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There is a black hole in Britain where a skilled workforce should be. It’s hitting productivity and profitability for businesses large and small and with the reduction in the number of foreign workers to fill the gap expected post-Brexit, it’s going to get bigger.
It’s no coincidence that Britain languishes at the bottom of the G7 group of nations for productivity at the same time as having an underperforming system of apprenticeships. Government figures show that productivity here is 15% below the average of the other six countries. The OECD predicts that on measures of intermediate and technical skills the UK will fall to the bottom five of all OECD countries by 2020.
Countries with the best high-volume, high-quality apprenticeship systems, such as Germany, Norway and Austria, have productivity levels of which we can only dream and youth unemployment levels half the British rate.
With that in mind, the recently reported 59% fall in apprenticeship starts over the past 12 months is not encouraging. But it isn’t surprising either.
When the government committed the country to three million new apprenticeship starts by 2020 two years ago, there was much sharp intake of breath. The apprenticeship levy, whereby large companies have to pay towards this national training target ,was supposed to encourage those big companies to do more with regard to training on a use it or lose it basis.
Many have responded by taking on no more apprentices but by cutting internal training budgets to compensate financially.
So why is the levy not having the desired effect?
There are a number of factors. The system is being reformed wholesale and in most cases for the better. The “standards” by which qualifications are set out are being published by employer groups and associations to ensure they are fit for purpose.
Not all of those are yet ready so some apprenticeships are not available but there’s no doubt that this change has meant a general improvement in the quality of the training.
Then there’s the resistance from some employers to the requirement for apprentices to spend 20% of their time in off-the-job training with providers like Milton Keynes College.
The thing about that is that if you don’t believe your staff could be 20% more productive after such training or give you a return on the investment by at least the cost of the training, why on earth would you want them to do it in the first place?
Perhaps the biggest hurdle is the whole image surrounding the concept of apprenticeships. In years gone by, apprentices paid to learn from a master craftsman. Today they get paid for doing it. Companies always say their people are their most valuable resource so why not invest in that resource in the same way one would in new machinery, a better website, marketing etc.?
Often we come across potential candidates who are being actively dissuaded from taking up an apprenticeship because their parents or grandparents are telling them it isn’t worth it. That may once have been the case but it certainly isn’t so today. A survey by Barclays and the Centre for Economics and Business Research found that apprentices can earn 270% more than graduates over the course of their lives.
It’s a fair assumption that they can only achieve those levels of pay because employers are seeing similar good returns.
There’s also a perception that apprentices are all school leavers. In reality the proportion of people over 25 becoming apprentices is growing faster than any other age group, standing at 44% of all apprenticeship starts last year.
Switched-on employers are taking advantage of levy funding to improve the skills of existing members of their workforce, effectively investing in a known quantity and giving them more reason not to look for betterment elsewhere.
With standards rising and unprecedented level of government backing, coupled with the ability to draw from the levy fund to pay for it, there’s rarely been a better time for businesses to offer apprenticeships to staff.
At Milton Keynes College, we certainly recognise the benefits to the city and to business and we understand the system.
Give us a call; it may be the single biggest opportunity you’ll ever have to boost your business.
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