Valuing Apprentices

Recessions put businesses under enormous pressure for example to cut back on training and marketing - but both can be costly mistakes in the medium term when an economy starts to recover…

My Monday morning edition of the Financial Times carried an important article on the prospects for apprenticeships during the economic downturn. The broad thrust of the piece was encouraging - a number of Britain’s biggest companies have said that they do not plan to curtail the number of apprenticeship programmes on offer to school and college leavers. It is not simply a case of altruism - a number of studies have shown that investing in the human capital of the workforce can achieve a positive payback in just a few years.

“Recent studies have shown that investing in an apprentice is often cheaper than recruiting qualified workers from rivals and then having to retrain them in the procedures of their new employer…...BT had “calculated a net financial benefit of over £1,300 ($1,910) per apprentice a year when compared with non-apprentice recruitment”......A more recent study by Warwick university for the taskforce’s successor, the Apprenticeship Ambassadors Network, found that it cost £28,762 to train an engineering apprentice but the “employer’s investment was, on average, paid back in less than three years”.

Why is the success of apprenticeship schemes important for the longer-term health of the UK economy? Many of the benefits of vocational programmes show through on the supply-side of the economy:

A lower risk of structural unemployment through lower occupational immobility

Less pressure on the welfare benefits system resulting from long term unemployment

A reduction in the number of unfilled vacancies for skilled workers

Higher productivity and better paid jobs - which then boosts aggregate demand

Ultimately - higher profits for businesses with successful apprenticeship schemes

Reduced dependence on inflows of migrant workers

Better skilled workers will improve the quality of work and provide a stronger platform for greater innovation in their chosen fields

Improved customer service e.g. in industries such as gas supply, plumbing and construction

The FT article can be found here

The website of the Apprenticeship Ambassadors Network is also worth visiting