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Dáil Éireann debate -
Thursday, 2 Dec 1993

Vol. 436 No. 6

Industrial Training (Apprenticeship Levy) Bill, 1993: Second Stage.

I move:

"That the Bill be now read a Second Time."

Scripts of my speech are not yet available because of the short notice about the introduction of this Bill but they will be available later. I have great pleasure in bringing forward the Bill and I will sketch some of the background to it.

During the 1980s a decision was taken by the Minister at that time, Deputy Ruairí Quinn, which was implemented by Deputy Bertie Ahern, that there would be a change in the way apprenticeships were run here. Arising from that, a consultative committee was set up, a White Paper was issued and all interested parties were asked to give their views. Many hundreds of submissions were received on the matter.

The board of FÁS, which has statutory responsibility for the delivery of apprenticeships, set up a sub-committee of the board — the FÁS apprenticeship sub-committee. They represent the viewpoints of industry, trades unions, the social partners in general and the Department of Education with whom the board of FÁS, under its legislation, has authority to interact and seek views on a consultative basis. That board met for about two years and worked out, in consultation with trades unions, employers and others, the shape of the new apprenticeship system.

The main thrust of the new apprenticeships is standards reached rather than time served. I strongly applaud the use of apprenticeships in Ireland and the fact that for many years such high standards were reached. There are records to prove that. We have young people going to the farthest corners of the world and coming home clothed in honours having received medals of one kind or another in the field of apprenticeship. Since assuming responsibility for apprenticeship and training — which dates from the time I was Minister for Education — I am particularly keen to have decent training and proper standards of certification. With those passports young people can travel the world or obtain employment at home. However, if they wish to gain wider experience, they can go to Europe or elsewhere but they must have their certificates stating that they have not just spent a number of years learning a trade — because, clearly that would not suffice — but that they have attained the recognised standards. That is the main point which came through by consensus.

From time to time there are discordant voices from one section or another to the effect that we should have stayed with the old system. I strees that the new system came about as a result of consensus. What we are aiming for now are standards reached rather than time served in a trade. For the present the time served will be the average duration of four years. FÁS has employed two keen experts in that field who are making a study of the length of time it takes to learn various trades here and in other countries, taking into account standards reached both on and off of the job.

This is a technical Bill, but I think it will give rise to much discussion about apprenticeship and training. It provides for the introduction and collection of a payroll levy from 6 April 1995 in certain sectors of industry to fund the new FÁS apprenticeship system. Lest Members fasten on the word "levy" and ask, "What have employers to say about this?", this was discussed extensively during the negotiations of the Programme for Economic and Social Progress and the scheme as worked out was agreed by the employers' representatives. Rather than put a levy on certain large industries, this levy is linked to employers' turnover and PRSI payments and happens automatically.

It may be suggested that companies which were not subject to levies because they were below the payroll levels will now have to pay this levy. That is so, but they will benefit from the funding arrangements in that they will be relieved of meeting the apprentice's wage costs during the periods of off-the-job training. For example, a company with a payroll bill of less than £500,000 and with just one first year apprentice would save more in wages during the apprentice's 20 weeks off-the-job training than they would pay in the levy. Clearly there are pluses and minumse. Previously the levy was pitched at between 1 per cent and just over 2 per cent, but now it is 0.25 per cent, which is minimal. The outcome will be that the young person so trained will contribute to the firm in which he or she is being trained and will go on to fill a valuable place in the workplace.

Section 4 sets out how the proceeds of the levy may be used by FÁS: (1) towards wages, travel and subsistence expenses of an apprentice while undergoing off-the-job training; (2) for certain administrative costs;(3) for there expenditure in relation to apprenticeships to be determined by the Minister. The levy will be set at 0.25 per cent of an employees' reckonable earnings, subject to the income limits set for employers' PRSI purposes. The employers who are exempt from paying PRSI in respect of certain employees will, of course, be exempt from the levy in respect of the earnings of these employees. The levy may from time to time be changed.

At the start I referred to standards. In spite of the very high standards reached under the system of serving time as an apprentice, a huge number of apprentices each year did not do the final craft examinations. While there were high fliers who succeeded in getting medals in their exams, others did not sit the final examination and therefore never got their qualification certificates. In the world in which we now live decent training and recognised qualifications will be the passport to jobs both at home and abroad. The original changes go back as far as 1986, but the present changes were brought about by the process of consensus.

