Opinion: 'More evidence is needed to convince firms to sign up apprentices'

15th September 2015 at 16:33
picture of Henry Overman apprenticeships
Henry Overman, professor of economic geography at the London School of Economics and Political Science, argues that apprenticeships can bring great benefits to learners, but more must be done to entice employers to the programme

The government’s flagship apprenticeship scheme has come under fire in recent weeks, with campaigners criticising the lack of high-level apprenticeships available, and the CBI expressing concerns about plans to tax firms to pay for the scheme.

That followed a deeply sceptical assessment by Baroness Alison Wolf, author of a government review of vocational training in 2011, of the government’s ambition to create 3 million new apprenticeships by 2020, which she described as a “mad and artificial political target which risks undermining the reputation of apprenticeships”.

But amidst all this criticism, a new report published by the What Works Centre for Local Economic Growth (which I am director of) should make for happier reading for the government, as it presents clear evidence that apprenticeships do tend to improve young people’s prospects of securing long-term employment and better wages.

For the report, we examined evidence from more than 1,250 policy evaluations and studies looking at the economic impact of apprenticeship programmes, both in Britain and abroad.

First, we found that apprenticeship schemes generally succeed in fulfilling their fundamental purpose: improving skill levels among young people, and in some cases encouraging them to take on further study. For example, participants in the French apprenticeship system have a 42 per cent higher probability of staying in education after finishing school, while young people taking part in the US CRAFT programme (designed to help high-risk youths and juvenile offenders learn a construction trade) are more likely than their peers to be working towards a general equivalency diploma (equivalent to graduating high school).

Secondly, we found encouraging evidence that apprenticeships improve a young person’s chances of gaining employment, and can have a positive impact on salaries – both in terms of raising wages at firms taking on apprentices, and giving individual apprentices a better chance of earning higher salaries over the course of their careers. For example, a study of the British system found that apprentices undertaking level 3 apprenticeships (equivalent to NVQ level 4 and above, or a foundation degree) earn 22 per cent more than peers without this qualification.

However, not all of the report’s findings are good news for the government. For a start, some of the apprenticeship schemes we examined did not increase employment or raise wages. Nor did we find evidence that the benefits we’ve identified will still apply if the government succeeds in creating an extra three million new apprenticeships over the next five years.

But most worryingly for the government – at least in terms of its prospects of achieving that target – is the lack of evidence about the economic advantages offered to firms. We found only one study which suggests that apprenticeships increase productivity and profits for businesses – and while many firms that take apprentices express satisfaction with the outcome, more evidence would help convince other businesses which are sceptical. Without it, the government may struggle to convince more firms to sign up for the programme, which could prove a major obstacle in their plan to expand apprenticeship numbers.

Our report also raises important issues for policy-makers to address, including the disparity in outcomes between different levels of apprenticeships – with young people undertaking level 3 apprenticeships enjoying substantially better wage-gains than those taking level 1 apprenticeships (equivalent to five GCSEs). Failing to address that disparity will result in an increasing number of level 1 apprentices who will continue to falling behind their peers.

So while it’s clear that apprenticeships can have a potentially life-changing impact for young people, the government also has many questions to ponder as it seeks to expand the apprenticeships programme in the coming years. Getting the answers right will be crucial in ensuring that more young people, and more firms, can enjoy the benefits that apprenticeships potentially offer. 


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