Victoria is sleepwalking into catastrophic skills shortages: All parties must take notice

"New figures on Victoria's apprenticeship and traineeship system are the canary in the coalmine for skills shortages that risk crippling Victoria's economy for the next decade and beyond," said Innes Willox, Chief Executive of the national employer association, Australian Industry Group.

The National Centre for Vocational Education Research (NCVER) data shows that in the year to December 2025, commencements of apprentices and trainees have fallen to the lowest levels in decades:

• Trade apprenticeship commencements were down 11.8% – falling to the lowest number since 2001.
• Non-trade commencements were down 20.8% – falling to the lowest number since 1995, when the traineeship system was in its infancy.
• Falling commencements were seen across a range of occupations including plumbers (down 15.5%), carpenters (down 16.1%), sheetmetal workers (down 18.9%), child carers (down 23.1%) and aged and disabled carers (down 16.6%).

"At the same time, the Victorian Skills Authority projects that between 2025-2035, the construction industry alone will require 162,000 new workers – the second highest growing industry behind Healthcare and Social Assistance," Mr Willox said.

"This is the latest fall in a structural decline in commencements that has been underway for several years – with overall commencements in Victoria falling by almost half (46%) since 2021.

"The last time we saw trade apprentice commencement numbers this low was a quarter of a century ago, at a time when Victoria's total workforce was significantly smaller than it is today.

"This is in part a national story, as commencements have been falling nationwide due to softening labour market conditions, lower employer demand and reductions in the incentives paid to employers of apprentices and trainees by the Australian Government.

"However, the situation in Victoria cannot be explained away with the national trend. The falls in Victoria exceed any other jurisdiction and clearly show that state-based policy settings are also having a significant impact.

"When as a State we are seeking to build more homes and infrastructure, equip our businesses to compete globally and deliver high quality services, the state of our apprenticeship system is an embarrassment.

"Australian Industry Group has been consistently emphasising to governments across Australia that while employers value apprenticeships, the economic reality of employing apprentices and trainees is becoming increasingly unviable. Many are reducing their intakes or simply walking away due to the cost and complexity involved. This is clearly borne out in the data.

"Skilled workers don't just appear overnight. They are developed over extended periods of time through apprenticeships and traineeships that combine training with real work undertaken in real workplaces. The skills shortages that result from this catastrophe will take many years to turn around.

"Every apprentice needs an employer. The only way to increase apprentice and trainee commencements is to ensure that more employers are able to employ more apprentices.

"In Victoria, there are currently a range of policy settings that make it more costly and complex to employ apprentices and trainees than it needs to be, or is the case in some other jurisdictions. Urgent action is needed to turn this around and start minimising the long-term impacts," Mr Willox said.

In the lead up to the Victorian election, a clear and credible plan is needed from all parties for delivering the pipeline of skills Victoria needs, starting with a sharp focus on reducing the cost and complexity of employing apprentices and trainees. Important areas of focus include:

• Lowering the cost of off-the-job training: In Victoria, employers pay significant costs for their apprentices and trainees to attend off-the-job training on top of paying their wages while they attend this training. For some trades this is in excess of $6,000. In other jurisdictions, these costs are significantly lower or free in many cases.
• Encouraging more market access for quality private training providers: Private training providers have been squeezed in Victoria for the last decade, despite being able to offer flexibilities and support niche training markets that public providers often cannot. Increasing diversity and competition in the training system will improve responsiveness to employer needs and provide more training options.
• Supporting access to Group Training Organisations: Group training offers a ready solution to support small and medium sized employers in navigating the complexity associated with employing apprentices and trainees. Making group training more accessible and affordable can be a particularly useful tool for supporting returning or first-time employers of apprentices and trainees.
• Lowering the burden of payroll tax when employing apprentices and trainees: Victoria provides only limited, case‑specific payroll tax relief for apprentices and trainees, unlike many other states that offer broad exemptions or rebates that significantly reduce employer costs.
• Proactively reducing system complexity: Victoria's apprenticeship and traineeship system is complex due to multiple approval steps, overlapping regulators, numerous stakeholder touchpoints and inconsistent funding and incentive settings. These settings should be streamlined to make it easier to employers to engage with the system.  

Australian Industry Group has published extensive research on the need to increase apprenticeship and traineeship commencements, including:

• 2025 report: Apprenticeships and traineeships: the employer perspective
• 2026 research note: Australia needs to turn around declining apprenticeship and traineeship commencements. Fast. 

Media Enquiries:
Gemma Daley – 0418 148 821