In recent weeks, there has been much controversy over the slowdown in the number of apprenticeship starts and the potential connection with the change in the funding system. The context is one in which there is a government target to have 3 million apprenticeship starts between 2015 and 2020. In the light of recent controversies, this briefing note is a synopsis of findings that are mainly from published CVER research, since its inception in 2015.
We first explain what an apprenticeship in England is (Section 2). An apprenticeship is usually thought of as a programme of work and study for young people as they transition from full time education into the labour market. This is not true for about half of those starting an apprenticeship in England, who are over 25 years of age.
Most of these people are already working for their employer before they start an apprenticeship. We discuss changes over time in Section 3. Since 2008 (and more especially from 2010), there has been a huge rate of growth in apprenticeship starts. This has been driven by starts among those aged 25+ (from zero in 2007) and to a lesser extent among those aged between 19 and 24. The number of apprenticeship starts for young people aged 16-18 has been fairly stable from 2003 to the present time. This section also documents that starts don’t equal completions. It is estimated that in the 2010-2015 Parliament, the 2.4 million reported as starting an apprenticeship translates to between 1.5 and 1.7 million achievements. We also discuss very recent changes, up to data released in 2017/18. Although there has been a fall in apprenticeship starts, the composition of apprenticeships has also changed, with Advanced and Higher Apprenticeships accounting for a larger share than previously. This complicates the interpretation of a simple count of apprenticeship numbers since the extent of the investment depends partly on the level of the apprenticeship.
In Section 4, we document that there can be a trade-off between quantity and quality. We show this using the 2012 reform that mandated a minimum duration of a year for apprenticeships. Although this led to a reduction in apprenticeship starts and increased the drop-out rate, it appears to have improved the job matching of young people to available employment opportunities. This example shows that efforts to improve quality can actually involve a reduction in apprenticeship starts.
One way to gauge the ‘value’ of apprenticeships is to evaluate whether they lead to an earnings premium in the labour market in subsequent years (reflecting higher demand by employers relative to supply). In Section 5, we summarise our findings for young people who did their GCSEs in 2003 and start an apprenticeship sometime after that. We follow them in administrative data through their education and into the labour market. We summarise the results from an evaluation of the earnings premium attached to starting an apprenticeship. This is estimated when the cohort is aged 28 (in 2015). There is a positive earnings premium on average from undertaking an apprenticeship, after taking account of many other confounding factors. However, there is huge variation in the earnings premium depending on the level of the apprenticeship as well as the sector. There are some apprenticeships where the earnings premium is very high – such as Advanced Apprenticeships in Engineering (where the premium at age 28 is comparable to doing an Engineering degree in university). At the other extreme, there are sectors which have a negligible or lower premium at age 28 compared to alternatives for people educated to the same level. This includes an Apprenticeship in Service Enterprises (such as hairdressing) and Advanced Apprenticeships in Childcare. The different premia attached to different sectors combined with the different choices made by men and women lead to a huge gender earnings gap among men and women who have undertaken an apprenticeship. The very different ‘value’ attributable to different apprenticeships conditional on their sector and level again calls into question whether a numerical target focused on apprenticeship starts is appropriate.
Over the last ten years, the increase in the number of apprenticeship starts has been driven mainly by those over 25 years of age (and to a lesser extent those aged between 19 and 25). In that many of these apprenticeships are ‘conversions’, it would seem unlikely that they would have the same added value to individuals as compared to apprenticeships that facilitate transition to a skilled job in the labour market. Even when we investigate the ‘value’ of apprenticeships to young people, we find a great deal of variability by sector and level. This implies that the value of a given number of apprenticeship starts depends on their composition. Furthermore, efforts to improve quality can have a direct impact on quantity – for example, stricter standards can mean that ‘low quality’ apprenticeships are not offered in the first place. One can increase investment in quality apprenticeships (i.e. paying attention to the level and context) or increase the number of apprenticeships. For given resources, a higher weight placed on the former must imply a smaller rate of growth in the number of apprenticeship starts.
Chosen excerpts by Job Market Monitor. Read the whole story at Apprenticeships in England: what does research tell us?