Chapter 5. Innovative approaches to attracting and retaining apprentices in Western Australia

This chapter explores the impact and effectiveness of enterprise-embedded apprenticeship programmes in the context of the construction industry of Western Australia. The case study features a “whole of life” pathway for apprentices to make the transition from secondary education to full-time work through a range of experiences and opportunities provided through a single company. The relationship between the apprenticeship scheme and the broader economic context of Western Australia is also explored.

Key findings

The ABN Group is a diversified construction company that has pioneered an enterprise-embedded model of apprenticeship programme delivery in the context of the Australian federal state of Western Australia.
The programme delivery method embeds a group training organisation into the company’s holding structure, which enables the company to manage both on-the-job training and off-the-job training internally. It also provides the ABN Group with the flexibility to shift apprentices to different construction sites according to the company’s needs.
The process of developing the enterprise-embedded model required a protracted process of consultation with relevant stakeholders, including government partners. Direct lobbying and legislative change was required to make this model feasible, even in the context of a well-developed apprenticeship system.
The merits of a lifecycle model of apprenticeship delivery, wherein the employer is engaged with the apprentice through the process of awareness, recruitment, training, work experience and graduation, are also explored.

Introduction

Enterprise-embedded apprenticeship models are relatively uncommon across OECD countries, even in those with well-developed apprenticeship systems and relative flexibility at the local level. This chapter explores the evolution of an enterprise-embedded model through the example of the ABN Group, a large construction company based in the Australian federal state of Western Australia. The benefits of the model for the ABN Group include increased flexibility, reduced hiring and training provider costs and increased alignment of on-the-job training and off-the-job training. This model was somewhat unprecedented and required regulatory reform before successful implementation.

Policy context

The total Australian population in 2012 was 22.7 million people, with a national labour force participation rate of 65.2%. Nationally, Health Care and Social Assistance and Retail were the top two industries by percentage of employees. The Australian workforce is highly concentrated on the eastern seaboard, with more than three quarters of workers employed in the three most populous states (New South Wales, Victoria and Queensland).

The Australian labour market has been transformed over the last twenty years by the concurrent trends of increased participation of women in the workforce, a much greater focus on skilled jobs, an associated increase in young people participating in education and the ageing of the population. Technological change, greater labour market flexibility and economic reforms have also been associated with a significant improvement in labour market conditions between the end of the early 1990s recession and the onset of the Global Financial Crisis (GFC) in 2008.

Although labour market conditions in Australia deteriorated at the onset of the GFC in late 2008 and the unemployment rate rose to 5.9% at the peak of the crisis, Australia fared much better than most other advanced economies and recovered strongly during 2010. Since then, however, domestic conditions have softened again as a result of ongoing uncertainty and volatility on global financial markets and weaker global growth.

Western Australia is the largest state in Australia (by landmass) and the second-largest country subdivision in the world. The state experienced particularly strong employment growth over the five years to November 2012, driven predominantly by the strength of the resources sector. Employment increased by 175 200 or 15.4% (the strongest rate of any state or territory).

Western Australian workers are slightly less likely to hold post-school qualifications than the national average (61% compared with 63%). Workers in the capital city (Perth) are more likely to have a bachelor degree or higher qualification than those in regional areas, but workers outside Perth are more likely to have Certificate III level or higher vocational education and training qualifications.

Australia experienced a period of substantial expansion of the resources sector during the 2000s (especially from 2005 to the end of the decade), driven by Chinese economic growth and high commodities prices. From March quarter 2005 to September quarter 2010, capital expenditure by the mining industry increased 258% to AUD 11 143 million (ABS, 2010). The largest proportion of mining sector investment occurred in Western Australia, where mining revenue represents the biggest proportion of both gross state product (GSP) and exports (ABS, 2010).

Along with strong economic growth, the mining boom led to increased levels of employment in Western Australia. This is reflected by the fact that during the period 2006 to 2011, the number of employed persons grew by 11% in Australia, and by 18% in Western Australia (ABS, 2006; ABS, 2011). The mining industry was a major contributor to employment growth, both nationally, with the number of those employed in the sector growing by 65%, and locally (70%).

In Western Australia, the construction, professional, scientific and technical services and the electricity, gas, water and waste services industries also considerably increased the numbers of employees between 2006 and 2011; by 31%, 34%, and 31%, respectively (ABS, 2006; ABS, 2011).

The construction phase of the mining boom had strong flow-on effects to other sectors, particularly the construction industry. A review of 20 years of labour market data published in 2010 demonstrated that sectors relying on trades occupations generally suffered from shortages of skilled workers following strong economic growth; with the construction, and the engineering and automotive trades usually being more severely affected (Oliver, 2011).

