Government unveils $390m subsidy for employers training apprentices

Employers are being encouraged to upskill apprentices with a new cash incentive.

By RNZ

A new government subsidy will pay employers up to $16,000 for each new apprentice they train from August.

Minister of Education Chris Hipkins said the $390 million Apprenticeship Boost would pay businesses $1000-a-month for each apprentice in their first year of training, and $500-a-month for apprentices in their second year.

Hipkins said the scheme would run for 20 months from August this year until April 2020, and about 18,000 employers would be eligible to apply.

The programme would help to ensure there was not a skill shortage when the economy recovered, he said.

"After the global financial crisis, there was a significant reduction in the number of apprentices on the job, because as the economy turned down employers often laid them off. And then as the economy started to pick up again, we struggled because [of] significant skill shortages," he said.

"We want to learn from that mistake that was made years ago, and we want to say actually we've got to do a better job of keeping our apprentices this time around, and hopefully recruiting new apprentices so the skilled workers are there when we need them."

The building and construction industry was already noting a downturn because of the Covid-19 pandemic, and other industries also struggled during the lockdown, Hipkins said.

The subsidy was focused on the first two years of apprenticeship, because that was when apprentices were most vulnerable, he said.

"We know that in the first couple of years, that's when employers have to put the most into their apprentices, it's where apprentices are most at risk of being laid off if employers start to feel the economic squeeze."

The scheme was available to apprenticeships in all fields, unlike the free trades training scheme the government announced in its May Budget, which was focused on industries most needed for the economic recovery, Hipkins said.

The amount of money employers received would vary depending on how far through their training their apprentices were when the subsidy began in August.

The maximum they could receive for a single apprentice during the 20-month scheme would be $12,000 for 12 months of training in their first year, plus a further $4000 for eight months of training in their second year.