Looking at Lifetime Salaries
These past weeks, students up and down the country will have been awaiting A-Level results with baited breath, knowing their grades could have a large bearing on their future and their careers.
To many, university might seem like the best and most obvious route – indeed, recent research by Barclays found that 61 per cent of young people in the UK apply to university on ‘autopilot’ without considering other options or questioning whether it really is best for them. Young people cited worries of disappointing parents, feeling like university is the only route to a good job and a lack of information on other options, such as apprenticeships, as key reasons for applying. This is why it is so important that young people feel they have all the information to make an informed decision for their future, as university isn’t a ‘one size fits all’.
There are still many misconceptions that surround these alternative options; for example, many believe that you need a degree to be able to earn a good salary and get ahead in the world of work.
However, working with the Centre for Economics and Business Research (Cebr), Barclays has published a report, “Productivity and Lifetime Earnings of Apprentices and Graduates”, which reveals that the average gap in lifetime earnings potential between apprentices and graduates is actually just 1.8 per cent.
The average ‘Lifetime Earning Premium’ (LEP) difference for the two study paths stands at just £2,200 and in some sectors, apprentices’ LEP outstrips that of graduates by over 200 per cent, including Arts, Media and Publishing and Agriculture, Horticulture and Animal Care.
The figures in the report show quantifiably for the first time that apprentices are getting a ‘hidden pay cheque’ through earning while working that is comparable to or in some cases higher than university graduates.
This bonus means they can fast track themselves to home or car ownership – as well as through their careers without worrying about long-term student debt.
The report also rebukes the common misconception that apprenticeships are only relevant for those looking for careers in vocational or manual industries; Business, Administration and Law accounted for the most apprenticeship starts in 2014/15, and there were over 89,600 apprentice starts within the Retail and Commercial Enterprise Sector.
With university applicants facing a challenging and unpredictable financial landscape – with maintenance grants abolished and rising tuition fees putting university degrees out of reach for many – we also predict that apprenticeships are set to grow in uptake as they are available across more sectors and at different levels, offering people a genuine and viable alternative to university.
Indeed, the uptake of apprenticeships has more than doubled in the past decade, with almost half a million starts in the 2014/15 academic year.
More and more young people are waking up to the fact that worthy and viable alternatives to university exist and it is possible to gain skills and prepare yourself for the world of work without taking on debt.
Furthermore, a new ‘Degree Apprenticeship’ was introduced in 2015 that allows apprentices to earn a full university equivalent qualification in their chosen sector without paying the ever-increasing university tuition fees.
At Barclays, we support Degree Apprenticeships and have a target of offering at least 50 places on their scheme in 2016. Additionally, the Apprentice Levy introduced by the UK government this year is set to create three million apprenticeships in England by 2020. This shows that now is the time to start seriously considering taking up an apprenticeship.
With increased tuitions fees driving up the cost of university and putting it out of reach to some, Barclays forecast that apprenticeships, particularly Degree Apprenticeships, will become increasingly more important to the UK economy, and predict exponential growth in their uptake in the near future. We have seen enormous productivity and value in bringing apprentices into our business and strongly encourage others to follow our lead.
I firmly believe that apprenticeships are a genuine alternative to university that should be considered a viable and valuable career path, and the figures released in our report strongly back this up.
Today, apprenticeships are available in a huge range of sectors and levels and are open to everyone, regardless of age, social background or qualifications and are fast becoming one of the most worthwhile career paths allowing people to earn and learn at the same time.
Mike Thompson, Head of Apprenticeships at Barclays