Skills shortages occur as a result of an imbalance between demand for qualified workers and the number (supply) of skilled workers available. This may occur as a consequence of a low number of skilled people entering the workforce, aged workers leaving the workforce, or growth in the demand for skills which might result in high competition for workers between growing industries, or employers within these industries.

During the 2000s, low unemployment rates and an increasing number of resource sector projects drove increased demand for skills and resulted in the emergence of skills shortages. The shortage was “exacerbated by a long period of under-investment in apprentice training”, following a lower than national average growth in the number of apprentices during the 1990s (State Training Board, 2006).

The strong employment growth in resource-related construction was largely met by skilled workers originally employed in residential and civil construction, who were attracted by the higher wages being offered by the resources sector. This in turn resulted in a high turnover of both skilled and partially trained workers within the construction industry, and created wage pressure (Construction Training Council, 2010). Moreover, the operational side of the resources sector, i.e. the mining sector itself, also posed strong competition for workers. Between 2005 and 2010, the number of workers moving to the mining industry from other industries more than doubled (D’Arcy et al., 2012). It was not uncommon to have teachers, police officers and other professionals, for example, working on mine-sites alongside those with more relevant experience (The Australian, 2010). The impact on the construction industry in Western Australia was significant. For example, 25% of people recruited into mining in 2012 came from the construction industry (Source: interview with Director of Skills Development, CTF).

In Australia, Vocational Education and Training (VET) is the main pathway into trade occupations. The construction industry relies heavily on recruitment of apprentices and employs 40% of all apprentices in Western Australia.

However, although commencements in trades apprenticeships in Australia increased by an average of 6% between 2006 and 2010 (NCVER, 2015), completion rates during this period were low. Across Australia, more than half of apprenticeship training contracts in trade occupations were not completed, whereas in Western Australia, 46% of programmes were not completed (NCVER, 2015). Figure 5.3 outlines the completion rates for Australia and Western Australia.

Policy context

Since the 1990s, the Australian VET system has undergone modernisation and harmonisation to ensure that training delivered by the states and territories is consistent and meets the needs of a changing economy. These reforms were achieved through the introduction of legislation and regulation, and were accelerated in the context of an economic boom during the early 2000s, which raised concerns about a shortage in the supply of skilled workers.

In response, the Council of Australian Governments (COAG), comprising the heads of the Commonwealth and all state and territory governments, decided to speed the introduction of competency-based training to achieve a skills pipeline that would be able to meet areas of pressing demand (NCVER, 2011). The National Skills Framework (NSF) was established and included the following initiatives:

The VET Quality Framework (VQF) – the nationally agreed quality assurance arrangement that ensures the quality and consistency of VET training delivery and assessment;
The Australian Qualifications Framework (AQF) – a comprehensive framework that provides a unified system of national qualifications in schools, vocational education and training and the higher education sector (mainly universities); and
Training packages – nationally endorsed standards and qualifications used to recognise and assess people’s skills in a specific industry, industry sector or enterprise.

The competency-based training packages are endorsed by industry-specific national Industry Skills Councils to ensure that training meets the needs of industry (Hodge, 2007). Under this arrangement, apprentices demonstrate that they have achieved a minimum standard skill level in order to attain completion, which means that some are able to finish earlier than usual, dependent on their assessed competence.

A more recent initiative of COAG is the National Agreement for Skills and Workforce Development (2012), designed to ensure Australia has a productive and highly skilled workforce in to the future and in the context of a changing economy (COAG, 2012). Key targets are to “strengthen the capacity for public and private providers and businesses to deliver training and support people in training”, and to, “strengthen, streamline and harmonise the Australian Apprenticeships system”, (COAG, 2012).

Within this context of reform, and with a stronger focus on developing a productive, skilled workforce that responds to the needs of industry, Australian Apprenticeship programmes now include a greater focus on the needs of employers. While some apprentices are directly contracted by employers, others are contracted by Group Training Organisations (GTOs) and then hired out to a number of different host employers during their training programme. This way, GTOs provide apprentices with access to multiple worksites to develop their work experience through on-the-job training. Off-the-job training is delivered by organisations known as Registered Training Organisations (RTOs), which deliver Vocational Education and Training (VET) that results in qualifications of statements of attainment that are recognised and accepted by industry and educational institutions throughout Australia. RTOs can be government bodies or privately owned organisations. Figure 5.4 provides an overview of the relationships between parties in the delivery of apprenticeships, within the National Skills Framework.

Australian apprenticeships can be undertaken by any Australian older than 15 years, and some may also be offered as a school-based apprenticeship from Years 10 to 12, the final two years of secondary school. A training contract must be signed by the employer (when hiring independently) or GTO (when hiring through group training schemes), the employee (the apprentice, or the parent/guardian if under 18 years of age), and the relevant RTO.

