The Real Costs And Benefits Of Apprenticeships

98% of employers state apprentices bring significant benefits to their businesses 

A new report "The Real Costs And Benefits Of Apprenticeships" published by apprenticeship and skills organisation, The St Martin’s Group, in partnership with leading awarding organisations City & Guilds and NCFE, has found that employers who take on an apprentice gain an early net financial benefit to their business of almost £2,500, despite common misconceptions over high costs.

  • Employers stand to gain a net benefit of at least £2,496 when taking on an apprentice even during their training period 
  • Survey of 1,000 HR decision makers reveals that 98% of apprenticeship employers experienced additional benefits to their business. 
  • Demand for apprenticeships is on the rise, as 60% of businesses surveyed reported they would consider employing an apprentice now or in the future. 

The findings of the report bring positive news for employers looking to expand headcounts and invest in training for new talent, as the research provides a comprehensive review into the benefits of apprenticeships to both businesses and individuals in the UK.

In a bid to increase participation in the workforce and promote sustainability, quality and growth in the apprenticeship sector, the report quantifies the real costs of hiring apprentices in the UK. Dispelling common myths relating to costs, time and complexities associated with apprenticeships, the report not only highlighted an early net gain of £2,496 for employers taking on apprentices but revealed additional value for employers.

As part of the research, 1,000 HR decision makers were surveyed, with 98% of businesses currently employing apprentices stating they bring additional benefits.

Of these, headline figures indicated:

  • 47% of respondents reported that apprentices help address skills shortages.
  • 39% of employers say apprentices offer a cost-effective labour source.
  • 40% of employers say apprentices provide value for money.
  • 33% of employers say apprentices improve diversity within their business.

The report emphasises that many of the additional upfront costs associated with onboarding apprentices can be recovered much earlier than anticipated. Coupled with this, the benefits apprentices bring increases as they become more skilled, meaning an employer’s average net benefit will continue to grow over time.

The benefits to the UK’s economic recovery that further investment in apprenticeships can have were also outlined, revealing those with apprenticeship qualifications outperformed the wider labour market in terms of unemployment. Between 2017 and 2020, the unemployment rate amongst those with apprenticeships averaged 2.5%, while that of the wider economy averaged 4.2% and graduates average stood at 2.8%.

The Government has provided funding and support to help invigorate the apprenticeship sector as it promises to play a pivotal role in the recovery of the job market. Recent funding and subsidies have been vital in consolidating the value of apprenticeships and encouraging more employers to embrace alternative routes for recruitment; the research found that 60% of businesses are considering employing apprentices now or in the future.

However, it is suggested that if these prospects are to be converted, the system will need to be easier to navigate and operate to overcome barriers that employers face.

Sector Reaction 

Gillian Keegan100x100Minister for Apprenticeships Skills Minister Gillian Keegan MP, expressed support for the findings:   

“It is brilliant news that this report shows that 98% of those surveyed recognise the significant benefits apprentices bring to their workplaces. Not only do employers set to gain financially from hiring an apprentice, but they also benefit from so much more including filling skills gaps and boosting diversity.

“Apprenticeships are fantastic way for businesses of all sizes to develop the talent pipeline they need for the future. There are over 625 high-quality, industry designed apprenticeships available at a range of levels including degree. To support more employers to take on apprentices we are offering a £3,000 cash boots for each new apprentice they take on until the end of September. Find out more about how you can recruit an apprentice at apprenticeships.gov.uk.”

David Marsh, Co-Chair of The St Martin's Group and CEO of Babington said:

“Apprenticeships are an incredibly valuable career pathway, and we are encouraged that the findings of this report demonstrate not only the net benefits to employers but also the employment prospects for those who complete apprenticeships.

"While Covid-19 has brought a range of unforeseen hurdles for the sector, the past 18 months have also shown how apprentices can help improve the resilience and flexibility of businesses across the country. This includes the vital role apprenticeships can play in closing skills shortages in sectors that are crucial to economic recovery.

"We have welcomed the Government's apprenticeship and skills initiatives in driving forward the growth in apprenticeships. However, to ensure employers and learners continue to reap the rewards, funding levels and wider support must continue, particularly for SMEs and areas of deprivation to help overcome any further barriers to participation.”

Robert Halfon 100x100Rt Hon Robert Halfon MP, Chair of the Education Select Committee, said:

“This report highlights the significant and important effects of apprenticeships for young people, and demonstrate why they should be seen as an excellent route for learners to take. Apprenticeships provide a ladder of opportunity for young people and this research demonstrates the positive impact they are having. I am also delighted to see there is such supportive data of the impact apprenticeships can have for a business, in terms of the return on investment, and the energy and enthusiasm businesses have reported when hosting an apprentice.

“It is important we keep up the first-rate work that has been done in recent years to push for greater support for apprentices, whether that be in school, through careers advice, supporting businesses to do so, or increasing the public’s awareness of apprenticeships as a viable and high-quality route for all learners.”

David Gallagher 100x100David Gallagher, Chief Executive of NCFE, said:

“Apprenticeships are a great chance to bridge the gap between education and employment, and it’s pivotal that they are used to open doors for those who might not otherwise have access to a wide range of opportunities.

“The findings of this report demonstrate that apprenticeships can benefit learners and businesses in tandem and should therefore be a fundamental part of education and skills provision in England. We must ensure that we are providing businesses with innovative solutions at this challenging time, while continuing to support learners from all corners of the country and guide them intro roles which provide high-quality training and set them up for the future.

“Looking ahead, capacity for funding needs to be increased where demand is growing so that everyone can pursue their preferred routes. Therefore, we would like to see the report’s recommendations come to fruition to deliver this for learners and businesses alike.”

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