I want to make an appeal to employers. In the Programme for Economic and Social Progress negotiations, the employers representatives sat around a table and negotiated a change in the system of apprenticeships with the board of FÁS and with the subcommittee of FÁS, but I find that they are modest and in some instances tardy in following up on their obligations under the system of apprenticeship per se. In difficult times it is the weak and vulnerable who are most put out. The same applies to apprentices. There are now many redundant apprentices and FÁS has set up a special fund to bring those young people back into employment. I have met with IBEC, with the board of FÁS, with the subcommittee and with FÁS executives on many occasions. Next week I will meet with the Construction Industry Federation. I am clearly convinced that the new system of FÁS apprenticeships — 15 trades were introduced in 1993 and in 1994 we will have another ten — when it is operating fully will make a remarkable difference to young people entering apprenticeships. We aim also to extend the number of recognised trades into traineeships in other fields, such as a traineeship in the field of retail sales, hairdressing and butchering. Representative groups have been to see me and are very anxious to have their particular skill authenticated and, more importantly, properly delivered.

The question of equity is increasingly being brought to my door in the constituency and also in the House. Indeed, I remember Deputy Richard Bruton raising this issue in the very first question I answered in the House as Minister of State with responsibility in Labour affairs. Deputy Bruton put it to me that it was becoming impossible to become an apprentice. However, 2,000 apprentices have been taken on this year and there are 14,000 in the system altogether. Deputies from all parties have come to see me about this issue. At that time I was new to the brief, but as I investigated the matter and discussed it in detail it became clear that there was a problem with equity. Often getting an apprenticeship is dependent on whom you know and whom you can get to tweak an ear in the commercial field. I am not prepared to stand over that. I have made this an issue that has to be addressed. In pursuance of that I met again with all of the groups about whom I spoke, and in particular with the employers and with the executive and the subcommittee of FÁS. They are in the process of drawing up a short paper, which I hope we will tease out fully on Committee and Report Stages.

There is a perceived inequity and that is not good enough. This inequity means that young people do not have access to various trades in a system in which the Government is investing a considerable amount, between Irish and EC funding to the tune of £30 million per year. Quite plainly, it is incorrect to decide that one person can be taken on while another cannot. The employers have said to me that it is they who have to employ the person and therefore they should have the right to decide whom to take on. We have to achieve a balance between proper access and the rights of employers to have a voice, but not the overriding voice, in chossing the apprentices. I am putting down a market on that. Even as late as yesterday I thought we would have had the considered paper from the FÁS board. I expect it within the next few days. They are working out equity arrangements which I hope will prove valuable as I am not prepared to stand over an apprenticeship system which is not transparent. The biggest bone of contention among people who have spoken to me about the FÁS scheme related to the equity of the system. I assure everyone in the House and people throughout the country that an equitable system of access will be put in place.

I spoke about the need for high standards based on my experience in the Department of Education. Deputy Quill who dealt constructively with me in that sphere will understand when I say that I am totally committed to high standards. I referred to the 1986 White Paper and the apprenticeship review group which was set up in 1988. I referred also to employers who are not taking sufficient responsibility for training apprentices. The German system is constantly held up to us as the proper model for training apprentices. Compared to the German system where employers must provide adequate on-the-job training and release apprentices for off-the-job training, Irish employers for the most part were not committed to apprenticeship training and systems were inflexible, provided too few opportunites for women, and did not facilitate late entrants. Neither did the system reflect the fact that apprentices have higher education levels than in the past.

The conclusions of the review group were published in December 1989 and then the question of a new apprenticeship system, including the proposals of the review group, was the subject of detailed discussions between the social partners during the negotiations on the current Programme for Economic and Social Progress in 1991. The system was to be standard based. To be recognised as a craft worker in future a person would have to have the national craft certificate. I spoke about the thousands of high fliers and the thousands who did not gain their final qualifications who had papers proving that they had spent four years doing something but not a certificate showing that they had reached the attainable standard and had qualified. I hope that in the future such people will not fall away.

