IER Research
The Value of Apprenticeships
A recent study carried out by the University of Warwick Institute for Employment Research (IER) demonstrated that Apprenticeships are an investment by employers and where the investment is nurtured, the returns to the employer are significant.
Based on detailed employer case studies in seven sectors the study was commissioned and scrutinised by the business leaders who form the Apprenticeships Ambassador Network (AAN).
The aim of the study was to provide a detailed assessment of the contribution of employers to the provision of Apprenticeship training, and to indicate the long term benefits to the employer.
Costs of Apprenticeship Training
Researchers, working with employers, identified:
- Costs of training,
- Benefits obtained over the training period,
- Information about the benefits obtained over the longer-term (e.g. accepting values of the company, creating a stock of skilled and qualified workers), and
- The extent to which the employer’s training costs are recouped.
The Economics of Training
The study also recognised that;
- Wage costs will be greater than apprentices productivity whilst training and
- Post-training costs are recouped as wages will be less than the worker’s output.
Costs in Engineering
Within the Engineering sector the study found that;
- Apprenticeships well established in case studies,
- Shortage in external labour market,
- Opportunities for ex-apprentices to progress into supervisory and managerial jobs, and that
- Costs of training were relatively high at £29,000 over a three to four year period, but recouped over two to three years after completion.
View the results graph »
Costs in Hospitality
For thhe Hospitality sector the study found that;
- Apprentices relatively productive during their training
- The average cost of training is around £4,200
- The Apprenticeship often completed within a year
- Employer’s costs are recouped quickly
View the results graph »
Costs in Social Care
The study identified that in the Social Care sector;
- Level 2 costs can be as high as £4,300, and if training continues to Level 3 the total net cost is around £7,700,
- The payback period can be around four years,
- But there is much variability in the sector.
View the results graph »
Costs in Retail
For the Retail sector the study recognised that training;
- Completed within a year with training mainly on-the-job,
- Training costs relatively low at £2,300, and that
- Employers’ costs are recouped quickly.
View the results graph »
Costs in Business Administration
Within the Business Administration sector;
- Training costs vary because of the varying durations of training
- The cost of training to Level 2 is around £1,100 and around £3,500 to £3,900 at Level 3 depending upon the duration of the training, so
- The payback period for a Level 3 Apprenticeship which takes three years to complete is around one year.
View the results graph »
Costs in Construction
The study showed that within the Construction sector;
- Employers train to meet their own skill needs and those of their sub-contractors,
- Training tends to be highly structured and relatively costly compared to other sectors: £22,000 although there is variability between employers, and
- Employers’ costs are recouped two years after completing the Apprenticeship.
View the results graph »
Costs in IT
For the Information Technology sector the study identified that;
- The largely workplace-based nature of training means productivity is relatively high,
- Therefore there are comparatively low costs to employers, so
- Employers’ costs are recouped in a short space of time – on average around six months.
View the results graph »
Benefits to Employers
The study showed that the costs of training are quickly recouped upon completion of the Apprenticeships.
Other benefits include;
- Retention within the company,
- Understanding of company values, and
- Progression to become managers and supervisors.
Conclusions
The study concluded that;
- The costs of Apprenticeship training is recouped relatively quickly,
- Recruiting from the external labour market is seen as more expensive because of recruitment and induction costs,
- Supply in the external labour market is limited,
- Apprentices provide a pool of skilled people to select from for future promotion,
- Apprentices are seen as loyal, more likely to stay with the company and steeped in company values, and
- Apprentices bring new ideas into organisations.
Last Updated: 26/11/2009