Summary

This paper examines Training Opportunities administrative datasets to gain insight into government-funded training activity for unemployed people between 1999 and 2007. It tracks various facets of the Training Opportunities programme across time to determine participation trends and changes during this period.

It 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. Changes in participation in Training Opportunities have not always closely matched changes in GDP growth, perhaps a reflection of the change in the profile of participants to those at risk of unemployment over those who have experienced long-term unemployment. 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.

Training Opportunities learners are now more likely to be 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, while the proportion of learners going on to full-time employment two months after leaving placements has dropped. 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.

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 around 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 Ministry of Social Development 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.