Apprentices deliver clear RoI, new research shows

Companies that recruit apprentices can see a return on investment (RoI) as soon as year two of the apprenticeship programme, according to new figures from The Electrotechnical Skills Partnership.

Using scenarios based on low, medium and high charge-out rates for unskilled and skilled work, the overall net costs and benefits of apprentice recruitment have been projected.

At the lowest rates, an apprentice delivers a net benefit of around £11,400 over the four years and starts to make a return in year three of the apprenticeship. At higher charge-out rates, the apprentice begins to pay for themselves in year two and by the end of year four has created a net total benefit of just over £34,000 at medium charge out rates and £56,700 at high rates.

Research specialist Pye Tait Consulting carried out the RoI analysis on behalf of TESP, after speaking to twenty companies of different sizes and specialisms. Each company was asked about the weekly wages of apprentices over the course of the apprenticeship, as well as additional costs for course fees, travel, equipment, in-house training and the time spent by supervisors and other skilled staff for mentoring and support.

The calculations take into account the weekly costs of an apprentice and supervision, the percentage of time spent on supervision and the increasing amount of time the apprentice spends completing the work of a qualified electrician.

With 95% of training costs in England now funded by the Government for apprentices of all ages, these new figures provide a strong case for employers to consider apprentices as a means of bringing new skills into the business.

For smaller companies in particular, who often struggle with the resource for managing the apprenticeship and initial impact of productivity, TESP believes these projected returns demonstrate that, with the support of a quality training provider, an apprenticeship will eventually pay off.

“Although it is a commitment, which can be daunting to small businesses in particular, investing the time and resource into apprenticeships will ultimately drive business growth,” said Ruth Devine, Managing Director of SJD Electrical and Chair of TESP. “As a small business owner I have experienced first-hand that, over time, apprenticeships increase capacity and strengthen the business culture.

“A strong relationship with a quality local FE college or training provider is vital however. Industry organisations such as the TESP partners are also happy to help and give advice. When I first started at SJD, I found the supportive network of fellow ECA members invaluable to navigate some of the challenges of managing apprentices and providers; it’s always good to benefit from others’ experience.”

Leading apprentice training providers JTL and Focus Training also welcomed the release of the RoI figures to support their employer recruitment efforts:

“The report is really helpful to us as a training provider, we’ve never been under any illusion about the value of apprentices, but the analysis will help us to convince employers of the tangible benefit to taking on an apprentice,” commented Liam Sammon, JTL’s Director of Learning & Innovation.

Bernard Collins, Curriculum & Quality Director at Focus Training Group, added: “It is great to see evidence that having an apprentice not only delivers an individual who fits in with the companies’ ethos and work ethic but also provides an appreciable financial return, even after making allowances for support and expenses.”

The RoI figures and full LMI report can be downloaded from the Labour Market Intelligence section.

Over 12,500 electricians needed for new technology skills demand

A new labour market report on the electrotechnical industry has estimated that between 12,500 and 15,000 additional skilled electricians will be needed over the next five years to accommodate forecasted growth.

Within this figure, the research suggests that even if an extra 5000 new apprentices qualified by 2023 (representing a 33% increase), this would still leave a shortfall of 7,500-10,000 electricians needing to be sourced from elsewhere. These workforce predictions are based on meeting demands solely due to sector expansion and do not cover the additional staff turnover occurring from leavers and retirement.

Emerging and future technologies are expected to be major drivers for this increase in skills needs over the next decade, with SMART technology, e-mobility and Wi-Fi technology named as the top-three forces for change. Other areas that are likely to influence the sector include changes to regulations and public policy in areas such as energy efficiency and fire safety.

Whilst the largest proportion of the UK workforce is between 25 and 49 years old, England and Wales have only around 15% of their workforce under the age of 25, compared to 24% for Scotland and Northern Ireland.

Commissioned by The Electrotechnical Skills Partnership (TESP) and co-funded with industry charity National Electrotechnical Training (NET), the report is the first to provide an in-depth analysis of electrotechnical skills needs in over 10 years. Research specialist Pye Tait compiled the report after surveying almost 450 electrotechnical companies, with around 19,000 employees.

The report confirmed that apprenticeships are still highly rated across the sector and, based on up-to-date calculations published in this research, there is clear potential for a return on investment for those who recruit apprentices.

However, the number of apprentices currently recruited each year is insufficient to meet projected demands and employers identify various barriers to further recruitment, including some candidates’ attitudes and behaviours. They believe more needs to be done to widen the potential pool of applicants and the calibre and diversity of new entrants, for example through improved industry engagement with colleges and schools, and further development of alternative routes into the industry for college leavers, career changers and others from older age groups.

