The employers have to pay, and rightly so, because they are getting fine young people into their employment.
The discussions within the central review committee of theProgramme for Economic and Social Progress led to an agreement between the social partners on funding proposals in respect of four sectors of industry — construction, motor, printing and paper and engineering, excluding electronics — which employ the vast bulk of all registered apprentices. The main provisions of the funding proposals are as follows. Apprentice payments while the apprentice is off the job and a contribution towards any associated travel and accommodation costs are likely to be met from an apprentice fund and matching EU support.
This is only a small amount of the total cost of apprentices which is funded by this country and Europe. The apprentice fund is to be created by the introduction in the four industry sectors of a new employers' apprenticeship levy under which employers will pay 0.25 per cent of payroll to the fund. The new levy should bring in approximately £4 million in a full year towards the total cost of £30 million in a full year. With the introduction of the new levy the existing levy/grant system in the four sectors will be discontinued. Under existing arrangements companies above certain payroll thresholds in the construction, engineering and motor sectors pay a 1.25 per cent levy, while the paper and printing sector pays 1 per cent. Companies can recoup 80-90 per cent of the costs of approved training programmes depending on the sector involved.
Under the new regime all registered companies in the designated sectors 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 skilled workforce. It is a much neater arrangement and will provide a minimal amount towards the overall cost. 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.
TheProgramme for Competitiveness and Work, which was concluded since Second Stage of the Bill in the other House, makes specific reference to the possibilities of increasing the numbers of apprentices. In particular, it states that employers will be expected to maximise the recruitment of apprentices, that the potential for public sector bodies to contribute to the expansion of apprenticeship will be reviewed, and that the possibility of making it a term of public sector construction contracts that an agreed number of apprentices should be employed on such contracts will be examined by Government in consultation with relevant interests. I specifically requested that the second and third parts of that and the other agreement be included in the section, because there are fine apprenticeship systems in the Army, Aer Lingus, Aer Rianta, Bord na Móna and the ESB. We will have a series of meetings with those bodies to examine how they can be encouraged to expand their apprenticeship systems. It will probably be down to money, but I want to engage in that process and include the public system to try to get more excellent apprentices.
The Bill is necessary to enable us to provide a mechanism to fund the off the job training of apprentices. The main provisions of the Bill are as follows. Section 2 provides for the imposition of the levy on all employers in sectors which will be designated under section 3. The section also provides that the employer 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. I outlined the agreed sectors earlier. Section 4 enables the Minister to make regulations to provide for an equitable and fair system of recruitment for apprentices. Section 5 provides that the proceeds of the levy shall be used mainly to cover payment of off the job training allowances. Section 6 sets the levy at 0.25 per cent of reckonable earnings. Section 9 provides for the collection of the levy by the Revenue Collector General.
I wish to summarise the main reasons for the introduction of the apprenticeship levy. It is designed to fund off the job training allowances for apprentices in the apprenticeship system. The general features of the new system are as follows. It will be a single and national system. It will be standards based, rather than simply 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 towards the attainment of required standards. Training and assessment will take place both on and off the job. A national craft certificate, recognised nationally and internationally, will be awarded on successful completion of the apprenticeship. A national craft certificate will be required for one to be recognised as a craftsperson.
All Members of the Oireachtas know from their constituency work how often we meet young people, and perhaps their parents, who say that they cannot get an apprenticeship. The main difficulty is that they cannot get an employer for the purposes of an apprenticeship. I went to Germany for two days in early January and saw their system, which is considered excellent by many people. I spoke to young people and employers. It is a different market there. Employers, despite their economic circumstances, are still urgently seeking apprentices. However, there is a different historical background to apprenticeships there. Employers value apprentices and the input of young people. They have a strong professional belief that it is part of their job, for the future of their country and their industrial sector, to ensure that young people are properly instructed and learn their trade. Perhaps it is related to medieval crafts and Members will recall the journeypersons of old who went about their business in Europe. They recognised their trades and that was a strong European trend. They also had an industrial revolution, all of which passed us by. This meant that they had mechanisms in place and that employers clearly realised that apprenticeships are necessary, not just in the immediate sense but for the future of their business. This point came through from representatives of trade, employers and young people.
When an apprentice goes to an employer, he or she signs a contract with that employer. This is binding in the German courts. If an employer reneges on it, the employee has redress. If the firm closes or fails, the employer must, by law, place the apprentice in another firm. In turn, if the employee absconds and does not fulfil his or her time, the employer can take the employee and his or her family to court for redress. It is extremely strong and, of course, the Germans love regulations. They are highly regulated in every facet of their lives. This comes from the German personality which succumbs to massive regulation, although I do not think we are partial to that in this country. Our experience shows that this is the case. However, I was impressed. While recognising that we do not have that historical crafts background, nevertheless, we have crafts in a traditional sense, but not in a utilitarian sense. That is the essential difference. I also recognise that we have a long way to go before we reach that point.
I have tried to use the carrot and stick approach with employers. They read the Dáil and Seanad Official Reports and I urge them not just to think of the immediate future. Firms are in a difficult economic climate, but the recent budget made good changes for employers. I ask them to think not just of the immediate position but of the future of their business and sector. The economic development of the country largely depends on having skilled people with vigour, knowledge, attainments, standards and the will to work in their country. If they go away and come back with additional knowledge, it is all to the good.
Regarding equity, in Germany there are empty apprentice places. No matter how we go about it, there is an intense shortage of places here. We should separate the two issues. Equity in itself will not bring more places, but we hope the extension of the system will do this. However, equity will ensure that those who get places do so on merit. At least people will then have the satisfaction of knowing that the restricted places are given on merit. We all complain from time to time about systems such as the CAO, yet nobody denies that they are fair and just, even though they may be crude, rude, rough and ready.
We are addressing private employers in this instance so it is necessary for constitutional reasons to be careful with the way matters proceed. There is widespread knowledge about the difficulties in getting employers to take on apprentices and the evidence is too strong to ignore that would-be apprentices often get into the system through those whom they know rather than by merit.
I had to undertake a lot of work to have the code of practice considered and I wish to advise those who want to take matters further immediately that there has been a huge leap forward, first, to get recognition of the fact that there was inequity and, second, to have this inequity addressed by having it processed through a code of practice. If this does not work, then the matter will be taken further.
I commend the Bill to the House.