Restaurant and Catering Australia

Restaurant and Catering Australia

Executive Summary

Restaurant & Catering Australia is the peak national association representing the interests of Australia’s 32,000 restaurateurs and caterers. The industry is comprised of small business and employs (with the fast food sector) 456,600 people.

The industry is still experiencing strong growth and is forecast to grow, in employment numbers, by 2.6% per annum until 2015 (59,358 new jobs). 20% of these jobs will be derived from the apprenticeship system.

The restaurant, café and catering industry employs more apprentices / trainees per capita than the average industry (at 12.9%).

Restaurant & Catering is concerned that the process and composition of the panel for the Apprenticeships for the 21st Century activity were flawed. The Association believes that the conclusions and recommendations need to be viewed with some scepticism given these flaws.

The Association is also concerned at the selective use of data in the narrative of the report. Restaurant & Catering suggests that a conclusion that the occupations of cooks and chefs (and food trades in general) should be a high-value occupation could just as easily be drawn from the data presented. Investment in traineeships and apprenticeship in the personal services sectors will bolster the nation’s economic performance. In addition, traineeship and apprenticeship in these industries meets a number of social objectives by engaging many young, displaced and disadvantaged employees.

The Association contends that the process of pre-qualification of employer for the engagement of apprentices should acknowledge existing accreditation and quality schemes in place (e.g. the Certified Professional Restaurateurs Scheme operated by R&C).

Restaurant & Catering believes that the structure created to support apprenticeship an traineeship should be built on the core role that industry organisations play in providing advice to members on training arrangements. The structure should combine apprenticeship administration, recognition of providers, the promotion of careers and trainingwith mentoring and a recognition of the standards of employers. This ‘one-stop-shop’ needs to have an industry and a regional context.

R&C contends that, in addition, the industry approach industry based arrangements to match candidates for apprenticeship / traineeship with vocations and employers that suit them should be encouraged.

Restaurant & Catering supports the recommendation to enable Apprentice mentors at the workplace level.

Restaurant & Catering contends that the alignment between Australian Apprenticeships and the workplace relations system has been made more complex by the centralisation of the IR system. Further developing this alignment will need to consider the stark differences between arrangements at any industry level.

Introduction

About Restaurant & Catering Australia

Restaurant & Catering Australia is the peak national association representing the interests of Australia’s 32,000 restaurateurs and caterers.

Restaurant & Catering Australia is made up of a federation of State Restaurant and Catering Associations. There is a member association in each State / Territory. In total there are 7,500 members of the associations nationally (in any 12 month period).

About the Restaurant and Catering Industry

The Australian Bureau of Statistics reported 32,225 restaurant and catering businesses at the end of the 2008/09 financial year[1]. 95.6% of the businesses in the sector meet the ATO $2 Million turnover definition of a small business (see below).

Figure 1 –This table is from ABS, Counts of Australian Businesses, including Entries and Exits, Jun 2007 to Jun 2009, Cafes, Restaurants and Catering Businesses

A defining feature of the industry is the ‘churn rate’ of businesses. At the end of 2009 the industry experienced a modest growth but had an overall churn rate of some 20%, as follows:

Figure 2 –This table is from ABS, Counts of Australian Businesses, including Entries and Exits, Jun 2007 to Jun 2009, Cafes, Restaurants and Catering Businesses

Statistical collection for the restaurant, café and catering industry has been recently changed to include fast food (traditionally counted in retail). Turnover in the cafes and restaurants sector is larger yet more inconsistent than that in the fast food sector. In seasonally adjusted terms, turnover in the industry is still growing with total for the sector for the month of January 2011 being $2.60 Billion (with $1.456 Billion in the café and restaurant sector).

Figure 3 –This table is from ABS, 8501.0 Retail Trade, Australia, Turnover (Millions), Cafes and Restaurants.

Employment in the Restaurant and Catering Industry

The Cafés, Restaurants and Takeaway Food sector dominates employment in the Accommodation and Food Services industry, accounting for 456,600 workers (or 61.6 per cent of industry employment) as at February 2010.

The Department of Education, Employment and Training estimates that in the five years to 2014-15, employment in Cafés, Restaurants and Takeaway Food is expected to grow at an average rate of 2.6 per cent per annum (see Figure 5), which equates to around 59,358 new jobs.

Employment growth in the overall restaurant industry (including quick-service / fast food restaurants) has been at 4.5% in the 12 months to February 2010[2].

Figure 4 –This table is from ABS, Labour Force Survey cat. no. 6291.0.55.003 (DEEWR trend data)

Figure 5 –This table is from ABS, Labour Force Survey cat. no. 6291.0.55.003 (DEEWR trend data); DEEWR projections to 2014-15

Restaurant and Catering Industry Educational Profile

The Department of Education, Employment and Training describe that Accommodation, Cafés and Restaurants as a relatively low skilled industry.