Training plans, determined in collaboration with RTOs, identify how the course and training will be delivered and how competence will be assessed. The latter is often connected to wage progression, where achievement of competence against the requirements of the training package is assessed and reflected in wages. A Level III (VET) Certificate is granted to those who successfully complete their apprenticeship programme.

The Western Australian Department of Training and Workforce Development (DTWD) administers training contracts and regulates the apprenticeship system within the state. DTWD is responsible for auditing training plans, assessing employers’ suitability to train apprentices, and ensuring that regulatory requirements are maintained across the apprenticeship system.

Apprentices in the Western Australian construction sector

In the early 2000s, there were major concerns about the Western Australian construction industry’s capacity to ensure development and supply of a skilled workforce in the face of growing demand for construction projects. This was compounded by the increasing attrition of workers from construction to the lucrative mining industry.

Long-term planning set in place by the Western Australian government, as well as the benefits of the competency-based, employer-focused approach to modernise Australian apprenticeships, were key factors that enabled the construction industry to maintain the supply of skilled workers despite ongoing skills shortages. The Construction Training Fund (CTF), which is specific to Western Australia, was established via legislation in 1990 to support skills development within the construction industry by extracting a 0.2% levy from all construction projects within the state, where the value of construction is higher than AUD 20 000. The levy is intended to be used to incentivise employers to train apprentices and to up-skill their existing workforce. It is also used to support the provision of school-based work experience and pre-apprenticeship programmes, which are seen as strategic initiatives to ensure the development of a future workforce pipeline within the construction industry. Over 48 000 apprentices and trainees have been supported by the CTF since its inception (CTF, 2016).

The construction sector is highly dependent on the availability of a skilled workforce in order to meet demand for projects. As companies can only sell what they can build, their capacity to operate is undermined by a lack of skilled tradespeople. Hence, a commercial problem is created and the capability to plan and grow is compromised.

Increasing capital investment from mining companies drove increased wages and population growth (derived from the increasing influx of workers from other states and overseas), and resulted in growing demand for building and construction projects in three markets:

Mining infrastructure;
New housing stock; and
Housing renovations and expansions.

The ABN Group, as a leading operator within the building and construction sector, primarily services the new home and home renovation markets in two of the four largest Australian states (by population) – Western Australia and Victoria. As a large organisation and employer, the ABN Group was significantly affected by the availability of skilled tradespeople, especially in a context of expansion during the mining boom.

Beyond training newcomers to the industry, it is also crucial for companies to be able to access a pool of graduated tradespeople within their workforce. In the construction sector, graduating apprentices typically become self-employed contractors. This means that, after completing an apprenticeship programme, there is no guarantee that tradespeople will either continue working for their host employers or be able to find employment in the industry. In GTO arrangements, where apprentices rotate between different, unrelated employers, the links and commitments between these parties is even weaker.

Prior to 2004, contractors working within the ABN Group would host apprentices hired through a very small number of external GTOs. The rotation of apprentices between host employers outside ABN Group translated into apprentices that did not genuinely see themselves as part of the ABN Group of companies. As the ABN Group’s interaction with RTOs was mediated by the external GTOs, ABN Group also had limited control over the apprenticeship training programme and its ability to meet the company’s skills needs and broader values. A third significant issue was the high leakage of apprentices to other employers, and other industries, before and after training was completed.

This led to the creation of an enterprise-embedded apprenticeship programme to meet the expectations of the ABN Group with respect to training standards, recruitment of talented candidates, apprenticeship completion, and retention of skilled workers.

A key outcome of this new approach to workforce development was a decision by the ABN Group to adapt the usual group hiring services provided by GTOs by creating its own internal GTO, ABN Training. This new company was established by the ABN Group in 2004, when investment in the mining sector was peaking and expected to keep growing, and demand for skilled tradespeople in the construction sector was soaring.

The enterprise-embedded apprenticeship model

Objectives

The main goal of the enterprise-embedded apprenticeship programme developed by the ABN Group was to achieve the highest possible retention of graduated apprentices within the company, with the broad aim of guaranteeing future accessibility to tradespeople that meet the ABN Group’s standards of skills and align with their organisational culture. Underlining this was the aim of achieving generational change in standards relative to core issues such as safety, work readiness and quality of work.

The following key performance indicators underlie the work of ABN Training:

70% of each intake complete apprenticeship programme
80% retention rate as a tradesperson six months following graduation
60% retention rate as a tradesperson two years after graduation

The internal GTO ABN Training also attempted to attract mature-aged workers to their apprenticeship programme. While mature-aged people are generally underrepresented in the Australian apprenticeship system, over a third (34.5%) of apprentices hired between by the ABN Group from 2012 to 2015 was mature-aged. The organisation also attempts to attract apprentices from other underrepresented groups.