In response to the report and its findings, TESP is now developing an industry action plan to tackle the issues and recommendations raised. Work is already underway in several areas, including the development of new careers resources, promotion of industry-recognised qualifications and activity to forge closer ties between industry, schools and further education. The action plan will also take account of the large numbers of small and micro businesses in the industry, including sole traders, and how these might be better supported in future.

Ruth Devine, chair of TESP and managing director of SJD Electrical, said: “The TESP survey – the first of its kind in over a decade – offers not only a useful snapshot of where the electrotechnical industry and its skills-base are now but also a vital insight into the scale of the challenges we face in the immediate future. The organisations which form TESP all have a crucial part to play in shaping and coordinating the industry’s response to these challenges, and the priorities for action defined in the survey report represent an important first step. Future success will, however, also hinge on the active participation and support of other stakeholders, including Government departments and agencies, clients, training providers, other sector bodies and of course individual businesses – especially the small and micro businesses who make up our industry’s core.”

The Electrotechnical Skills Partnership (TESP) is a not-for-profit industry partnership formed by the ECA, Joint Industry Board (JIB), National Electrotechnical Training (NET), SELECT and Unite the Union to support electrotechnical employers to develop and drive the industry’s skills agenda.

Download the full LMI report

TESP partners involved in the project commented: 

“ECA welcomes the recommendations from this large and extremely significant survey. Its findings will strongly inform our policy development and implementation, both for ECA and as a leading partner in TESP. Concerns expressed about the sector’s ability to attract enough high-quality new entrants support our strategy of ramping up our schools and college engagement with fresh thinking.” Andrew Eldred, ECA Director of Employment & Skills

“This valuable report by Pye Tait gives the JIB and TESP an excellent platform to develop initiatives and projects which will take the industry forward. However, the industry will not be able to recruit the 12,500 to 15,000 additional electricians it needs over the next five years without much higher levels of direct employment. Clients and main contractors need to do more to encourage direct employment and the Government must also play its part by adopting policies which drive down levels of false self-employment. Apprenticeships and programmes to upgrade the skills of individuals already working in our industry are the key to success but they cannot be effective unless direct employment is the norm.” Steve Brawley, JIB Chief Executive

“As the industry charity responsible for the assessment of competence, NET is delighted to have supported this project which fills a big gap in LMI for our sector and sets out a clear picture of challenges and status. It’s now important that we continue to build on this, explore the findings from the report in more detail and maintain an up-to-date profile of the industry’s skills needs. The NET board is fully committed to this as an ongoing project and we look forward to more work on this in the future.” Carolyn Mason, NET Chief Executive

“The data insights divined from this report will help SELECT and its TESP partners focus attention on how best to build a high-skill, high-reward profession for the Industry. It signals a period of impending change fuelled by a range of short term and longer-term drivers. The information collated in this report will enable employers to respond to these strategic drivers and help them to meet increasing demand by improving performance and productivity. It also provides employers with an insight into their workforce’s abilities, ambitions and needs.” Fiona Harper, SELECT Head of Employment Affairs

“This comprehensive report identifies key challenges and opportunities facing the industry, including the importance of the need for increased apprentice recruitment and investment in quality apprenticeships. The cost benefits apprentices bring to employers and society are clear.”

“As well as increasing opportunities for young people and other workers to enter the industry into highly skilled, well-paid jobs and apprenticeships, the need to bridge skills gaps and address the continuing professional development of the existing workforce are other important areas that the report identifies in detail.”

“Unite the Union, therefore, look forward to working with the other industry stakeholders on The Electrotechnical Skills Partnership in order to ensure that the electrotechnical workforce is at the forefront of delivering rapid paced technological change for the benefit of society, the industry and the UK as a whole.” Ian Woodland, Unite the Union National Officer for Construction

Major new Labour Market Research project – coming soon

Electrotechnical employers will soon be asked to input to a comprehensive labour market research survey, to build an up-to-date picture of skills issues across all sectors of the industry.

TESP is carrying out this work, in conjunction with industry research specialists Pye Tait. Using the research findings, we will explore how roles and occupations are changing, consider the impact of new and emerging technologies and help to keep training relevant to industry needs. We hope you can support this important project for the industry – to register your interest visit https://www.snapsurveys.com/wh/s.asp?k=153674242266

UPDATE: REPORT AVAILABLE SOON – this project has now been completed and the report will be published in early April.