We have made special provision for women. FÁS has set targets for women plumbers, electricians, plasterers and brick layers and women are beginning to enter those crafts. Hundreds of years of discrimination must be overcome in that area, including home conditioning, commercial market conditioning, environmental conditioning and so on. In FÁS workshops which I have visited I have found one young female apprentice along with, perhaps, 11 men. The young women assure me they are enjoying the course, that they are equal to their compansions but that they feel isolated. ICTU developed a project which I launched some time ago to give peer help to young people or women in non-traditional training and employment so that they will not feel alone. The entry of women into these profession is very slow and I exhort career guidance teachers to point out the possibility and potential in entering into non-traditional employment. If women enter into apprenticeships in hairdressing, relating and finance, those areas will be opened up to provide more opportunites for them. Of course there will be special provision for the disadvantaged, the disabled and mature entrants.

The system will be based on uniform, pre-specified and industry agreed standards, on best international practice and on the needs of Irish industry. Each apprenticeship will have seven phases, three off-the-job and four on-the-job. This modular structure allows for a certain degree of flexibility. The rigidity of every trade needing four years training will go. The higher minimum entry requirements reflect the general increase in education levels of school leavers.

The apprenticeship system which incorporates best practice from our main European partners can be adapted for the extension of apprenticeship to further occupations. Structured ongoing assessment will give more valid evidence of attainment during apprenticeship, getting away from the doggedness of time served. Modular assessment makes it easier to up-date the system, which will be more transparent to users.

The national crafts certificate will be a compulsory requirement for craftperson status as agreed in the Programme for Economic and Social Progress. The new apprenticeship system will have nationally and internationally recognised certification which will provide for mobility.

It is the intention that the training and assessment programmes in the new system should provide for progression to technical and other qualifications for persons who are able and interested in pursuing these options. I have met people who have done certification courses in regional colleges or in the Dublin Institute of Technology who have gone on to do diploma and degree courses. At the degree awards ceremony in the Athlone Regional Technical College, I met a young person who had gone from being an apprentice to receiving his PhD. I have given a firm commitment to the ladder of progression for apprenticeships, so that there need be no barrier to a young person's learning curve. Apprenticeships in general are very fertile ground for people going into industry and for people starting up small industries.

The new apprenticeship levy in the principal craft sectors of industry will ensure that the individual employer will not be directly out of pocket as a result of releasing an apprentice for off-the-job training or education, thereby providing an incentive to the employer to conform with the requirements of the apprenticeship curricula.

Following discussions within the Central Review Committee of the Programme for Economic and Social Progress there was agreement on funding proposals in respect of the construction, motor, printing and paper, and engineering sectors, excluding electronics, which employ the vast bulk of our registered apprentices. It is proposed to make apprentice payments while the apprentice is off-the-job and to contribute towards any associated travel and accommodation. The apprenticeship fund is to be created by the introduction in the four sectors of a new employer's apprenticeship levy under which employers will pay 0.25 per cent of payroll.

We estatimate that the new levy will bring in approximately £4 million. When the new levy is introduced the existing levy-grant system in the four sectors will be discontinued. Under the existing arrangements, companies above certain payroll thresholds in the construction, engineering and motor sectors pay a 1.25 per cent levy and in the paper and printing sectors they pay a 1 per cent levy. Companies can recoup 80 per cent to 90 per cent of the cost of approved training programmes, depending on the sector involved. Under the new regime, all registered companies will be subject to the levy of 0.25 per cent, thereby ensuring that all companies which stand to gain from the availability of a skilled workforce will be seen to contribute to the cost of providing that workforce. The new funding arrangement is aimed at ensuring that there will be no direct costs to the individual employer in those sectors while the apprentice is released for off-the-job training or education.

I have heard of a number of cases where new apprentices were taken on purely because of their relationship to or friendship with the owner of the company. Better qualified young people are ignored in that process and frequently have great difficulty in finding industry sponsors. I want those involved in industry to know that we will not condone or allow the system to continue. In conjunction with FÁS we are preparing a new system of equitable access to the apprenticeship schemes which I will submit to the House before the Bill concludes. I am keen to ensure that, in so far as possible, such favouritism is avoided and that there is equity in the recruitment process.

I recognise, of course, that a proper balance must be struck, As taxpayers will contribute £30 million, they are entitled to know how the apprenticeship system works. Therefore, I have asked the board of FÁS to submit proposals to address the issue urgently and effectively. A sub-committee was established by the board and it will report to me shortly.

