Wales TUC consultation response:

Welsh Government consultation

Aligning the apprenticeship model to the needs of the Welsh economy

Date of issue: 22 January 2015

Date of submission 24 April 2015

  1. Wales TUC welcomes the opportunity to respond to this consultation.
  1. Wales TUC is the voice of Wales at work with over 50 affiliated unions collectively representing around 400,000 workers in Wales across the public, private and third sectors.

Introduction

  1. Wales TUC has long supported the delivery of apprenticeships as part of the trade union movement’s commitment to learning at work and the need for individuals to have the opportunity to develop their skills, knowledge and understanding to support career progression. In pursuit of these goals, we support the priority attached to meaningful skills development that aids social mobility in Wales as referenced in the consultation document.
  1. Trades unions have a vital role to play in apprenticeship delivery and work as key partners in some of the best schemes within Wales. Furthermore, the role of trade unions in the design and delivery of schemes acts as a continuous check on quality for programmes that ought to serve the long term interests of the workforce upon which our economy depends.
  1. Many employers invest in quality, structured skills development for their employees. In many cases it’s central to their business model, saves money in the long term and boosts morale amongst a workforce that is valued and listened to. Where this approach exists, trade unions are able to play a positive role in negotiating for, and supporting a system that delivers positively for its members.
  1. However, many employers across Wales are uninterested in upskilling their workforce and are hostile to the notion of collective bargaining. It is for this reason that Wales TUC is committed to ensuring that changes to the apprenticeship system in Wales are based on genuine partnership that responds in an intelligent way to the challenges within the modern labour market.
  1. In order to deliver against its cross cutting aims, which include tackling poverty and the goals set out in the Wellbeing of Future Generations Act, the Welsh Government should design an apprenticeship model that tackles exploitation and poor employment practices which continue to undermine the realisation of social justice for many working people in Wales.
  1. Wales TUC shares the ambition to learn from the successful apprenticeship models found within Europe where judicious regulation and robust social partnership combine to make high-quality apprenticeships more widely accessible, particularly for young people.
  1. When considering how best to ‘align the apprenticeship model to the needs of the Welsh economy’ it is difficult to envisage a truly successful model that emulates the outcomes of leading European examples without the regulation and embedded partnership that underpinsthem.
  1. Wales TUC believes that a system with stronger regulation and shared ownership over design and delivery would provide greater stability and better clarity on what apprentices can expect from their training. A more compelling offer is needed in many sectors to encourage young people to opt for an apprenticeship while also boosting productivity within the Welsh economy.
  1. Wales TUC believes that a more stable and clear structure would boost demand for skills and apprenticeships within sectors that are able to support enhanced productivity. It is important to note that Wales TUC does not agree that boosting skill levels alone will have the same affect. Employers have a responsibility to ensure that the skills of the workforce are properly utilised through effective workforce planning.
  1. Such an approach will also support high quality provision within the Further and Higher Education sectors which can be better matched to clearerpriorities.Wales TUC believes that more training should take place within the HE & FE sectors to support high quality learning that promotes genuinely transferrable skills.

A Whole government approach

  1. Apprenticeships in Wales would be better able to support economic development if the Welsh Government pursued a coherent and explicit industrial strategy against which progress could be measured.
  1. Wales TUC has called for the establishment of such a strategy with increased urgency in the wake of the recession and UK driven austerity. Within a strategy that clearly expresses the future direction of the Welsh economy, apprenticeships could be better aligned to areas of long term priority.
  1. A whole government approach is necessary in order to raise skills in an environment where there is sustainable demand for skills development across the Welsh workforce.
  1. Wider economic policy levers should also follow the existing good practice in including apprenticeship delivery as a condition of Welsh Government support. This community benefits approach should be utilised across government and become a basic expectation of any form of public subsidy, ranging from grants and contracts to loans.
  1. Trade union recognition should also become a condition of such support in order to ensure better quality employment and apprenticeship opportunities.

Shared responsibility

  1. As demand for higher skills grows and public funding becomes increasingly scarce, Wales TUC believes that it is now a matter of urgency that apprenticeships are better regulated if they are to become truly synonymous with excellence.
  1. As stated in the Wales TUC response to the Welsh Government’s 2014 consultation on co-investment we believe that mandatory training levies should be introduced in order to ensure a fairer model to finance relevant quality training, including apprenticeships. Rather than beingperceived as aposition of last resort, this model ought to be established to ensure long term stability and responsiveness within the system.
  1. The recent experience of employers and workers within the film industry illustrates the weakness of voluntary levies as representatives from across the industry push for a mandatory arrangement.
  1. The UKCES report, Understanding Training Levies includes evidence on the voluntary levy within the sector which supports the need for a mandatory arrangement. The study also reports on the benefit this brings to addressing sector wide skill shortages:

