With 1.02 million 16 to 24 year olds unemployed, the largest number since records began, the government faces some tough questions. It’s no surprise that the day this cataclysmic statistic was released, business secretary Vince Cable announced plans to help small and medium-sized enterprises (SMEs) take on more young apprentices.
This was quickly followed by promises of a ‘youth contract’ from deputy prime minister Nick Clegg, which will offer subsidies to companies for hiring those not in education, employment or training.
Apprenticeship schemes have been on the government’s agenda for some time, with official figures showing that more than 400,000 places were created in the past academic year. The Federation of Small Businesses recently said that the obstacles faced by its members in hiring apprentices were mostly financial, and Cable’s plans attempt to address this by offering businesses with up to 50 staff an incentive payment of up to £1,500.
No-one sees the value of apprentice schemes more than SMEs, which account for 69 per cent of all apprenticeships.
Judging by a recent survey carried out by Clydesdale and Yorkshire banks, Cable’s fresh announcement will be welcomed. The research found that, while 84 per cent of SMEs agreed that the use of apprentices is a good way to develop new talent, 63 per cent admitted that they do not have the money to pay them.
Mike Norfield, chief executive of Team Telecom Group, which has its own trainee initiative, confirms, ‘Many SMEs just do not have the time and infrastructure on their hands to implement an apprentice scheme.’
Time will tell whether the government’s new incentive will entice more SMEs to hire apprentices. The fact is, though, there is much more to implementing a successful apprentice scheme than the cash.
Companies such as Team Telecom and space engineering company Magna Parva took on apprentices long before Cable’s announcement, and have managed to grow successful schemes without funding from the government.
In both these companies, the apprentices complete two- and three-year apprenticeships that see them work four days a week and attend a local educational institute on the fifth day to complete a relevant course. Norfield says, ‘I think a combination of education and on-the-job experience is a true apprenticeship.’
The majority of businesses in the UK that hire apprentices will opt for this sort of ‘day release’ scheme. At the end of the apprenticeship, companies will have staff that have gained on-the-job training coupled with a qualification, usually a National Vocational Qualification (NVQ) or a Higher National Certificate (HNC).
Magna Parva’s apprentices finish their ‘Space Academy Apprenticeship’ with an HNC in engineering and varied experience in the industry. Managing director Andrew Bowyer comments, ‘They do six months doing technician-type work in the laboratory, then they do six months in the design office, then they go back to the lab. They do this for the three years while also learning various different things at the college.’
Linking up with the local colleges that offer the certificates is one area in which the government can help. The National Apprenticeship Service (NAS) is responsible for apprenticeships in England and works with the Department for Business, Innovation and Skills and the Department for Education.
The service promotes apprenticeships to both employers and learners, and helps businesses recruit apprentices through its website. It also coordinates funding for apprentice training: full funding for 16 to 18 year olds, and partial subsidies for 19 to 24 year olds. This is paid to the training provider, which is usually the local college.
Bowyer remarks, ‘We do not receive anything directly from the government, though we are registered with the NAS and everything is done under their appropriate guidelines, a lot of which the college takes responsibility for. I suppose by being involved with the college, we are probably getting some secondary benefits of some government investment.’
One company that did receive a cash incentive to hire apprentices was Wales- based IT repair business Comtek, which runs a one-year apprentice scheme, again in conjunction with a local college. The company received a £2,000 incentive from the Welsh government to take on an apprentice for a year, which chief executive Askar Sheibani says went a long way. However, he argues more should be done.
‘Vince Cable’s announcements are not good enough; the government should fully subsidise an apprentice’s first year,’ says Sheibani. ‘If you go to businesses and tell them that they have nothing to lose if they take on apprentices for one year, they will.’
The government’s overall apprenticeship budget for 2011/12 is £1.4 billion, which is where Cable’s new cash incentives will come from. An initial payment will be made two months after the apprentice starts and the balance paid when he or she has completed the scheme and progressed into suitable employment.
The vast majority of businesses that employ apprentices talk about the long-term benefits for the company. Paul Tanner, chief executive of Alan Day Volkswagen, says simply, ‘They are the lifeblood of our organisation.’
The company has been running an apprentice scheme for over two decades, taking on eight to ten apprentices annually in different roles including technicians, service advisers and sales staff. They work in conjunction with the Volkswagen Group’s National Learning Centre to ensure that the apprentices receive their NVQs.
Tanner, who himself started out as an apprentice, is adamant that his scheme will last for years to come, no matter what the climate. He remarks, ‘It is a tough time for the motor industry, and in times where we have had to let some people go, the last thing we would do is get rid of the apprentice programme – it is the future of our business.’
The long-term loyalty you gain from apprentices is unique, Tanner believes: ‘Because you have given them the opportunity, they are very keen to pay you back.’ Four staff members at Alan Day are about to be recognised as they hit 25 years’ service, and three of these started out at the company as apprentices.
Magna Parva’s Bowyer agrees. ‘When we hire an apprentice we know that we get a member of staff who is loyal and is going to be with us for a long time.’ Norfield from TTG goes further: ‘Even if they go on to leave your company, they are always going to know who they started with and will become an advocate for the business.’
Fans of apprenticeships argue that they can play an important role in future business growth. TTG invests heavily in research and development, and for Norfield apprentices are at the heart of this. ‘We have got great new products coming through and all my engineers are old, so the young apprentices coming on board are filling this gap,’ he remarks.
Comtek’s Sheibani agrees. ‘In my company, 10 per cent of my employees are apprentices because I believe in them and I think that they will do great things for us in the years to come.’
Because apprentices have started out and been trained at a company, the odds are they will be totally in sync with the business’s vision and aims.
Tanner says, ‘You are teaching them your culture right from the start and it becomes embedded in them.’ Sheibani adds, ‘Young people are full of energy and during training they are like sponges – they absorb so much, which is a great asset for a company.’
Nevertheless, running a successful scheme means a lot of hard work for the whole company. As well as needing the right funds and infrastructure, companies require a competent HR department. Contracts, for example, are important. Tanner of Alan Day remarks, ‘Our apprentices are monitored and constantly reviewed, which means that our HR team must always keep in touch with management.’ Healthy communication with the training providers is also essential to make the schemes work.
But Bowyer of Magna Parva is clear that there is a good return on investment. ‘The apprentices are very bright and they do work,’ he says. ‘They don’t just sit around making tea; they actually do a job and we get the benefit from that.’
Minimum wage for apprentices: £2.60 an hour (applies to time spent in training as well as at work)
Minimum hours of employment per week: 30
Subsidies for training costs: 100 per cent for 16-18 year olds, 50 per cent for 19-24 year olds