Activities

As illustrated in Figure 5.5, the enterprise-embedded apprenticeship strategy developed by the ABN Group has a “whole of life” approach, and consists of three phases:

Work exposure: promotion of career paths in the construction industry to Year 10-12 students;
Apprenticeship: in-house delivered apprenticeship programme; and
Career progression: a “graduation” programme offering employment solutions both within the ABN Group and the broader building and construction industry to maximise the retention of graduated apprentices.

The programme features:

A ratio of one training manager to approximately 25 apprentices, well below the general industry practice among building and construction GTOs of one training manager to 50 apprentices (Source: interview with a project manager from the Construction Training Fund);
Tailored training and career plans; and
Coaching and mentoring programmes from the commencement of apprenticeship through to post graduation.

Work exposure

As part of this first phase of the “whole of life” workforce development strategy, ABN Training works in collaboration with the CTF to promote careers in the construction industry to secondary students. The Group contributes to career fairs and schools-based “try-a-trade” short courses where secondary school students in Years 9 and 10 can participate and receive an overview of each trade. As part of this same work exposure phase, ABN Training also provides Years 11 and 12 students with on-the-job training as part of CTF’s “Schools2Skills” pre-apprenticeships programme. Each year, the ABN Group hosts around one third of the approximately 1 500 Western Australian students that participate in “Schools2Skills” programmes.

ABN Training works with schools and RTOs to recruit apprenticeship candidates that have been involved in the school-based programmes funded by the CTF, as these have a better understanding of the industry, and therefore a lower risk of non-completion. Many of these students have already achieved Level II certification as a result of successful completion of the “Schools2Skills” programme, which can then accelerate completion of their apprenticeship. These candidates also tend to have a better understanding of the industry and a lower risk of non-completion. In addition to this, the ABN Group also seeks to recruit mature-age participants. Although mature age apprentices are entitled to higher wages that school leavers, the ABN Group has found that they tend to be more committed to the programme and able to advise and mentor younger apprentices.

In 2014, ABN Training received 1 000 applications for 100 apprenticeship vacancies. These apprenticeships are offered in particular trades on the basis of market and skills demand, the company’s strategy and workforce planning

Apprenticeship

Successful candidates are hired by ABN Training as apprentices under a training contract, and then hosted by different subcontractors working across the 23 subsidiaries of the ABN Group, each of which specialises in a different area of construction. In 2015, apprenticeships were offered in 13 trade areas. On commencement, apprentices have the opportunity to experience all trade areas before specialisation. Upon appointment as an apprentice, they continue to be exposed to other trade areas to enhance their understanding of the industry.

The ABN Group also creates special internal training teams for trades where the workload within the ABN Group is too restricted to justify a host employer taking on apprentices. For example, in 2015, specialised training teams were created in the areas of wall and floor tiling, carpentry and joinery, concreting, and commercial construction.

Almost all of the ABN Group’s companies have a “training manager” that is responsible for the recruitment and management of the apprentices allocated in that company (in some instances, smaller companies within the Group share a Training Manager). Training managers are also responsible for providing apprentices with tailored training plans and mentoring. The ABN Group’s Apprentice Training Manager oversees the training managers working for the Group’s various companies, ensuring apprentices receive the appropriate training and level of pastoral care required to keep them fully engaged in the apprenticeship programme.

The ratio of Training Managers to apprentices in the ABN Group is around 1:25, which compares favourably to the general industry practice of one GTO training manager to around 50 apprentices. This lower ratio is designed to allow apprentices to develop a stronger relationship with their training manager. In comparison, most GTO training managers tend to focus on finding host employers instead of offering support and pastoral care (source: interview with Director, Skills Development from the CTF). Apprentices are internally assessed prior to any formal assessments undertaken by the associated RTOs, and will receive extra support to address any learning difficulties that might lead to failing RTO training units.

The ABN Group also holds annual Apprentice Awards to recognise the top-performing apprentices in that year’s cohort. The categories for awards include leadership, excellence in their chosen trade and safety awareness. ABN Group apprentices have also featured strongly in broader State and National Apprenticeship Awards over recent years.

Career progression

The final part of this phase is the career progression phase, during which apprentices are mentored by a Trade Development Manager to set both short- and long-term career goals. Graduate apprentices attend a short business course, where they learn about the legal and financial aspects and obligations of operating a business, and hear from graduates from previous years who share their business experience.

