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Apprenticeships : employer incentives
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Dickinson, Peter and Hogarth, Terence (2020) Apprenticeships : employer incentives. Skills Development Scotland. (Unpublished)
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WRAP-SDS-Apprenticeships-Warwick-IER-Employer-Incentives-FINAL-REPORT-300620.pdf - Draft Version - Requires a PDF viewer. Download (667Kb) | Preview |
Abstract
This report focuses on the role and potential that employer incentives could play in supporting and stimulating uptake of apprenticeships, particularly as part of the economic recovery from the recession which is likely to affect the country following the Covid 19 crisis.
Comparisons with past recessions
The length of past recessions has ranged between one and two years, with GDP regaining its pre-recession levels in three to four years. The length and depth of the Covid-19 recession is unclear at this point in time but the initial evidence suggests an extraordinarily deep fall in output over the short-term with likely implications for employment and the provision of apprenticeships.
The evidence over the recent past indicates that the number of apprentices has been increasing in Scotland (by 8% over the past five years). This has seen an increase in the share of disabled people, those from BAME backgrounds, and older people participating in apprenticeships. It has also seen increases in occupational areas such as construction, sport, health and social care, food and drink, and automotive; as well as higher level apprenticeships (Level 3 and above). There is the danger that these gains made over the recent past might be undone if any Covid-19 associated recession proves to be deep and protracted.
It might well be that the number of apprentices in administration and related; construction and related; creative and cultural; hospitality and tourism; personal services; retail and customer service; and transport and logistics that are most at risk. Together these accounted for 54% of all apprenticeship starts in 2018/19, and four are key/growth sectors.
Potentially at risk is the future skills supply to key occupations and sectors and alongside that the opportunities apprenticeships provide to those who occupy a more disadvantaged position in the labour market.
Apprenticeship responses to the economic cycle
Apprenticeships tend to be pro-cyclical and are therefore affected by recessions more so than other types of skills provision. That said, evidence from a number of countries shows that apprenticeships grew in the period after the 2008 financial crisis. In part this was because of measures Governments introduced to bolster apprenticeships through public subsidies and other mechanisms to help apprentices who had been made redundant to complete their apprenticeships. But it needs to be borne in mind that the depth of the recession currently forecast may be much deeper than that following the financial crisis in 2008.
Some countries, such as the Netherlands, have always recognised that apprenticeships are susceptible to economic downturns. To manage the vagaries of the economic cycles an alternative was available to learners which contained a substantial work experience element but which was mainly delivered by vocational schools. In this way, when there were not a sufficient number of employers willing to provide apprenticeships, places could be provided in vocational schools. Both the school based workplace learning and the apprenticeship path in the Netherlands are equally well regard by learners and employers.
Countries have focused on increasing the benefits and reducing the costs of apprenticeships to make them more attractive to employers. In Switzerland, the emphasis has been on increasing the productive content of apprentices (through increasing their ability to undertake more productive work), whilst in England employers have been given primary influence over the content and structure of apprenticeships.
Current apprenticeship responses to Covid-19
Initial evidence suggests that public authorities have responded to the Covid-19 crisis by providing wage subsidies to employers to take on apprentices and/or providing flexibility in completing apprenticeships. The German, Dutch and Danish Governments have provided wage and other subsidies to employers to keep apprentices employed. Other countries (such as England) have introduced flexibilities so that furloughed, or key sector staff have longer to complete their apprenticeships. A number of EU countries have promoted the use of ICTs so that training and assessment can be undertaken online.
Effective practice in employer focused apprenticeship support
Most EU-28 countries provide financial support for apprenticeships via training grants, tax incentives and levies. These are mostly national and long standing programmes operating for all employers, although some are targeted at certain sectors and sizes of organisation.
A review of the international evidence suggests that Government funding of employer investment in apprenticeships produce modest but positive returns, but impacts vary due to the differences in apprenticeship programmes, and the nature and size of financial inducements. In addition, effects vary between sectors and firm sizes.
Apprenticeship incentives on their own have limited impact, involve trade offs (e.g. cost of administration versus deadweight) and work better on increasing apprenticeship take-up amongst existing employers rather than new ones.
To be effective, incentives need to increase financial and non-financial benefits and/or reduce financial and non-financial costs. They need to be flexible because employers vary in their characteristics, cost and benefit calculation, and intent. Smaller employers tend to require higher levels of support. These facets require an understanding of employers’ needs as well as the structure and dynamics of local labour markets.
Employer incentives work best when they are simple, straightforward, and are aligned with and complement existing systems and structures. Effective communication is important, especially to employers less likely to engage with apprenticeships.
A number of incentives are sectorally targeted because this can facilitate employer engagement and input into design and delivery, as well as tailoring support. In addition, a number of other national and subregional economic development and skills strategies are sectorally focused, which new incentives can be aligned with.
Programmes need to be monitored to identify that the incentive’s aims and objectives are being met as well as identifying and measuring any unintended consequences such as deadweight, substitution and displacement.
A key success factor is employer buy-in through involving employers in design and delivery. This helps to ensure a fit with employers’ needs, and makes communication and engagement more effective.
Item Type: | Report | ||||||
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Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce L Education > LC Special aspects of education > LC5201 Education extension. Adult education. Continuing education |
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Divisions: | Faculty of Social Sciences > Institute for Employment Research | ||||||
Library of Congress Subject Headings (LCSH): | Employer-supported education , Apprenticeship programs , Occupational training, Industrial promotion, Incentives in industry | ||||||
Publisher: | Skills Development Scotland | ||||||
Official Date: | 30 June 2020 | ||||||
Dates: |
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Number of Pages: | 40 | ||||||
Status: | Not Peer Reviewed | ||||||
Publication Status: | Unpublished | ||||||
RIOXX Funder/Project Grant: |
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