The Accommodation and Food Services industry is providing job opportunities for large numbers of low skilled workers. Although there is a stronger emphasis now on formal qualifications in the industry, 60.9 per cent of workers had no non-school qualification as at May 2009 compared with 38.7 per cent for all industries (see Figure 18). In part, this reflects the younger age profile in the Accommodation and Food Services industry, including students working while studying. Over one third (39.1 per cent) of workers in the industry had completed a non-school qualification. The most prevalent non-school educational attainment was a Certificate III/IV (13.9 per cent), reflecting trade qualifications required of Chefs and Cooks.

Figure 6 –This table is from ABS, Education and Work, Cat. no. 6227.0 (May 2009)

Nevertheless, long-term employment growth in the Accommodation, Cafés and Restaurants industry has provided many job opportunities for first-time jobseekers and low skilled workers. Just on two fifths (49.1 per cent) of workers in the industry had completed a non-school qualification. The most prevalent nonschool qualification was a Certificate III/IV (13.9 per cent), especially reflective of Chefs and Cooks.

Training Effort – the Restaurant and Catering Industry

Whilst the level of qualifications within the industry is relatively low, the proportion of the work in formal training, in particular Traineeship / Apprenticeship is comparable with most other industries and substantially higher than for Engineering and ICT, Printing and Textile industries. In the food trades industries, in 2009, 12.9% of employment was trainees and apprentices compared to all trades at 12.1%

Figure 7 – This table has the source as NCVER and ABS Labour force, Australia, Detailed, Quarterly, February 2010

Occupations

The predominant occupations in the restaurant, café and catering industry are waiters, kitchenhands, chefs, cooks and café and restaurant managers.

Figure 8 – This table shows Numbers of Employees by Occupation, Accommodation and Food Service Sector - ABS Labour Force Survey cat. no. 6291.0.55.003 (four quarter average)

The career pathway for cooks and chefs is through a apprenticeship in Commercial Cookery. This occupation is regarded as a ‘traditional trade’. Food trades (cookery) accounts for 13.7% of all apprenticeship numbers[3]. Chefs (as the ultimate qualification covered under food trades apprenticeship) are highly qualified at trade level with 46.1% holding a Certificate III or IV (the trade qualification).

Figure 9 – This table shows Proportion of Chefs with Qualifications - source ABS Survey of Education and Work, May 2008 cat. no. 6227.0.

Apprenticeships for the 21st Century Expert Panel Paper

January 2011

The Panel and the Process

Restaurant & Catering was concerned at the outset with both the process of the review and the establishment of the panel. As is clear from the information presented above, the apprenticeship system is an important part of the preparation to work in the restaurant, café and catering industry. One in five positions within the sector are the outcomes of the apprenticeship system.

Given this importance, and the importance of the apprenticeship system to other service sectors, it was a concern that the ‘expert committee’ was comprised without and service sector representation. Further, given the work-based nature of apprenticeship and traineeship, the lack of employer representation on the committee was also a concern. Researchers and training providers are stakeholders in the apprenticeship system, however, the centre-piece of the system are employers and they should have had a clear majority on the Committee.

The process of commissioning research and withholding that research throughout the consultation period, used by the ‘expert panel’ was also flawed. This meant that conclusions were drawn from the data presented without any opportunities for the data to be questioned or defended. This, from the perspective of R&C drawn into question the conclusions drawn and the recommendations in the report.

Apprenticeships Data

Restaurant & Catering believes that the analysis in the report used specific data to support the conclusions the ‘expert panel’ formed rather than an objective analysis of the data. For instance, the report refers to the shortage in ‘traditional trades’ and one of the core justifications for intervention, citing growth as the driver of future shortage.

The Department of Education, Employment and Workplace Relations (DEEWR) SkillsInfo website states that employment growth all sectors 1.8% - Construction 2.4% - Restaurants and Cafes 2.6% (as noted above). On this basis an objective analysis would suggest that the priority should be on apprentices and trainees in the restaurant, café and catering sector. Instead, the report suggests that priority should be given to construction, mining and ‘hard skills’ sectors.

Further the document states that 3.8% of the workforce is made up of trainees and apprentices. As noted above, ABS data suggests that the proportion of trainee / apprentices, in accommodation cafes and restaurants is 12.9%. This is additional justification for the inclusion of the food trades among the ‘high-value’ occupations.

Restaurant & Catering is keen to stress, in response to the report, that technical and trade training is 13% of VET and Apprenticeship and Traineeship makes up 3.8% of employment. It is traineeship and apprenticeship that provides the greatest return on investment for employers – It is suggested that, if costs are to be cut from the training system, that the focus should be shifted to other areas of vocational training that are not ‘technical and trade’ based.

Food Trades (Cooks)

It is clear from the data (as detailed in Figure 10 below) that Food Trades have been resilient to ‘shocks’ in demand. The restaurant, cafes and catering sector saw very little downturn during the GFC which has enabled commencements to hold up for the Foods Trades.

The focus of much of the commentary, in the report in on Completion rates. The hole in the links drawn in the report is that completion rates measure ONLY completion of the training undertaken with the employer and training provider with whom the training is commenced. Completion rates ignore recommencements. In an industry like hospitality there is significant movement between employers but NOT in and out of the trade / occupations. In the event that recommencements were considered, completions in foods trades would equal those of other industries.