Each successful graduate also receives an AUD 1 000 voucher from the ABN Group to use with a local accounting firm to assist them to register their business name, obtain insurance cover and process their first taxation return. Graduates are also coached on how to establish their own business as a sub-contractor and create their own team, or have the option of joining other contractors’ teams as a subcontractor. As a contractor, successful graduates work for one of ABN Group’s companies according to the skill sets developed in the apprentice programme. Graduates are also offered interest-free loans to assist them to buy tools and equipment and establish themselves in the market if starting up their own contracting business to work for ABN Group. The loan is then paid back through direct debits on construction contracts. Apprentices can also access finance packages from the ABN Group for home and car loans, either upon graduation or later as a contractor or employee.

Feedback and mentoring support from the ABN Group continues indefinitely after graduation, and graduates may be guided towards further training and education if moving into a more high-skilled or managerial position is part of their longer-term career goal.

The graduation programme is crucial to the success of the apprenticeship as graduates are offered financial and pastoral support, with the possibility of employment within the ABN Group. Alternatively, graduates who choose to establish their own contracting business are guaranteed contracts from relevant ABN Group companies. This aligns with the ABN Group’s workforce development strategy and integrates with the company’s planning process to meet current and forecasted future workloads.

Programme, governance framework and delivery arrangements

The enterprise-embedded apprenticeship model takes place in the broader context of the ABN Group’s business activities. The ABN Group is an integrated construction, property and financial services company comprising 23 businesses – one of which is ABN Training. A high level overview of ABN Group industry profile is outlined in Figure 5.6.

ABN Training is a registered GTO that is responsible for the design, development and implementation of the apprenticeship programme at the ABN Group. It works closely with the ABN Group’s board of directors to identify medium to long-term strategies, and to monitor and evaluate the progress of apprentices.

As a registered GTO, ABN Training is also responsible to the following external organisations:

The Western Australian Department of Training and Workforce Development (DTWD), which provides funding, assesses GTOs against the National Standards for Group Training Organisations for membership of the National Group Training Register, and conducts biannual compliance audits;
The Construction Training Fund (CTF), which provides funding, supports recruitment planning and strategy through market intelligence, and supports school-based training programmes and promotional activities for skills development in the construction industry;
Registered Training Organisations (RTOs), which assess work-based training opportunities, provide off-the-job training and assist in the development of training models suited to business needs;
Construction and Property Industry Skills Council, which collaborates with ABN Training and other GTOs to improve relevant training packages.

Figure 5.7 provides an overview of the governance arrangements within the ABN Group.

As Figure 5.7 shows, ABN Training is an organisation housed within ABN Group and reports to its board of directors. ABN Training supervises the host employers, namely contractors that work for the ABN Group, and the Training Managers that are responsible for the overall management and mentoring of apprentices.

The overall performance of both the programme and all the training managers is evaluated annually through surveys disseminated to apprentices and host employers, and the results are used to inform continuous improvement.

Due to the volume of apprentices, the organisation is able to negotiate training package delivery with RTOs to minimise off-the-job training where possible. For example, apprentices within the carpentry apprenticeship pathway would usually attend an RTO for five days of off-the-job training to complete the roofing unit of competency. As apprentices are able to develop this competence on site, and apply related skills almost daily, the ABN Group was able to negotiate with the relevant RTO to provide only relevant off-the-job training over the period of a single day. This maximises the development of practical workplace skills for apprentices while meeting the national minimum standards for units of competency. The ABN Group also collaborates with external companies and suppliers to provide industry training, including with respect to safety, tools and materials application.

Budget and financing

Figure 5.8 provides an overview of the financing arrangements that apply to ABN Training’s apprenticeship programme.

ABN Training receives government funding of AUD 1 500 for each apprentice upon commencement, with a further AUD 1 000 provided if participants are based outside of Western Australia’s capital city (Perth) or are over 21 years of age. On completion of the apprenticeship, ABN Training receives a further AUD 2 500 per apprentice from the Commonwealth government.

As a GTO, ABN Training also receives funding from the CTF and the Australian Brick and Blocklaying Training Foundation. Unlike other GTOs, ABN Training passes these funds onto their host employers.

Discounting all the costs that are covered by host employers, and government and CTF incentives, the programme costs ABN Group around AUD 5 000 per apprentice. The ABN Group begins to observe a return on investment after the apprentice completes 32 weeks of work.

One of the features of a GTO is that the host employer pays a fee to the GTO to cover the cost of the apprentices’ wages, workers’ compensation insurance, superannuation etc. As part of the programme costs are absorbed by the ABN Group, this enables ABN Training to charge lower fees to host employers (within the Group) while paying apprentices above the relevant minimum (industrial award) rate.