‘After a period of consultation led by Creative Skillset, industry stakeholders decided in 2004 to seek a statutory levy. The main reasons for pursuing such a levy are as follows: there is 30 per cent non-compliance with the voluntary levy; there are feelings of unfairness on the part of levy-payers; and support for the voluntary approach might wane, if those who do not contribute are seen to be benefitting unduly. It was also stated that a statutory levy would provide a more assured income and enable longer-term planning to deal with skills shortages and gaps. There is a belief that a higher income could be usefully deployed, and Creative Skillset research suggests that a minimum income of £1m is required to meet industry needs’.[1]

  1. The industry’s union, BECTU plays an active role on the Film Industry Training Board and continues to support the push for a mandatory levy which, if successful, could have a positive impact on training and development opportunities for the growing film industry workforce in Wales.
  1. Wales TUC opposes UK driven austerity and believes that the funding instability for apprenticeships has become a symptom of the wider pressure on Welsh Government finances. These challenging financial circumstances will make the delivery of comprehensive, quality and equitable learning at work more difficult. It is against this backdrop that we support the efforts made by the Welsh Government to stimulate greater investment from employers in work based learning, including apprenticeships.
  1. As funding for apprenticeships reduces, the economic benefit of this investment will be reduced. Cuts to Further Education budgets more broadly will make it increasingly difficult for those institutions to offer the excellent facilities and expertise that learners will require as part of their apprenticeship.
  1. The argument that greater regulation will dissuade employers from participating in apprenticeship programmes has been a powerful force in reducing the policy levers available to governments in the UK in recent decades. However, international studies show that other countries support higher-quality apprenticeships – at a greater volume – within frameworks which are underpinned by statutory regulations. These include the 2012 ILO report: Overview of Apprenticeship Systems and Issues.[2]
  1. The role of regulation should be considered as part of the wider contribution of apprenticeship programmes and specifically the benefit they can offer to individuals, employers and the wider economy. Employers engage in apprenticeships because they offer numerous benefits to their business which would be difficult to achieve without purposeful government policy. The employer organisation, Business Europe lists the following among the advantages of apprenticeships:
  • ‘Apprentices contribute to production;
  • Companies and their employees get used to training and integrating “newcomers” and they see the importance of learning;
  • Employing apprentices is a unique source of recruitment for companies; former apprentices constitute a “pool” of competences for companies or event for a sector;
  • Apprentices contribute to the company with new energy and enthusiasm’[3]
  1. At a UK level a 2012 Chartered Institute for Personnel Development report found that:
  • 80% of those employers who employ apprentices agree they make their workplace more productive.
  • 92% of employers who employ apprentices believe that apprenticeships lead to a more motivated and satisfied workforce.
  • 83% of employers who employ apprentices rely on their apprenticeships programme to provide the skilled workers that they need for the future.[4]
  1. Given the longstanding and well understood benefits of apprenticeships for employers, the use of more robust regulation to encourage the outcomes to which we aspire should be regarded as the guarantor for quality and fairness in a system that consistently serves employers incredibly well.
  1. Moreover, better regulation with employers and unions playing a greater role in enforcement ensures that good employers are not undercut by those who seek to exploit the system.

A culture of learning

  1. Apprenticeships are an important element of a wider necessity to create a culture of learning in more workplaces.
  1. Wales TUC currently supports 1,300 Union Learning Reps across Wales, who act as brokers in the workplace, helping to link Welsh Government support to employee and employer needs.
  1. Trade unions have supported many workplaces across Wales to introduce long term workforce development plans and have introduced on site learning centres to make learning more accessible and appealing to the workforce, including non traditional learners.
  1. However, unions report that even the strongest systems are vulnerable to the whim of poor management decisions which have denied opportunities for workers within organisations that have previously embraced a genuine culture of learning.
  1. Unions are also uniquely placed to bargain for quality training and to ensure that apprenticeship places lead to sustainable employment upon completion. It is for this reason that trade unions believe cuts to the provision of work based learning risks damaging the engagement necessary to expand apprenticeships.
  1. Government is not in a position to deliver a truly holistic approach on its own which is why Wales TUC supports a genuine model of social partnership where government plays an essential and influential role as facilitator across a fairer system

