Employers would benefit from school leavers starting apprenticeships lasting for several years, according to a new study released today by the Education Policy Institute (EPI), German think tank Bertelsmann Stiftung and the JP Morgan Chase Foundation.

The report, by Professor Stefan Wolter, chair of the OECD expert group on vocational education and training, and Eva Joho, an economist at the University of Bern, says that England can learn from other countries with traditions of apprenticeships.

Concerns among many companies about the costs of training apprentices remain a barrier to growth in apprenticeships, says the report.

Firms need to be convinced “that apprenticeship models are a potential win-win-win situation, creating benefits not only for students and the public purse but also for the training firms”.

Swiss approach

The report focuses on the Swiss model of apprenticeships - which are targeted at school leavers and typically last for three years. Drawing on cost-benefit data from around 2,500 Swiss training firms as well as the UK’s labour force survey, the report looks at how the Swiss approach could work if applied to England.

It states: “The chances for firms of breaking even at the end of the training period of an apprenticeship are highest for three-year programs assuming that the apprentices are younger than 19 years, because minimum wages increase substantially afterwards”.

It adds: “Therefore, apprenticeships for young people as an alternative to school-based general education or school-based vocational training may produce the best outcomes from the perspective of firms”.

It looked at 10 occupations: bricklayers, car mechanics, care workers, commercial bank employees, cooks, electricians, financial analysts and advisors, IT/software developers, retail cashiers and waiters.

Informing the debate

The report comments: “Most firms in England in most of the occupations for which we run our simulations will only break-even (having no net-costs of training) if they pay apprentices’ salaries that are either close to or even below current minimum wages”.

However, even if companies paid apprentices more than the minimum wage “any costs arising in the near term would eventually be compensated by saving on hiring new workers from outside the firm” providing the apprentices were kept on.

The report, which comes on the first anniversary of the apprenticeship levy, claims its findings “could help steer English policymakers and employers in more evidence-based directions” so that “England’s large investment in this area is properly informed by evidence and more likely to yield positive returns”.

It adds: “One of the major challenges for a successful expansion of an apprenticeship training system in England that will create a win-win situation for firms and apprentices is a quality improvement in programs”.

Mixed reaction

David Laws, executive chairman of the EPI, commented “This report brings some much-needed evidence to debates on the future of apprenticeships policy. In learning from countries with successful training programmes, England can ensure that a sustained expansion in apprenticeships sees positive returns for both employers and young people”.

Responding to the findings, Teresa Frith, senior policy manager at the Association of Colleges, said: “While the report makes some good points, it does not consider any of the existing English reforms and so overlooks the second use to which apprenticeship funding has been put, for example, to progress those already in work”.

Simon Ashworth, chief policy officer at the Association of Employment and Learning Providers, said: “While AELP supports apprenticeships at all ages, we particularly welcome the report’s findings on the returns from starting programmes at a young age”. However, he added: “We are not convinced at all by mandating a longer time-serving element for all apprenticeships, not least because it fails to recognise that in terms of competence, some apprentices progress more quickly than others”.

Anne Milton, apprenticeships and skills minister, said: “Our reforms have fundamentally changed apprenticeships for the better […] they must last a minimum of a year and now give apprentices a recognised qualification understood by future employers and are a stepping stone to a successful career”.

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