The raft of measures announced by the Government in response to coronavirus, has certainly propped up many businesses in the short term, with many being able to take advantage of JobKeeper and JobSeeker programs.
Also recently announced, is the $2 billion JobTrainer program – a two-part package aimed at ‘retraining and upskilling’ Australians in high-growth sectors, including manufacturing.
One part of the package is aimed at subsiding wages for those currently employed in apprenticeships and traineeships, extended till 31 March 2021. This is a generous package that does not require a reduction in turnover, and it is also available for medium-sized businesses (up to organisational size of 200 people).
The second part of the package is aimed at supporting school leavers with low-cost courses – with manufacturing identified as a priority for funding.
However, for manufacturers, whose biggest threat to business is shortage of labour, the JobTrainer package - while very welcomed - is a bandaid fix that will not be enough to keep all current apprentices and trainees in their jobs; or be enough to attract new ones, especially in this period of uncertainty.
Without the longer term focus on new incentives or subsidies to encourage employers to take on new apprentices or trainees, the manufacturing industry will suffer.
It’s well known that the future success of Australian manufacturing must embed Industry 4.0 capabilities to survive. Yet, this also requires a shift from ‘blue collar’ to ‘new collar’ workers as the sector increases advancement in technology, with a digitally-driven modern manufacturing supply chain.
This will require investment in workers who undertake vocational education and apprenticeships, more so than manual labour. While the payment of low-cost courses is a great start, only paying for part of a pathway is not the best incentive for school leavers, and given the historical stigma associated with vocational education, more is needed to boost its relevance in today’s modern manufacturing world.
In terms of wage subsidies; right now, manufacturers are looking at how they can continue in the next 8-9 months. According to a BDO poll taken this week, many manufacturers are optimistic about the manufacturing output in Australia in the short term, (85% expect PMI to stay the same or increase in the next results) – however, at the same time they are putting in place measures that consistently assess their cash flow, defer payments and negotiate contract terms.
Watch this week’s webinar and view the poll results.
Given this, it may mean they are less likely to take on new trainees, or worse still, let go of their current apprentices. If we reduce the number of new apprentices now, we aren’t going to see the effects of this for another four years, when those apprentices are finishing their courses – this coupled with the pace of change in the sector currently, the manufacturing sector will be left behind competitively.
Now is not the time to be taking the foot off the pedal and the Government needs to be accelerating their plans of assistance.
We are also starting to hear from many manufacturers that they will be reluctant to utilise the R&D incentives once it is officially reformed, given the high cost of compliance and little benefit.
In the same BDO poll taken this week, we found that only 33% of manufacturers would consider accessing the R&D Tax incentive if the draft legislation is passed and the effective benefit is 4.5%.
This means, there’s opportunity for the Government to better funnel that money elsewhere, and Rethink the manufacturing sector - setting up stronger foundations now, so we can remain globally competitive into the future.