Demand for skills & Employer engagement

  1. The consultation points to low skills across the UK being identified as one of the main reasons for its poor productivity relative to other countries.
  1. It is important to recognise these factors when designing a new approach to apprenticeships as unintended consequences when seeking to focus on higher apprenticeships can damage social mobility and accessibility for those in greatest need of support. Wales TUC believes that a focus on quality, driven by influence from social partners - employers, unions and providers - should ensure that apprenticeships across sectors are sustainable and of benefit to the future needs of the economy as a whole.
  1. Wales TUC recognises that there is a growing demand for skills at higher levels and agrees that Welsh Government education and work based learning policies should help workers match the opportunities this will deliver.
  1. However, it remains the case that many employers are not seeking higher skilled workers and that much of the growth in employment since the recession has been at the bottom end of the income distribution within low skilled jobs. This is exacerbating the longstanding problem of low skilled employment in Wales as employers seek to fill vacancies that do not utilise the skills of the workers recruited.
  1. The 2013 WISERD study: Skills and the Quality of Work in Wales[5] found that despite the rise in jobs requiring higher skills, there remained half a million jobs in Wales that did not require level 2 skills. At that time around 200,000 people of working age in Wales did not possess a level 2 qualification.
  1. Apprenticeships should play a role in improving the value of work and the use of job design in these sectors in order to tackle skills shortages and support social mobility. This approach should complement wider skills policies to address the problem of underutilised skills in many parts of the labour market.
  1. This problem is a fundamental task in challenging the impact of the recession and austerity in Wales which has seen many workers become stuck – and often underemployed - in entry level roles which they would otherwise have left more quickly.
  1. At a UK level, 80% of all new jobs created since 2010 have been in industries where the average wage is below £8 per hour. The rise of temporary roles, forced self employment and casual jobs since the recession has seen permanent roles as a share of employment in Wales drop from 64% to 60% (2007-14). This is equivelant to a shortfall of 51,000 full time employee jobs.
  1. Wales TUC has consistently pointed to the consequences this problem poses for the wider labour market as workers that need to progress cannot do so, while young people seeking work struggle to find jobs with decent hours and pay.
  1. The labour market statistics quoted above are in part a product of historically low business investment rates in the UK economy as weak demand pushed a rate which was already low by international standards, lower still.
  1. This problem is exacerbated by the longstanding effects of a UK banking system which does not serve the interests of the economy as a whole:

‘£1.3 trillion of loans were extended to British residents by UK banks in the 10 years before 2007, around 100 per cent of GDP, and 84 per cent of this went into either property or to financial companies. The banking system’s focus on property and finance contributed to regional inequalities, to the UK’s low level of investment and to the asset price boom, which sowed the seeds of the crisis.’[6]

  1. Over this period the real economy – within which most workers are employed – was starved of investment leading to lower productivity which has been worsened by recession and regressive austerity policies at a UK level.
  1. It is crucial that this background is acknowledged when considering skills as these factors have dictated the type of jobs which have been created which in turn defines the access to learning and progression working people experience.
  1. Mandatory training levies offer a practical route to directing more private sector investment into training at a time when it is not realistic to expect employers to deliver a major injection of funding without a better regulatory framework.

Level 2 provision

  1. While Wales TUC agrees that the completion of apprenticeships at level 3 should be pursued, it is crucial that level 2 provision is available as a component part of such programmes.
  1. Wales TUC recognises that apprenticeships represent only one element of improving the skills base in Wales. Alongside unions, we currently work to actively secure level 2 learning for workers outside this area as well as within apprenticeship programmes.However it must be recognised that removing apprenticeship provision at level 2 without a robust policy that offers equivalent training could leave thousands of workers without the training they need to progress.
  1. Trade unions have expressed deep concern at this reality which ought to be addressed directly in this consultation process. Without detailed proposals on how the shortfall in provision can be met it is difficult to appraise the proposed solution to this problem.
  1. The Welsh Government needs to explain how demand for level 2 learning will be met. If existing public funding cannot meet this demand then more radical proposals, including those advocated in this response, should be pursued.
  1. While themove to level 3 will improve skill levels, better employer engagement is needed to ensure that such skills are properly utilised in the workplace. Without improved skills utilisation, the economic benefit of the Welsh Government’s investment will be limited. Specifically, trade unions are concerned that removing level 2 provision altogether would risk significant disengagement from employers in sectors such as retail, elements of manufacturing and the service sector.
  1. Wales TUC believes that all apprenticeships should last for at least two years.
  1. Ensuring time off for study and other related activities is crucial to a meaningful apprenticeship. The recent UKCES Employer Perspectives Survey revealed that 43% of employers offering apprenticeships in Wales allocate less than 5 hours per week for study and other activities away from the job role.This significantly undermines the quality of an apprenticeship and the ability of the apprentice to develop transferable skills.
  1. Labour market projections for Wales published by the UK Department for Business, Innovation & Skills confirms that a major challenge for the Welsh economy is the task of meeting the demand for replacement labour effectively.
  1. The net increase in headcount across the Welsh workforce as a whole, stands at 4.2% for the period between 2012 and 2022, while the demand for replacement labour over same period is projected at 39%.
  1. The projected change in composition of the labour market means that effective workforce planning should be practiced and promoted as far as possible. The age profile of the public sector workforce in Wales is also a threat to the delivery of public services over the medium to long term.
  1. The use of more high quality apprenticeships must be treated as a priority in addressing this challenge. Better workforce planning across the Welsh public sector should be used as a catalyst to create more advanced and higher level apprenticeships.

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