Apprenticeships can boost a business’ productivity. They bring new ideas and make loyal employees. So, why are small businesses not training more tailor-made talent?
In England, 375,800 people started apprenticeships in 2017 to 2018. But England and the rest of the UK lags behind countries such as Germany, Denmark and Australia in apprentice numbers. Meanwhile, business owners say they cannot recruit qualified talent. Skills gaps could cost the average UK SME up to £318,000 over the next five years, according to research by recruiter Robert Half.
“There’s an assumption among smaller businesses about apprentices taking time to get up to speed,” says Lizzie Crowley, skills policy advisor for the Chartered Institute of Personnel and Development (CIPD). “It’s true it’s likely to be six months before benefits are felt. But evidence shows then productivity increases and retention rates improve. Business owners’ fears about the bureaucracy involved are often more myth than reality.”
Anthony Impey, founder of London-based IT and telecoms business Optimity, believes business owners not hiring apprentices are missing a trick. As much as 10% of his 60-strong workforce has come through the apprenticeship route. “It’s hard to find highly skilled, affordable candidates in tech, so we develop talent in-house. Apprentices make loyal, skilled employees who have a positive impact on the whole team. They give us a competitive advantage,” he says.
Small firms rely strongly on on-the-job training, particularly for younger recruits. More than nine out of 10 apprenticeships offered by small companies are held by 16- to 24-year-olds, according to research from the Federation of Small Businesses . But the introduction of an apprenticeship levy in 2017, which changed the way the training schemes are funded, has resulted in a growth in higher level apprenticeships.
The levy was intended to boost employer investment in training and improve apprenticeship standards. A goal was set to achieve 3m apprenticeships by 2020. In fact, apprenticeship starts have fallen by a fifth since the levy was introduced, according to the Learning and Work Institute. This is because more expensive higher and degree level apprenticeships are being undertaken, often by older or existing employees rather than young people starting out. Critics predict the apprenticeship budget will be overspent this year as a result.
One specific gripe about the levy among small business owners is the requirement for 20% of training to take place away from the workplace. SME bosses also complain valuable management time is taken up by the apprenticeship process, while paying for the apprentice and finding the right training provider are further headaches.
However, about three out of four employers say improved productivity, better quality of product or service and higher staff morale were all effects of hiring apprentices, government research shows. Developing skills relevant to their organisation was the most commonly cited advantage.
Impey, who is also the FSB’s chair on apprenticeships, feels many business owners still labour under misconceptions about what hiring apprentices involves. “Apprentices do take an investment of time, but the benefits far outweigh that. And they needn’t be young recruits straight out of school. It could be existing staff or a way of training up your senior management team. You need an induction programme, but that’s part of being a good employer. Small businesses that engage with the apprenticeship system love it because they see a huge return on their investment.”
