoTs and more enterprise-focused universities are already offering technically-oriented courses, taking a practical approach to learning and integrating curriculum requirements with technical and vocational elements. In these cases, employers often provide support and work experience for students. This trend has been given further impetus through the more advanced Skillnets networks, the Springboard programme and the ICT conversion programmes which were designed and delivered in partnership with industry However, apart from FAS through its traineeships and apprenticeships, the record of the VET sector working closely with employer is patchier according to the OECD 2010 report. SOLAS and the ETBs will have an important role in building the capacity of our further education training colleges to engage with business. There has been important learning from the multiple provider model that was deployed across the labour market activation fund programmes such as Momentum. This involved VECs, third level institutions, community and voluntary organisations and private sector providers. The professional traineeship model should be based on an appropriate mix of public and private provision. Funding for a proportion of both higher education and further education programmes FET should be based on the principle that public money should follow consumers rather than suppliers. And in this case the consumer is the employer. In the UK, for example, the best further education colleges are innovating in the delivery of apprenticeships. In some instances they are partnering and hosting small and niche specialist private providers, creating partnerships that benefit both. SOLAS should incentivise ETBs to work with, and earn income from, employers by developing traineeships. The Higher Education Authority should adopt a similar approach with IoTs and universities through the strategic dialogue process. While business ownership and co-funding should give employers greater control over the traineeships process, education and training providers will also be at the heart of its design and delivery. It is right and efficient that employers dedicate their efforts and resources to running their businesses, not to running apprenticeships. Employers are not pedagogical experts. We have suggested above that business organisations and professional bodies could have a key role to play here. But we also acknowledge that the role and capability of existing bodies varies considerably across sectors. Training organisations should have a strong interest in offering the best possible service to individual employers and business organisations. They will have a key role to play in supporting employers by providing pedagogical expertise, off-the-job learning centres and external accountability. In Denmark, for example, a learning plan is developed between the employer, the provider and the apprentice, and it is a binding agreement between all parties. 23

26 Examples of enterprise-led training networks working with higher education institution The Irish Medical Devices Association (IMDA) runs a one year sales and marketing diploma designed to provide out of work engineers and business professionals with the skills to take up new work in the med-tech sector. The diploma was developed by IMDA and LifeSciences Skillnet, in conjunction with NUI Galway and BioInnovate Ireland, and begins today in NUI Galway. The BioInnovate Ireland programme brings industry, clinicians and researchers together to lead medical innovation. The IBEC Export Orientation Programme (EOP) has developed an accreditation process, which allows graduates to complete a Postgraduate Diploma, or Masters Degree, in International Business Development while completing their work placement. The Postgraduate Diploma Programme is managed in partnership with the Dublin Institute of Technology (DIT), College of Business and is delivered through a series of intensive workshops and distance learning modules. The IBEC Retail Skillnet has delivered 10,000 Level 5 and Level 6 certified work based learning programmes to over 10,000 people working in retail since In 2012, it commenced a Degree in Retail management practices which is delivered in the Institute of Public Administration. The programme has been designed and delivered in collaboration with Letterkenny Institute of Technology. It is delivered two days per month between September and May for three years. Learners receive significant recognition for learning achieved in the workplace. The Summit Finuas Network is part of the Finuas Networks Programme whose aim is to support the sector in maintaining Ireland s position as a top international financial services centre, through ongoing investment in the development of the skills and expertise of this workforce. In 2012, Finuas networks developed new industry-led programmes in employment growth areas such as green finance, Islamic finance and aircraft leasing, in partnership with a range of institutions including Dublin City University (DCU), the University of Limerick, the Institute of Bankers in Ireland and the Chartered Institute of Management Accountants (CIMA). The Postgraduate Diploma and Master of Science Degree in Product Management have been designed specifically to meet the needs of organisations in the software and digital technology sector. Designed and delivered by Dublin Institute of Technology in partnership with the Irish Software Association and ISA Software Skillnet, the programme draws on the expertise of leading academics, international experts, recognised industry practitioners and the latest research. Practicing product managers gain in-depth knowledge while making a very practical contribution to participating companies. First Polymer Training (FPT) Skillnet operates as a training network for the plastics Industry and is funded under the government s Skillnets initiative. Initiated by the business organisation, Plastics Ireland, the aim of FPT Skillnet is to deliver training that is focused on the specific needs of the plastics industry and includes certification and development. The network has close links with Athlone Institute of Technology and recently launched a Blended Learning Level 7 Engineering Degree focused on polymer technology in conjunction with both Athlone and Sligo institutes of technology. 24