Skills Funding Agency
UK businesses could gain additional £18bn revenue from apprenticeships
A new report from the Centre for Economics and Business Research (CEBR) has revealed that consumers prefer to do business with businesses employing apprentices.
The report, launched to mark the start of National Apprenticeship Week 2015, is part of a national drive to promote the benefits of apprenticeships. Events across the country will celebrate the success of apprenticeships that have been transformed over recent years so they are more responsive to the needs of employers and learners.
The Benefits of Apprenticeships to Businesses study finds that offering apprenticeships were perceived by two-thirds of the public as contributing to society and providing opportunities for young people, with 5 million consumers more likely to make a purchase from an apprentice employer.
One in four consumers say they would go as far as even paying more for goods and services offered by companies that employ apprentices. Aggregated across key sectors in the economy, this price-premium would equate to an additional £18 billion a year in consumer spending.
National Apprenticeship Week will also see the launch of a new mentoring service for small businesses interested in taking on apprentices will be launched by small business champion Jason Holt CBE.
Yesterday’s research also highlighted a number of other financial benefits firms employing apprentices can enjoy, such as increased long-term productivity. A typical apprentice delivers productivity gains of over £10,000 per annum, rising to almost double that in the construction and planning, and engineering and manufacturing sectors.
Moreover, the research demonstrates that even before an apprentice is fully qualified, many businesses will see economic benefits of offering apprenticeships. The figures show that while training, each apprentice in England is estimated to deliver an average positive net gain of £1,670 per annum to their employers.
Business Secretary Vince Cable said:
In launching National Apprenticeship Week we are celebrating the 2.1 million apprenticeship starts since 2010 and the positive impact they are having on businesses around the country.
The benefits of apprenticeships are clear - they make a vital contribution to the economy, boost business productivity and give people the skills they need to get on in the world of work.
As this research shows, there has been an important shift in the attitudes towards apprenticeships with businesses, consumers, and young people recognising the significant opportunities they can offer.
Skills Minister Nick Boles said:
This research is further proof that apprenticeships deliver for businesses as well as providing life changing opportunities for young people.
National Apprenticeship Week gives us the opportunity to raise the profile of apprenticeships and traineeships, and to celebrate the important role they play in our economy. I encourage people of all ages and employers of all shapes and sizes to find out more about apprenticeships and how they can deliver for them.
The CEBR report examines the benefits that apprentices offer businesses both while they are training and long after they have completed their apprenticeships:
- A quarter (25%) of consumers said that they would be more likely to pay more for goods and services offered by businesses employing apprentices, with the most popular services to pay a premium on being a plumbers’ visit, a meal or a haircut
- Consumers are prepared to pay between 1.2% and 2.0% extra as a price premium –the aggregate gain in consumer spending if these premiums are realised is £18 billion per annum
- The benefit to an employer of hiring an apprentice is the value of the economic output produced by an apprentice, plus any subsidies received, less wage and training costs. This equates to an average of £1,670 per annum for the average apprentice in England but can rise as high as £13,824 and £9,721 for team leadership and management, and business administration apprentices respectively
- Productivity gains from employing an apprentice long-term average at £214 per week, ranging from £83 in the retail sector and £114 in health, public services and care, up to £401 in construction and planning, and £414 per in engineering and manufacturing
Scott Corfe, co-author of the report The Benefits of Apprenticeships to Businesses, said:
Previous Cebr research has demonstrated the impact of apprenticeships to the economy and the country as a whole, but this report proves that hiring apprentices has a hugely positive impact on employers themselves. Not only do apprentices contribute to the productivity of a company from day one, but consumers are more likely to switch to brands and firms that employ apprentices.
As part of National Apprenticeship Week, employers are being encouraged to share their reasons for employing apprentices on social media, with #100reasonswhy.
HR and Training Manager, Steve Starling from Suffolk based JEB Engineering Design has already taken part and commented:
We’ve been recruiting apprentices for over 35 years. Many staff members in senior positions here started out as apprentices, including our Managing Director. We believe our future success is dependent on a strong, sustainable apprenticeship programme.
To find out more about National Apprenticeship Week go to www.gov.uk/naw2015.
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