Regions and cities must re-focus their economic development priorities on building a skilled workforce that is more adaptable in the face of these new labour market realities. Local vocational education and training (VET) programs can help by building occupational-specific skills and better linking people to quality jobs.

In Australia, the employment rate of the working-age population with vocational education was 81 per cent in 2017, well above the overall average employment rate of 61 per cent.

Within the VET system, apprenticeships are an underutilised but successful tool. They combine work-based training with classroom learning, leading to a formal certification or qualification.

For individuals, apprenticeships lead to better wages, higher job satisfication and future career progression opportunities. They can also positively impact the productivity of a region by creating a pipeline of talent within priority growth sectors.

Apprenticeships have gained a lot of attention across the OECD after the 2008 Global Financial Crisis. Countries with strong apprenticeship systems — such as Germany, Austria and Switzerland — performed better in containing rising youth unemployment after the crisis.

Australia can better capitalise on apprenticeships. The youth unemployment rate stood at 13 per cent in 2018, still well above the pre-2008 level of 8 per cent.

There has also been a decline in the take-up of apprenticeships with registrations, more than halving from 376,800 in 2012 to 164,000 in 2016-17. Going forward, more efforts are needed to improve the overall image of the VET sector and restore confidence in apprenticeship training. This requires better engagement with employers to give them a leadership role in steering the system at the local and national level.

The OECD has released a new report which sheds light on key lessons on how to co-design apprenticeships with employers.

The OECD collected information from more than 300 employers across Australia about their skills needs, mainly small and medium-sized enterprises. Half of the firms responding hired at least 75 per cent of their apprentices upon completion of training.

About 20 per cent of surveyed businesses noted that they did not offer apprenticeships because of lack of time or resources (e.g. financial and administrative). Another 15 per cent noted current apprenticeship programs do not adequately serve their needs.

The success of apprenticeships often depends on effective implementation at the local level, where regional and local governments play a critical role. They can develop a community-wide vision for training, while proactively working with employers to raise awareness about the benefits of apprenticeships. They can also work with employers to help them navigate Commonwealth and state programs that are available. TAFE institutions also have an essential role to play in conducting more outreach with employers to ensure training programs are providing apprentices with the right skills.

Flexibility in the delivery of apprenticeships programs through part-time and modular delivery, as well as a multidisciplinary approach to training, are also important. In Australia, group training organisations allow the rotation of apprentices among companies when required. This arrangement can enable apprentices to complete their apprenticeship training within a network of companies, as opposed to a single employer.

This is beneficial for small and medium-sized enterprises, as it reduces costs for them to participate.

In the Hunter region, STEMship provides an interesting example of how local partnerships between regional development organisations, industry and TAFE can encourage more apprenticeship training.

The program provides pre-employment training for secondary school graduates to enter apprenticeships as an alternative to university, leading to a certificate III qualification. By working closely with employers in STEM-related fields to drive curriculum development, this program was able to identify the necessary skills and align training with local industry demands in new and emerging occupations.

The OECD stands ready to support Australia so all communities can prosper in the new world of work.

Jonathan Barr is head of the employment and skills unit at the OECD Centre for Entrepreneurship, SMEs, Regions and Cities.