Strengths of the programme

Innovation

The main innovation illustrated in this case-study has been the enterprise-embedded model developed by the ABN Group whereby the traditional GTO arrangement has been adapted into an internal programme. By doing this, the company has been able to utilise the apprenticeship programme as part of its workforce development strategy and can offer apprentices the chance to experience work across the breadth of the ABN Group. Apprentice retention rates have remained high due to the specific features of the programme, including continued coaching after graduation, business training and access to in-house loans.

The Programme has three core features. Apprentices:

Are contracted and receive on-the-job training within a single company (compared to other GTO arrangements, where apprentices are contracted to the GTO and “subcontracted” to a variety of host employers throughout their apprenticeship);
Receive thorough support to fulfil their career pathway aspirations; and
Experience an environment that enables fulfilment of a career pathway as tradespeople. The “whole of life” strategy of the programme enables apprentices to access pastoral care and support not only during training but also after graduation.

Both the ABN Group and the CTF have noted that, to the best of their knowledge, this is a unique approach that does not occur elsewhere in Australia, in or outside the construction industry (source: interview with the Director of Skills Development, CTF).

Table 5.1. Innovative aspects of the ABN Group’s apprenticeship programme
Innovation	Impacts
Apprentices are hired by and hosted/trained within one single entity (ABN Group).	Model fosters organisational citizenship. Graduated apprentices are more likely to meet ABN Group’s quality standards, and become a loyal, reliable workforce. ABN Training is directly linked to ABN Group’s board of directors, and the whole programme is designed and implemented to pursue ABN Group’s strategic priorities.
Apprentices are guaranteed work, and may choose between different career pathways within ABN Group, while continuing to receive ongoing mentoring and support.	ABN Training is able to attract candidates who are the ‘cream of the crop’, as apprentices have the opportunity to explore multiple trades as well as look forward to more than just completing a trade certificate.
High volume of apprentices provides greater flexibility in embedding the company’s needs and standards when negotiating tailored training delivery with RTOs.	Training can be adapted to business needs and internal standards, leading to: Less duplication of training delivery between off-the-job and on-the-job content. Higher cost-effectiveness. Apprentices able to complete training units in less time. Apprentices able to spend more time on site, resulting in improved productivity.
Significantly lower ratio of training manager to apprentice compared to the average GTO.	Training managers are able to offer more personalised support, and to dedicate more time to each apprentice.
The main role of ABN Group’s training managers is to provide mentoring and coaching, rather than focusing on managing the allocation of apprentices between host employers.	Apprentices feel supported, increasing satisfaction rates and strengthening links with the company.
Subcontractors hosting apprentices are prioritised for new contracts offered by companies within ABN Group.	Increased attractiveness for ABN Group contractors to act as host employers for apprentices.
Mentoring and coaching continues after completion of the apprenticeship, when Trade Development Managers stay in contact with the contractors or employees who graduated from ABN Training for an unlimited time. This occurs even if they no longer work for ABN Group.	Apprentices feel supported in their career pursuits, strengthening links with ABN Group brand. ABN Group is able to reach out to qualified tradespeople in times of skills shortage. Former apprentices are confident they will be welcomed back after an absence.
Source: Author’s own elaboration.

Outcomes

The enterprise-embedded apprenticeship model has succeeded in achieving high completion and retention rates. According to internal data, 71% of apprentices completed the programme between July 2009 and June 2012. In contrast, the average completion rates for construction apprenticeship programmes were 42% in Australia, and 52% in Western Australia, between 2008 and 2010 (NCVER, 2014).

Training Managers within the ABN Group note that the lack of completion is often a result of a lack of maturity. The ABN Group’s willingness to hire experienced candidates, including mature applicants and those that have already completed the “Schools2Skills” Programme, may have also driven the high apprenticeship completion rate. Retention rates for the period July 2011 to June 2015 show that approximately 86% of apprentices who successfully graduate remained with the ABN Group for the first 6 months after completing their apprenticeship. Two years after graduation, 73% of graduates remain with the ABN Group.

Table 5.2. Measured outcomes for apprentices completing the ABN programme between July 2011 and June 2015
Target	Benchmark/KPI	Achieved
Completion	70%	71%
Retention rate within ABN Group six months after graduation	80%	86%
Retention rate within ABN two years after graduation	60%	73%
Source: ABN Group.

Impacts

ABN Training’s apprentices have been regular winners of regional (state) and national awards over a number of years, which attests to the quality of the training programme.

Internal satisfaction surveys undertaken by ABN Training in the third quarter of 2014 provide further evidence of the positive impact of the programme. The performance of the training managers was rated as “excellent” or “above average” by 96% of apprentices and 98% of host employers. Host employers’ performance was rated as “excellent” or “above average” by 89% of apprentices while the performance of apprentices was rated as “excellent” or “above average” by 77% of host employer respondents. There is also strong competition for the ABN apprenticeship programme due to the guaranteed career opportunities offered upon completion, alongside the standard trade certificate qualification.

