01 May 2016

The Cost-Effectiveness of Apprenticeship Schemes

The Cost-Effectiveness of Apprenticeship Schemes

Making the Business Case for Apprenticeships

Key Messages

  1. Apprenticeships are first and foremost a means of training, primarily of the young, to enhance employability and future employment prospects.
  2. Across Europe, some apprenticeship systems are employment-based, whereas others are rooted in education and training and/or more school-based. Apprenticeship systems can also be demand-led, to varying degrees, depending on the extent to which employers’ skills needs are taken into account. This often relates to the role that employers and their organisations play as part of the apprenticeship system.
  3. Well-functioning apprenticeship systems are dependent upon enterprises being able to create training vacancies (and job opportunities) to take on learners.
  4. Well-functioning apprenticeship schemes help meet enterprises’ skills needs and appropriately take into account cost drivers with a view to encouraging enterprises to invest in apprenticeships. Consequently, there needs to be an openness at national level to better adapt systems to enterprises’ needs and to better enshrine employer and, where appropriate, social partner involvement in the governance of apprenticeship systems. In parallel, it is necessary to develop closer partnerships and cooperation between enterprises, social partners, vocational education and training (VET) providers, and the state.
  5. In well-functioning apprenticeship systems, enterprises recoup their investments over time in terms of a better skills fit and through the partial productive activation of learners during training. If apprentices are then hired into regular employment, additional payback comes in terms of immediate productivity upon graduation, fostering of enterprise culture, and higher employee loyalty, therefore making apprenticeships an effectivemeans of recruitment.
  6. The return on the enterprise’s investment in apprenticeships will be reached earlier when schemes are demand-driven and when employers can select the candidates, contribute to curriculum design, and deliver parts of the training. For SMEs, notably micro-enterprises, the cost/effectiveness of apprenticeship schemes depends on additional factors such as duration of the scheme and time spent in the enterprise; retention of apprentices or support in administrative management.
  7. Employment-led apprenticeship systems can involve higher costs for enterprises, for instance when apprentices have the status of an employee and receive a wage close to entry level pay or minimum wages, where they exist. Apprentices can also have the status of an employee with a specific training contract or only receive a training contract. The nature of the relationship is determined in the context of national industrial relations systems and education and training practices.
  8. Irrespective of status, the key point for employers is that the level of the wage or compensation needs to be set at a rate that makes it possible for the enterprise to see a return on its investment, so as to encourage and foster the supply of apprenticeship places. Part of this is to foresee an appropriate element of co-investment and commitment by the apprentices, reflecting the benefits apprenticeships bring them in terms of future employment opportunities.
  9. Apprenticeship is a relevant education and training pathway to balance technical, soft, and social skills in an integrated approach. Currently the lack of soft and digital skills, less qualified students and more complex jobs gives apprenticeships the opportunity for a more prominent role. Digital skills are increasingly required across all sectors and occupations, including in the ICT, commerce and engineering sectors.
  10. The esteem and attractiveness of apprenticeships for learners depends, to a large extent, on the quality of VET systems. Excellence programmes can help to improve the motivation of learners to undertake an apprenticeship. The fact that some companies report difficulty in attracting motivated students with appropriate basic skills illustrates the need to improve the image of apprenticeships in society.
  11. There is a need at EU level to foster the quality, supply and attractiveness of apprenticeships. The European Alliance for Apprenticeships is a good platform to support this and could be further strengthened in these areas as part of the next review in 2017. Mutual learning could also be further strengthened within the framework of the meetings of the Directors General for Vocational Training, the Advisory Committee on Vocational Training and the relevant ET2020 working groups. At the same time, given the diversity of national systems, existing European definitions provide enough clarity and there is no need for further European-level action on attempting to define apprenticeships.