The data on training outcomes bears this out. Personal Services (Retail and Hospitality) follows the trend as far as positive outcomes from training is concerned.

Restaurant & Catering Australia concurs with the observation that the system is complex.

Figure 10 –This table is from NCVER, In-training at 30 June by trade occupation1,6, 1963–20102

Restaurant & Catering refutes the assertion in the report that the ‘biggest threat to . . . not completing their qualification is the breakdown in the relationship between the Australian Apprentice and the Employer’. This very loaded statement suggests that every separation between Apprentice and Employer is acrimonious.

In a report undertaken for the National Skills Shortages strategy, in relation to cooks specifically, it was found that the three top reasons for cancellation in an apprenticeship were:

Resigned from job (25.5%)
Found employment elsewhere (12.8%)
Job was terminated (6.7%).[4]

Figure 11 –This table is from NCVER Student Destinations Data

The distinction between ‘Well established high profile business’ and small to medium businesses in the report is also erroneous. Many small businesses are also well established and high profile, particularly restaurants.

Structural Support for Employers

Restaurant & Catering concurs with the need for pre-qualification of employers to employ apprentices. The Association contends, however, that this pre-qualification process should acknowledge existing accreditation and quality schemes in place (e.g. the Certified Professional Restaurateurs Scheme operated by R&C).

This process should not be another bureaucratic process established and implemented by Government.

Advice and Support

The report should acknowledge the core role that industry organisation play in providing advice to members on training arrangements. This role is well documented and should be the start-point of building a support network. This was the case under the previous NETTFORCE arrangements (which saw a similar approach taken to that proposed).

Of any part of the training system, Apprenticeship and Traineeship should be employer driven.

Recruitment and Selection

Restaurant & Catering has been pursuing recruitment and selection as a means of increasing retention in all forms of employment in the industry (including Traineeship and Apprenticeship).

R&C contends that industry based arrangements to match candidates for apprenticeship / traineeship with vocations and employers that suit them should be encouraged. The Association has such a system that it has used through its Job Brokerage work that would improve retention within apprenticeship for the restaurant, café and catering industry.

Apprentice Mentors

Restaurant & Catering supports the recommendation to enable Apprentice mentors at the workplace level. This support to apprentices is vital and, once again, could fall to industry organisations to administer. R&C has attempted in the past to seek support, from Government, for such a program. This support is necessary to the functioning of such a system and has a return on investment by way of high completion rates.

Occupations in Skills Shortage

Restaurant & Catering refutes strongly the assertion that the statement that ‘traineeships.... in retail and hospitality, financial incentives to employers have led to large increases in trainees’ is somehow in conflict with the notion of incentive targeting areas of skills shortages. There is no doubt that some of the most severe skills shortages are in retail and hospitality.

Further, the Association rejects the assertion that ‘particularly for retail and hospitality qualifications, the incentives currently paid constitute an implicit wage subsidy to the employer’. As demonstrated in survey after survey, there is a significant cost in employing and training apprentices and trainees. These costs (and the cost of productivity loss) is only partially met by the incentives. There is no doubt that commencement in traineeship and apprenticeship would drop if incentives were reduced or removed.

Restaurant & Catering rejects the statement in the report that ‘It is time to move away from government support in the form of direct financial payments to employers’. There is no justification for this statement in the report nor is there evidence that leads to this conclusion.

Far from undermining the system, investment in traineeships and apprenticeship in the personal services sectors will bolster the nation’s economic performance. In addition, traineeship and apprenticeship in these industries meets a number of social objectives by engaging many young, displaced and disadvantaged employees.

This whole approach seems entirely contrary to the approach taken by the Government at the conclusion of the GFC with the Apprenticeship Kickstart initiative. According to the presentation given by the Hon. Mark Arbib at the launch of the National Workforce Development Strategy, apprenticeships were set to rebound to 22,141 in 2009/2010 as a result of Kickstart (which provided additional incentives).

The Role Incentives

Employer incentives(paid to employers of trainees and apprentices) were designed to off-set the loss of productivity in the workplace experienced by engaging an untrained person. The lack of productivity of apprentices and trainees is significantly front-end loaded (that is a first year apprentice is far less productive than a forth year apprentice). This was, in part, the logic for a higher commencement payment.

It is important that the commencement payment is sufficiently high to offset the loss of productivity borne by engaging an apprentice / trainee at the beginning of their training. Failure to do so will reduce commencements.

There is no doubt that incentives do affect commencements. This is demonstrated very clearly through programs suck as ‘Kickstart’ where additional incentives drove additional commencements. Restaurant & Catering observes that the greatest determinant of completion is commencements. The Association is concerned that if commencements slow, because of the removal or reduction of commencement payments, the number of completions will also be reduced.

Apprenticeship Administration (Apprenticeship Centres)

The current system has been in place for many years and if the outcomes being achieved do not represent an acceptable return on government investment, Restaurant & Catering suggests that these funds can be redirected towards structured support services which we believe will result in a much greater return on investment in the long term.