Over 900 apprentices have commenced the programme since 2004 and have provided a consistent and easily accessible workforce for the ABN Group. Most graduated apprentices continue working for ABN Group as sub-contractors, while many others become employees working as schedulers, construction and site managers and move on to assume other managerial roles within ABN Group’s companies. Many graduates also go on to become host employers for new apprentices, which further reinforces the sustainability of the model.

The enterprise-embedded programme also has positive impacts on the supply of skills in the broader Western Australian construction industry. According to ABN data, an estimated 98% of their graduates remain in the building and construction industry six months after the completion of the programme, and an estimated 85% remain in the industry two years after graduation. Although data from other apprenticeship programmes is not available for comparison, these numbers are quite striking in the context of the skills shortages associated with the mining boom that drew workers away from almost every industry in Western Australia.

There are also indirect benefits for the ABN Group, including an improved reputation as a major contributor to skills development in the construction industry and increased ability to attract new clients (source: interview with the ABN Group’s Managing Director).

Key factors underlying success

A key factor underlying the programme’s success is the full commitment of ABN Group’s leadership team to the programme. The programme’s successful implementation was driven by the direct involvement and personal engagement of the Group’s Managing Director and other senior leaders in pushing for regulatory reforms, developing and implementing innovative approaches to workforce development, and promoting trades as a career.

The ABN Group’s willingness to collaborate with apprentices in the long-run by guaranteeing post-completion employment has also had positive impacts on apprenticeship completion and retention rates. The strong pastoral care and mentoring provided during and after the apprenticeship is also crucial to the programme’s success.

Some of the unique features of the apprenticeship model include:

ABN Training offers a wraparound service that is directly linked to the company’s operations and strategies;
The ABN Group partially absorbs management costs, meaning host employers pay a lower fee to ABN Training then they would pay to an external GTO whose sole business is group training;
The enterprise-embedded model is able to capitalise on some features of the large and diversified company, including greater access to market intelligence (including between its own companies) and the ability to expose apprentices to a wide variety of work;
There are a number of host employers available within the ABN Group, which allows ABN Training to find the best match for the apprentice’s skills and interests;
As an industry leader, ABN Group is able to facilitate discussion around apprenticeship policy, and lobby for changes in regulation;
The programme specifically targets mature apprentices and young candidates who have completed other vocational training programmes. The experience of these candidates helps to foster better educational opportunities during the apprenticeship and increased completion and retention rates.

Obstacles faced during design or implementation

Regulation

At the time that the ABN Group started hiring its first apprentices under external GTOs, the Western Australian apprenticeship model was based on time-served rather than achieved competencies. The model was seen to be inflexible in terms of the responsiveness of training providers to industry needs. It also lengthened the average apprenticeship as candidates were unable to receive credits for skills previously learned in other courses or during work experience.

The ABN Group’s senior leadership team worked alongside representative of the state government, industry councils and associations and unions to review and reform the regulation of the apprenticeship system of the building and construction industry. After a process of investigation and review, the state apprenticeship model was shifted from a 4‐year time-served programme to a competency-based approach (Western Australia Training Board, 2006).

This allowed apprenticeship programmes to be completed in three years (or less, depending on apprentices’ abilities). This made apprenticeships more attractive to both young people, who were now able to get credits for skills learned in pre-apprenticeship programmes, and also mature workers from aligned industries who could get credit for competencies learned in previous jobs. The competency-based programme also removed some requirements for extensive classroom-based learning and promoted more practical on-the-job skills development. Developing an embedded, internal GTO meant that the ABN Group was able to ensure that training design is tailored to its business requirements.

Access to talented young people

Prior to establishing their internal enterprise-embedded apprenticeship programme, the ABN Group identified a need to address a perception that apprenticeships were not highly valued compared to university. This perception limited the ABN Group’s ability to attract the best candidates.

To address this, the ABN Group worked in conjunction with the CTF to lead discussions on promoting the construction industry to young people leaving school. In 2004, an awareness and careers promotion campaign with the slogan “One Industry – No Limits” was developed to provide information on careers in the construction industry. The campaign was targeted towards educators, students and parents and illustrated how students could pursue a VET qualification while at school and demonstrated how different educational pathways could lead to a successful career in the construction industry.

Potential transferability

What are the main lessons for other OECD countries?

This case study provides a number of lessons for other OECD countries. In particular, the case study shows that designing and implementing an effective industry-led and enterprise-embedded group training model is reliant on a range of factors including strong leadership, appropriate financial and non-financial incentives, strong engagement with the education and training sector and enabling regulatory processes.

