Tackling the apprenticeships crisis

Measures which take effect in Austria from 1 July 1997 aim to make apprenticeships more attractive to both employers and 15-year-olds.

Apprenticeships, together with secondary vocational schools (ninth to 13th grade, around 15 to 19 years of age), form the backbone of the Austrian skill-formation system. They are a part of the formal educational structure, and are usually entered into at the age of 15, after completion of the compulsory nine years of schooling. They involve an employment relationship plus formal schooling over a period of three or sometimes four years. Schooling is for the equivalent of one and a half or two days per week. Apprentices graduate through a final examination in which they have to prove their theoretical and practical grasp of the occupation concerned. There are about 45,000 establishments having certified trainers among their employees.

Decline in numbers

In recent years, two developments have begun to put pressure on the apprenticeship system: the decline in the number of apprentices puts in doubt a sufficient supply of skilled workers in the future; and the shortfall of openings for apprentices makes mounting youth unemployment likely. There are predictions currently that by the end of 1997 there may be a shortage of around 12,000 apprenticeship places, compared with 3,000 at the end of 1996 and only 400 at the end of 1995. The table below, constructed from Austrian Chamber of the Economy and Public Employment Service data, shows the main developments since 1980.

1980 1985 1990 1995 1996
Current openings on 31 December 4,108 1,986 13,255 3,291 2,205
Apprenticeship seekers on 31 December 1,453 3,400 2,256 3,677 5,237
First-year apprentices employed on 31 December 61,795 52,781 44,845 37,343 37,079
Births 15 years earlier 129,924 112,301 93,757 90,874 93,942
First year plus seekers as % of births 48.7 50.0 50.2 45.1 45.0

The adverse change between 1995 and 1996 is due half to an increase in the number of 15-year-olds wishing to be apprenticed, and half to a decline in demand for apprentices. The reversal from glut to shortage between 1990 and 1995 was due entirely to a decline in demand three times as large as the decline in supply of apprentices. The number of female apprentices has been falling considerably faster than of male ones - by 17% between 1992 and 1996 compared with 10%.

Broken down by federal sections of the Austrian Chamber of the Economy - see table below - the data reveal an uneven distribution of the decline in demand for apprentices. Industrial establishments and transport stand out as the two sections with the most remarkable shrinkage in percentage terms. In absolute numbers, trades and crafts, retail and wholesale trade, and industrial establishments account for over five-sixths of the decline since 1990.

1990 1993 1996 1996 as percent of 1993
Trades and crafts 76,120 72,449 68,942 90.6
Industry 21,815 18,076 13,837 63.4
Wholesale and retail 26,352 22,251 19,006 72.1
Money, credit and insurance 687 728 699 101.7
Transport 2,689 2,565 1,770 65.8
Tourism 13,941 11,562 11,589 83.1
Non-Chamber 3,912 3,728 4,089 104.5
total 145,516 131,359 119,932 82.4
Apprenticing establishments 46,320 42,304 39,663 85.6

The number of apprenticing establishments shrank by about one-sixth from 1990. to 1996. The average number of apprentices per establishment remained virtually unchanged going from 3.1 to 3.0.

There have been scattered reports of establishments not being able to find apprentices. Typical cases are the textiles industry, which is seen as being in decline and offering poor employment prospects, and tourism, which has had a bad press because of working conditions and incomes (AT9705111F) and which is also seen as offering an insecure future.

Measures to reverse the decline

The decline in apprenticeships triggered an essentially two-pronged legislative attack. First, in March 1997 (AT9702104N measures were taken to make apprenticing more attractive to employers, such as:

  • the cost of training apprentices was lowered by exempting apprentices from health insurance contributions not only during the first two years but also during the third year;
  • apprentices over the age of 18 (instead of 19) will be treated as adults by the law; and
  • in retailing and wholesaling, apprentices can be employed on Saturday afternoons.

The Government estimates that employers will save ATS 10,000 or ATS 11,000 per employed apprentice per year. This does not appear to be a sum that could provide a real incentive to hire. Employer representatives have been saying as much in public commentaries. They maintain that money is not the issue, and blame the waning demand on "red tape" and too many constraints associated with training apprentices, and also on the declining quality of 15-year-olds wishing to be apprenticed.

Secondly, an effort is being made to broaden the appeal of apprenticeships to young people. While apprenticeships, in terms of the system of formal education, were a "dead end" until now, they will now become an avenue to university. Graduates of an apprenticeship, a three-year secondary school course (10th to 12th grade, aged 16 to 18), or a nurse's school will be eligible for a four-part examination including German, mathematics, one foreign language and an essay on a topic from their occupation. Passing the exams will enable them to enter the university or other academic institution of their choice for studies of their choice. The exams will have to be taken at one of the established secondary vocational schools (which form an important part of the Austrian skill formation system). There is no fixed sequence for the four exams, but the last one can be taken only after the age of 19 has been reached.

All these measures are taking effect on 1 July 1997. In addition, the Trades Regulations (Gewerbeordnung) were changed from 1 July, permitting broader training packages and thus making apprenticeships less narrowly specialised. It is essentially up to the social partners to agree on the broader occupations, and on new apprenticeable occupations in computing, telecommunications and the environment. This is expected to be achieved later this year and to make apprenticing more attractive to both employers and young people.

Commentary

The very swiftness of the reversal from a glut of apprenticeship places to a shortage, and the fact that such swings have also occurred in the past, suggests the absence of a structural problem as far as the gap between supply and demand is concerned. Cyclical economic problems and demographic cycles seem to be coinciding in a way that leads to a temporary shortage of openings for apprentices. At the same time, however, a broader trend away from apprenticing seems to have begun both on the demand and on the supply side. Why this should have happened is open to speculation. The remedies suggested address demand as well as supply. It seems likely that opening university education to successfully apprenticed young people may indeed increase the attractiveness of apprenticeships and the quality of apprentices. Therefore the number of 15-year-olds seeking an apprenticeship may increase. At the same time, it is unclear whether lowering the cost of apprenticing to enterprises by a marginal amount will increase the number of openings. More than the financial incentive, success in attracting more academically able young people to apprenticeships seems likely to enhance the employers' wish to take on apprentices. Mixed with the more able, the less academically successful are likely also to be of greater use to the enterprise. Should this hold true, then the latter may not be displaced from apprenticeships by the former. They might prove to be complements rather than substitutes. (August Gächter, IHS)

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