Apprenticeship training in England: a cost-effective model for firms?

Wolter, Stefan and Joho, Eva (2018) Apprenticeship training in England: a cost-effective model for firms? UNSPECIFIED.

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Abstract

In England, the government plans to incentivise spending of billions of pounds over the next few years promoting apprenticeships, with most of the finance raised from the apprenticeship levy on employers. Promoting more apprenticeships is designed to improve England’s skill base – a government policy priority given the relatively low level of skills and educational qualifications amongst a large part of the country’s workforce. But does such a policy make sense in an English context, with a historically limited participation of many employers in work related formal training? Is additional spending on apprenticeships likely to lead to positive economic returns for employers, workers and for England itself? And how varied are the net economic returns by employer and by sector? What works for one category of employment may not bring positive gains where returns to training are much lower. To answer these questions the JPMorgan Chase Foundation, the Education Policy Institute and the Bertelsmann Stiftung have come together and partnered with the internationally acknowledged economist Prof. Dr. Stefan C. Wolter to explore the costs and benefits of apprenticeship training for companies in England. This report by Prof. Dr. Stefan C. Wolter and Eva Joho brings a much needed degree of rigour and quantification to a policy area which is too often characterised by assumption, hunch, and international experience which may not apply in a very different country context. The authors have used evidence from Germany, Switzerland and Austria to simulate the costs and benefits of an apprenticeship policy applied in an English context. They are aware of the limitations of this approach - not least given the different tradition of employer engagement in England - but the analysis in this report is important and could help guide employer and government policies in directions that maximise economic returns and limit low return scenarios. In particular, the return by occupations is shown to be highly varied based on the return and cost characteristics of each sector. The returns by employer within each sector also vary markedly. The key conclusions the authors have derived in the report could help steer English policymakers and employers in more evidence based directions, which should help ensure that England’s large investment in this area is properly informed by evidence and more likely to yield positive returns. In addition, the present study complements studies with a similar methodology in Spain (2016) and Italy (to be published 2018), which will enable learnings for successful implementation of apprenticeship models across countries.

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