Recommendations

Governance

  • Member States in cooperation with employers, VET providers and, where appropriate, social partners need to design and implement reforms in vocational education and training systems to make them more responsive to current and future labour market needs. Such reforms also need to provide a policy environment that makes a country a competitive place for enterprises to operate and invest in, and a mindset to educate for employment;
  • Member States need to better involve enterprises and employers’ organisations at all levels to ensure that employers have more control over the design of apprenticeship systems. This should be based on a shared understanding, between employers, VET providers and governments of the value of improving apprenticeships so that they more appropriately reflect the world of work;
  • Member States and, where they are involved, social partners should put in place the framework conditions that allow for the cost-effective engagement of enterprises in apprenticeship schemes. This requires broad acknowledgment that apprenticeships are primarily a training process and, accordingly, that the wage or compensation that apprentices receive should be lower than for a full employee, while being in line with national rules and ensuring the quality of the training provision and the learning outcomes. This is true both for national systems in which apprenticeships are conceived as an education experience, and others where they are defined as an employment relationship;
  • Member States, in cooperation with VET providers, employers and, where appropriate, social partners, should aim to reduce the burden of the accreditation procedure for enterprises, where it exists. They should also look to ensure a more flexible approach to the recognition of prior learning that is required to start an apprenticeship, while respecting necessary entry standards.
    As part of a renewed EU strategy on flexicurity, the European Commission should set up an EU system of benchmarking, which could have particular added value to promote education and training provision (including apprenticeships) that better meets labour market needs. Possible benchmarks that could improve national VET systems include:

    • share of work-based learning in overall initial education and training;
    • percentage or training time (as part of work-based learning) spent in the enterprise;
    • number of months after completing work-based learning before gaining employment.
  • In parallel with an EU system of benchmarking, the European Commission should further encourage and facilitate mutual learning and the exchange of knowledge and ideas between relevant actors to support Member States and national social partners in adapting the requirements of apprenticeship training;
    Employers, VET providers, universities and Member States should explore the possibilities for setting up national pilot actions to develop a public-private partnership to foster the promotion and acquisition of digital skills. The role of employers is important, notably in the design of curricula, so as to embed technological and business skills into apprenticeship schemes.
    Excellence
  • Member States with the involvement of social partners, in line with national industrial relations and education and training practices, need to adapt VET systems in view of improving the quality, flexibility and permeability of education and training systems. This will enhance the attractiveness of VET;
  • Member States, in consultation with employers’ organisations, enterprises and, where appropriate, economic chambers should expand the practice of apprenticeships beyond secondary VET. They should support projects that introduce apprenticeships and the principles of dual-learning across all sectors of the economy and into different types and levels of education pathways, notably higher VET as well as university education;
  • The European Commission, Member States, social partners and VET providers should further reflect on the potential for enhancing the mobility of apprentices. This includes exploring how mobility could have a positive impact on the training and future employability of apprentices. Mobility can contribute to a better parity of esteem between VET and general education. Therefore, it can help to improve the wider attractiveness of apprenticeships;
  • Member States, in partnership with VET providers, employers and, where appropriate, social partners, should ensure that teachers and trainers, in schools and enterprises, are sufficiently trained and able to update their skills and competences to train apprentices in accordance with the latest teaching methods and labour market needs.

Promoting apprenticeships

  • Employers’ organisations and, where appropriate, economic chambers should provide information and guidance as well as motivate and support enterprises to become involved in apprenticeship schemes. They should give them advice and support, in particular to Craft and SMEs, including through the organisation of cooperation between enterprises providing information about national framework conditions. They should also actively contribute to developing and updating qualifications frameworks, training rules and curricula to ensure that they are well aligned with enterprises’ skills needs;
  • To help ensure a better understanding of apprenticeships and how they foster employability and lead to promising careers, schools, VET providers and employers should have a stronger role in systems of career and educational advice to promote VET, and apprenticeships in particular, as an equitable choice as compared with university education. Information from EU benchmarks could help to enhance the image of apprenticeships;
  • In addition to careers advice, schools, together with local enterprises and VET providers, should better promote to students and parents, the possibility to undertake an apprenticeship. This could include organising, in cooperation with business organisations and enterprises, school visits to enterprises, teachers spending time in a local enterprise to observe its apprenticeship scheme, and apprentices coming into schools to talk to pupils;
  • As part of EU and/or national campaigns aiming to improve the image and attractiveness of apprenticeships, the European Commission, Member States, VET providers and, where relevant, social partners, should build on existing initiatives that aim to promote excellence in VET in the field of skills and competence development, such as Euroskills and VET weeks.

  • Table of content
    1. Introduction
    2. Project design and methodology
    3. The challenge of defining apprenticeship
    4. Apprenticeship schemes
    5. The dual learning principle
    6. Contractual arrangements
    7. Provision of apprenticeships by SMEs
    8. Cost-effectiveness of apprenticeship schemes
    9. Sectoral perspective: ICT, engineering, commerce
    10. Effectiveness of apprenticeships in meeting enterprises’ skills needs
    11. Governance, partnerships and social dialogue
    12. European and bilateral cooperation for partnerships and reforms
    13. National reforms
    14. Conclusions
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