In addition to seeking a new standards-based apprenticeship system for existing trades, the Programme for Government proposes to extend the trainee system to cover a greater number of occupations and to give certified training to those leaving Secondary education but not going on to third level. This follows on the agreement in the Programme for Economic and Social Progress that additional occupations should be included in the apprenticeship system. The criteria which an occupation should ideally meet for this purpose have been agreed and an initial examination has produced 30 occupations which potentially meet those criteria. Eight occupations have been evaluated in that regard and we hope to include some of them next year. Those include gas fitters, operators of computer numerically controlled machine tools, operator-programmers, floor-wall tilers, print finishers, baker-confectioners — industrial or retail — hairdressers and retail sales persons. We hope to recruit many more females to the system by expanding the number of apprenticeships. We also hope to recruit women in the non-traditional occupations.

This Bill is necessary to enable us to provide a mechanism to fund off-the job training of apprentices. It is technical but straightforward and I hope it will lead to a thoughtful debate on the issue of apprenticeships. While I will be outlining the details of the legislation on Committee Stage, I would like to summarise its main provisions. Section 2 provides for the imposition of the levy on all employers in sectors which will be designed under section 3. The section provides also that the employers shall not pass on the cost of the levy to the employee. Section 3 gives the Minister power to designate the sectors which will pay the levy. As I stated already, at the outset the agreed sectors will be construction, engineering, motor and paper and printing. Section 4 provides that the proceeds of the levy will be used mainly to cover payment of off-the-job training allowances for apprentices. Section 5 sets the levy of 0.25 per cent of reckonable earnings and section 9 provides for the collection of the levy by the Revenue Collector-General.

In conclusion, I will summarise the main reasons for the introduction of the apprenticeship levy. Basically, it is designed to fund off-the-job training allowances for apprentices in the new apprenticeship system. The new system will be a single national one and will be standards-based rather than simply on time served. Standards will be based on best international practice. Apprentices will be required to follow a specific course of training and to undergo a series of assessments to confirm the attainment of the required standards. Training and assessment will take place both on and off the job. A national craft certificate, which will be recognised nationally and internationally, will be awarded on successful completion of the apprenticeship. To be recognised as a craftsperson, a national craft certificate will be required.

It is my aim to provide equitable access to the system and a report in that regard will be available before Report Stage. There was consensus among employers, employees, trade unions and the social partners on the introduction of the standards based system. The arrangements for it were agreed over a period of years under the supervision of a committee following the introduction of the White Paper. The levy will apply to all employers but many will pay less than they have been paying up to now. It may be argued that small employers will be included but there is a certain dynamism in having a young person employed in any firm.

I appeal to industry in general to take part in this scheme. In difficult times people involved in industry should not move away from the idea of apprenticeships. In five or six years' time there will be a scarcity of skilled people in certain areas and we will wonder who is at fault and point the finger at certain agencies. It is clear already that that will be the case by the year 2000. People in industry can gain from this measure, but they are not putting their heart and soul into the apprenticeship scheme even though they have contributed to the ongoing debate on it.

I thank the Chair for the latitude allowed to me and I commend the Bill to the House.

We did not realise the dog would stop running so soon.

It appears the Minister recognises that she is somewhat premature in presenting this Bill to the House when the key issue of concern to most Deputies has not been resolved, namely, the issue of fair access to the apprenticeship system. She is aware that the State spends approximately £5,000 to £5,500 per annum on each apprentice in training. That is a welcome opportunity for young people and is being financed in the main by the State.

It is obvious from the brief document the Minister published some time ago that the system is totally unsatisfactory. That document states that FÁS will no longer sponsor apprentices, but will keep a register and bring it to the attention of employers on request. That is the type of system that has brought FÁS into total disrepute. It involves putting one's name on a list which will rot in some FÁS office. One's name can be identified by one's date of birth and can be called up on a computer screen at any time, but that does not benefit a person taking up an apprenticeship. It is unacceptable that the system should continue to operate as it stands, where the sole responsibility for recruiting apprentices lies in the hands of individual employers. There are alternative ways of recruiting such people.

While I welcome the Minister of State's statement that FÁS will present a paper on this issue as far as I am concerned the reform of the apprenticeship system has been on the cards for 20 years. It is unrealistic to suggest two minutes before we endorse the new system that FÁS will achieve a major breakthrough. They have failed to achieve this in the past 20 years.

I agree with the Deputy.

Debate adjourned.