Training Opportunities: Statistical Profile 1999 to 2007

7. Conclusion

This paper examines Training Opportunities administrative datasets to gain insight into government-funded training activity for unemployed people between 1999 and 2007. It is the first step in a comprehensive programme of analysis of targeted training programmes. It tracks various facets of the Training Opportunities programme across time to determine key changes and trends during this period.

Examination of the participant data shows that Training Opportunities participants are most likely to be Māori, aged 29 years or younger; be based in Auckland; have low or no qualifications, and be considered at risk of long-term unemployment. They are most likely to attend training provided by a private training establishment, and to be placed in programmes consisting of standards at levels 1 and 2 of the National Qualifications Framework.

The majority of learners participate in Training Opportunities for a total of sixteen weeks or less per placement, and attain about 10 credits per placement. Many learners have several Training Opportunities placements, so the average credit attainment per distinct learner is approximately 22 credits.

Data collected for accountability purposes show the destinations of learners two months after leaving Training Opportunities. Full-time employment is recorded as the destination activity in the largest group of placements (31 percent), followed by a return placement (26 percent) and unemployment or ‘Out of the Labour Force’ status (23 percent).

The data shows that the key participant profile of Training Opportunities has changed between 1999 and 2007, reflecting the changes that have occurred in labour market conditions within this period and the widening of eligibility criteria. Learners are now remaining in Training Opportunities for longer periods of time than in the past. They are also less likely than in previous years to be participating in their first placement. Placement outcomes are now less likely to result in full-time employment, and are more likely to result in a return to Training Opportunities.

Historically low unemployment and high labour market participation, coupled with a trend towards higher participation in certificate-level tertiary education, has led to a reduction in the numbers of Training Opportunities placements overall, and in the number of providers offering programmes. The reduction in the potential client base of Training Opportunities has not been matched by a reduction in the total numbers participating in the programme, and therefore, its coverage is now much wider than in the past. This is in part due to changes in the eligibility criteria in the interim period which have broadened access to the programme. The statistics provided in this report show evidence of:

• fewer placements by new individuals/more placements by the same individuals
• increasing likelihood of a referral by Work and Income relative to other sources of placements
• increase in participation by ‘At Risk’ eligible learners relative to others²⁴
• longer duration on programmes than in the past
• lower average credit attainment than in the past
• less likelihood of full-time employment at exit
• more likelihood of return to Training Opportunities at exit.
  

These suggest that Training Opportunities now provides work training to a quite different mix of people than in the past: participants are now unemployed people with low or no skills and associated labour market disadvantage, who require more and longer intervention, but who are not necessarily long-term unemployed. Increased referrals by Work and Income show that Work and Income caseworkers are now actively using Training Opportunities much more than in the past.²⁵ At risk and returning learners now make up 79 percent of participants in one year, up from 74 percent in 2004, the year after the widened eligibility was introduced.

The data indicates some wider issues of equity, both of participation and of outcomes.  Training Opportunities programmes are clearly important pathways for Māori and Pasifika. When adjusted for the numbers of unemployed in each ethnic group, Europeans do not participate in Training Opportunities at anywhere near the same rates as Māori or Pasifika.

Pasifika participate at much lower levels than Māori and are less likely than Māori and European learners to be engaged in industry training, Modern Apprenticeships, or university study two months after leaving placements, but are more likely than these groups to engage in further progressive training or a return to Training Opportunities. European participants are consistently more likely to gain employment than Māori or Pasifika two months after participating.

There are differences in destinations between the various groups who participate. For example, Asian learners are less likely to be participating in full-time employment two months after leaving placements than other ethnic groups, but Asians are the ethnic group most likely to be engaged in university or other further progressive training at polytechnics and institutes of technology. They are also the most likely to return to Training Opportunities within two months of leaving placements. They are the least likely to be recorded as unemployed or out of the labour force, while Māori learners are the most likely to be.

Similarly, males are more likely than females to be engaged in full-time employment, while females are more likely than males to be recorded as working part-time two months after leaving.

Changes in participation in Training Opportunities have not closely matched changes in GDP growth. A review in 2002, after a period of steep falls in participation and matching GDP growth, led to widened eligibility – including to those who lack foundation skills and those at risk of long-term unemployment. Unemployment subsequently fell much faster than participation in Training Opportunities, due in part to widening of eligibility criteria. This may have sustained Training Opportunities participation to some extent but may cause resourcing and efficiency issues going forward as the country goes into recession.

The pool of long-term unemployed who could be serviced by Training Opportunities mostly disappeared in the period of strong employment growth and low unemployment until 2007. Overall, learners are now more likely than before to be assessed as at risk of rather than having experienced spells of long-term unemployment. Moreover, they now have higher qualifications, are engaging in multiple spells, and are likely to be taking longer placements. This occurred while the proportion of Training Opportunities learners going on to full-time employment two months after leaving placements was dropping. This trend seems somewhat counterintuitive in a period of continually declining levels of unemployment.

Further, longer durations and more repeats, coupled with lower employment outcomes, means that more money is being spent on fewer people for less overall gain.

This analysis raises as many questions as it answers. For example: What does the changing demography of Training Opportunities mean? To what extent has Training Opportunities moved away from its original purpose of helping those who most need it gain access to the labour market? Is Training Opportunities the most appropriate form of work intervention for at-risk people? Does Training Opportunities provide an adequate return on investment? What are the longer term outcomes of Training Opportunities? The data also does not cover the period of the economic downturn, the effects of which did not begin to be felt seriously in New Zealand until 2008.  

However, under the existing eligibility rules, the current economic environment may lead to an increasing pool of eligible participants, and therefore increasing numbers of placements in Training Opportunities. Given forecasts for unemployment possibly to return to something like 7 percent, the widened eligibility, and the current domination of placements by the clients ‘potentially at risk’ of long-term unemployment, there is a risk of crowding-out of long-term unemployed, Training Opportunities’ traditional client base. If long-term unemployment again becomes a problem, the Government could consider adjusting the Training Opportunities eligibility criteria, or entrance to programmes could be prioritised to the one group over another. The other option could be to lift the funding limit to accommodate the additional learners.

However, increasing unemployment during this current spell of economic down-turn is likely to be structural, i.e. due to a lack of jobs due to a shortage of international liquidity, and consequent enterprise investment, rather than any lack of work-related skills by the unemployed. If the newly unemployed have been engaged in employment during the past few years, there is a weaker case that they need work-related learning, that is, training aimed at giving them the skills they need to attain sustainable employment, than it is for those people who have not had any recent employment experience.

An analysis of this kind, focusing as it does on the story told by administrative data, can never tell the whole story of Training Opportunities: more investigation is required. Information about the long term consequences of participating in Training Opportunities may be enhanced in future. The longer-term outcomes of Training Opportunities participation are currently unclear, however, there is scope for inclusion of Targeted Training data in statistical studies using matched tax and benefit datasets to determine what the employment outcomes are and what earnings premium, if any, is attached to completion of Training Opportunities programmes.

Footnotes

24. Note, the requirement for 26 weeks minimum registered unemployment does not apply to ‘At Risk’ learners
25. Work and Income referred learners take priority over self-referred participants where there is a waiting list for entry into programmes.