Monday, 10 March 2014

Local firms who take on an apprentice and get a £1,941 boost

I want to encourage more businesses to take on an apprentice, after new research revealed the extent of the benefits involved.

Every time a local company hires an apprentice, their bottom line gets an average boost of £1,941. This happens immediately, while the apprentice is being trained, and represents the benefit after typical wage and training costs for the North West are deducted.

The number of apprentices has increased rapidly since the National Apprenticeship Service was created in 2009. Despite this, surveys show that 60% of small businesses are missing out because they don’t know enough about how apprenticeships work. Many assume that they are difficult to administer and will involve a short-term cost.

Last year, 1,440 young people and adult learners started an apprenticeship in Hyndburn. That helped local businesses by a total of £2.8m in 2012/13.

The new research was commissioned by AAT, which has pioneered apprenticeships in accounting. Non-traditional areas like accounting now make up the majority of apprenticeships, demonstrating the huge range available.
Jane Scott Paul, the Chief Executive of AAT, welcomed the news saying;“I am delighted that Graham Jones MP is encouraging more companies to employ an apprentice. Far from being a cost, apprentices bring benefits straight away.

“It’s really important that employers know there are apprenticeships for all shapes and sizes, including those in non-traditional sectors like accounting and law. That’s how apprentices boosted UK firms by £1.8 billion last year.”
I would agree. If they don’t have one already, every local business in Hyndburn should consider employing an apprentice. Apprenticeship starts increased massively after the creation of the National Apprenticeship Service in 2009, but there is a danger that progress could stall unless more companies hear the message. We can do better for our young people and adult learners.

This is a chance for firms to give back to the community – and by giving local people a chance, they will also be boosting their bottom line.

Notes to editors

1.     The research was produced for the Association of Accounting Technicians (AAT) by Cebr, with data on the net benefits for each region and each Parliamentary constituency in England. A report on the national findings was released on 28 February 2014. It is available on AAT’s website: www.aat.org.uk.

2.     Cebr is an independent economics consultancy established in 1992 that provides macro and microeconomic research and advice to businesses across a range of sectors, including transport, energy, retail, property and information technology. Cebr undertakes quantitative research using a suite of computer-modelling tools and qualitative methods.

3.     The gain to an employer of hiring an apprentice can be summarised as:
Employer gain = apprentice output + apprentice subsidies – apprentice wages – apprentice training costs

4.     The average net benefit delivered by an apprentice varies according to the type of apprenticeship (which ranges from Team Leadership and Management to Hairdressing) and the level and related cost of training involved.

5.     Cebr calculated the average organisational net benefit from hiring an apprentice in 2012/13 by estimating:
o    Average apprentice wages in 2012/13.
o    Average training costs in 2012/13.
o    Economic output produced by an apprentice in 2012/13.

6.     To estimate apprentice wages Cebr drew on data in the 2011 and 2012 BIS Apprenticeship Pay Surveys. The wage rates have been uprated to give a 2012/13 figure.  Cebr also used data in the 2012 BIS Apprenticeship Pay Survey on average contracted hours for apprentices.

7.     The largest component of training costs is time spent by the employer providing on-the-job training. Cebr calculated these implicit time costs by using data in the ONS Annual Survey of Hours and Earnings (ASHE) on the wage costs of employees in different sectors/occupations in the economy.

8.     Economic output for an apprentice has been estimated using both wage data in the ONS Annual Survey of Hours and Earnings and data on economic output and employment costs provided in the ONS Annual Business Survey (ABS). The ABS has enabled Cebr to estimate a relationship between economic output and employment costs in different sectors of the economy, including the economic output produced by an apprentice. Estimates have been adjusted to reflect the “productive capacity” of an apprentice – the extent to which an apprentice can replicate the tasks undertaken by a fully qualified worker. The productive capacity estimates have been based on existing research – in particular McIntosh (2007), “A Cost-Benefit Analysis of Apprenticeships and Other Vocational Qualifications”, Hogarth and Hasluck (2003), “Net Costs of Modern Apprenticeship Training to Employers” and Hogarth and Hasluck (2008), “The Net Benefit to Employer Investment in Apprenticeship Training”.