The following five key lessons learned from ABN Group’s experience might be considered and/or adapted within other OECD countries:

Factors that improve apprenticeship completion and ongoing retention may include:
- A high ratio of supervisors to apprentices;
- Appropriate mentoring and career development opportunities;
- Allowing apprentices to develop broader business skills as well as technical skills.
Industry engagement is necessary to support the supply of apprentices and a training levy is a valid and proven method for achieving this;
Financial incentives for employers are effective in enhancing supply of apprentices;
Those managing apprenticeship programmes should liaise with the academic education sector to develop optimal pathways from education into work. Deeper connections can also address the perception that an apprenticeship pathway is “second best” to university; and
Flexibility and adaptability in training and assessment delivery can lead to greater cost effectiveness, deeper liaison between employers and training providers and can help stakeholders understand each others’ contexts and requirements.

Industry engagement in apprenticeship programme delivery is particularly effective in countries such as Australia and Germany that have dual apprenticeship systems, where training takes place both on and off the job and often commences during secondary education. This enables smoother transitions to employment and can help meet increased demand for workers in industries in which there are either skills shortages or forecast expansion (Steedman, 2014).

It is also crucial that government or industry councils are able to facilitate the transfer of information within the labour market by adopting systematic approaches to identifying areas of skills shortage and planning training policies accordingly. For example, the Western Australian state government’s Future Skills policy, for example, embeds a focus on subsidised training for priority courses linked to areas of shortage (Future Skills WA, 2016).

Further, financial incentives underpinned by clear legislation have been found to be a strong factor in encouraging employers to take on apprentices. The success of the construction training levy in Western Australia is linked to the CTF’s ability to redistribute monies to initiatives such as apprenticeship training, engagement with schools through programmes such as “School2Skills”, incentives to attract and support underrepresented learners including women, Indigenous learners and those in remote areas, and providing support to employers to up-skill existing workers. Because the levy is industry-specific, it can be targeted based on evidence and data collection to better meet the needs of the industry.

Developing a clear transition pathway from education, to apprenticeships and finally to small business ownership and employment was effective for the ABN Group. Vertical and horizontal integration within relevant organisations can also help to boost success.

The volume of apprentices enrolled in the programme delivered by ABN Training allowed them to negotiate targeted training delivery with RTOs in order to support organisational goals. The training context is flexible and apprentice-centred while remaining relevant to employment and the needs of the ABN Group. This approach takes place within an integrated framework of employers, training providers, apprentices and government. Meeting the needs of various stakeholders requires constant dialogue between government and industry around skills and vocational education policies.

This case is an example of how industry can challenge norms and regulations and question whether public policy is delivering as intended, or whether regulation is hampering or encouraging innovation and productivity.

Considerations for successful adoption in other OECD countries

The innovative approach used by the ABN Group reflects the broader Western Australian and Australian vocational education framework. All countries within the OECD possess some elements of the Australian Apprenticeship model.

The enterprise-embedded model developed by the ABN Group is based on its strong links with other parties, including government and the education and training sector. Transferring the model to other contexts would require the establishment of similar connections. The adoption of the enterprise-embedded model in other OECD countries would necessitate consideration of the following factors, including:

Scalability of the model. The model implemented at the ABN Group made considerable use of its size and horizontal and vertical integration. It is not clear whether the same model would be successful in smaller or multinational organisations;
A critical factor to the success of the model was access to an industry skills levy that is applied to all Western Australian construction projects valued over AUD 20 000. The levy is an industry-specific approach that establishes a common fund for training, and has similarities to the common funding pools established within the apprenticeships systems in Denmark and France (Steedman, 2014);
Co-ordinated policy settings are critical, particularly when supported by clear legislation that enables the transferability of competences and confirms the rights of stakeholders. Legislation should enable apprentices to see the value of portable certification that is valid across the country rather than only within a particular organisation. Further, the rights of the apprentice and the responsibilities of employers and training providers should be made clear in legislation.
Engagement with the schools sector is crucial, particularly with respect to the development of programmes that link the schools sector with industry areas of existing and future demand. This is necessary in dual vocational educations systems, such as those in place in Australia and Germany (Steedman, 2014).
Apprenticeships should be open to all willing candidates above the age of 18. In Australia, apprenticeships are open to anyone of working age, unlike other countries such as Austria, France, Germany and Turkey where there are maximum age restrictions (Steedman, 2014). Improving access to apprenticeships may be an important consideration depending on the relationship between skills shortages and population demographics.
Clear and streamlined policy priorities are necessary to remove bureaucratic hurdles to the development of good relationships between employers, training providers and apprentices. Where government acts as a “facilitator and regulator” (Steedman, 2014), and policy as well as training requirements can be continuously improved through consultation with industry representatives, there is likely to be a strong role for employers in the process.

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