Apprenticeships, skills gaps, information failure and training opportunities

Earlier this month the Prime Minister announced a £140m plan to create 35,000 additional apprenticeship places, of which 20,000 would be in the public sector (and 6,000 with McDonalds, making it the biggest apprenticeship provider in the UK). Lord Young, the minister responsible for apprenticeships in England, promised that those who won apprenticeships in the public sector would be able to complete their training, come what may. This article highlights the plight of a young man who has just lost his engineering workplace experience while studying with one of the largest private apprenticeship training firms in the South West of England.

It is an obvious way for employers to save money in the short term - but may mean that they risk a skills gap when we eventually do reach the end of the recession and an upturn. The picture is similar in the construction industry, which was the first to be hit hard by the recession last year; in England, some 1,200 apprentices have lost their places since the summer. The construction industry has created a new ‘matching’ service that has helped 350 apprentices find alternative vacancies, showing how the market failure of lack of information can be overcome. It seems likely that this ‘self-help’ approach will be copied in other industries - although the retail sector training body seems remarkably confident about apprenticeships in their sector.

Meanwhile Corus is taking a different approach; Robert Peston reports in his blog that although it is making more than 2,000 of its British workforce redundant, it plans to use the lack of derived demand for steel as an opportunity to carry out re-training for the rest, and has requested financial help from the British government for a rolling programme of providing new skills to its entire workforce. The justification for a state top-up for the wages of employees is that the alternative of making more employees redundant would lead to a rise in social security payments. A wage subsidy along these lines is provided by the government of the Netherlands, where Corus has substantial operations - could it be a method of government intervention adopted here to help taxpayers and businesses weather the recession?