The Cost of Living Crisis and Employer Demand for Level 2-7 Apprenticeships – FE News

The last twelve months have seen an encouraging recovery for apprenticeships after the terrible impact that the pandemic closures have had on new starts in the programme.

From recovery to stagnation

According to the latest official data, the 328,800 departures for the first eleven months of the 2021/22 academic year were 10.2% higher than the departures at the same time for 2020/21 and only 9.0% lower than the 361,400 declared at the same time for 2020/21. 2018/19 before the introduction of coronavirus restrictions. Housing starts increased at all levels and for all ages.

Another encouraging development is that while the Job Plan’s employer incentives have helped kick-start the recovery, their impact on housing starts has been minimal since January this year and housing starts for young people and at levels lower ones, where they initially made a big difference, continued to grow.

But while there will be a lag between what is happening now and the release of new data, warning signs suggest that startups may be on the verge of stagnating.

Falling demand from employers caused by rising business costs

It is important to remember that apprenticeships are an employer-driven program. It is therefore perhaps more accurate to refer to the impact of the overall increase in business costs caused by the increase in inflation and the cost of borrowing.

In the face of these, one of the first things employers are looking to reduce is their training bill, including apprenticeship. Training providers report that the planned recruitment of apprentices is now reduced, although we are still in the peak recruitment season.

After scrambling to fill vacancies all year, employers are now experiencing a turnover freeze. Businesses want to retain existing staff, for example by offering help with household energy bills and support for mental well-being. Retail and hospitality employers also need to support staff dealing with abusive customers as they work through their frustrations with the rising cost of living. The cost of staff support as well as the increase in salary costs inevitably have an impact on the budgets left for training.

outside vocational training

Another concern in the current circumstances is whether employers can release apprentices to meet training requirements away from work, particularly in the run up to Christmas. Program completion rates also suffer because some employers do not give their apprentices a final assessment once the apprentices have completed their training. If an employer is unable to adhere to the rules of the program, there is no point in committing to new hires.

Potential drop in demand from 16-24 year olds

Young people’s demand for a learning opportunity may also decrease.

As we have seen during the pandemic, they might prefer to pursue full-time studies or simply stay at home, as they feel this offers them more security than a job in a downturn. The 174,000 young people aged 16 to 24 who started an apprenticeship this year represent a big increase on last year, and they will have been attracted to the program by the usual advantages of earning money while learning and not to be saddled with a huge sum. student debt. It would therefore be very disappointing if housing starts for this cohort fell again.

Apprenticeship critics who argue that young people are exploited exaggerate their argument, not least because many of them assume that the minimum “apprenticeship pay rate” (see Figure 1) is the real wage of all young people. apprentices. Data published in the annual National Minimum Wage: Low Pay Commission Report paints a very different picture.

It is true that for apprentices aged 16-18, the median hourly rate is not significantly higher than the apprenticeship rate (estimates of £4.99 and £5.30 compared to the apprenticeship rate of 4, £81), but LPC figures show that for apprentices aged 19-20 the median wage is over £8 an hour compared to the national minimum wage of £6.83 for this age group. At 23, the median apprentice wage is well above the national living wage.

Nevertheless, it is reasonable, as many groups, including the UK Chambers of Commerce, have told LPC, to ask whether removing the apprenticeship rate would make the scheme more attractive to young people looking for a job. a job. There are also renewed fears that a recession could put downward pressure on apprentice wages, while a Prince’s Trust survey has just revealed that almost half (46%) of 16-25 year olds fear having no money for essentials this winter. .

Figure 1

For young people living at home (except in Wales), a parent is not entitled to Child Benefit for a child over 16 who is doing an apprenticeship. There are also work-related activity rules for claiming Universal Credit for those doing a part-time apprenticeship of less than 30 hours per week. The last thing needed is a shift in the system that results in parents discouraging their children from starting an apprenticeship.

Independent training providers

In good times and bad, it is the training providers who keep the wheels of the learning agenda turning and, like other businesses, they are facing huge challenges in the current crisis. Virtually no rate of learning standards funding to cover the costs of training and assessment has increased since 2017 and it is a dereliction of duty on the government’s part that it has been so slow to address this issue. The longer the neglect, the more supply at lower levels will be at risk, as many programs will simply not be sustainable. vocational training are one solution to address skills shortages in Britain. The Home Office is apparently willing to train employers to take advantage of a looser visa system, meaning employers will have less incentive to invest in training.

Recommendation 1

The government should review how the levy collected from employers in England is allocated through the apprenticeship scheme budget, ensuring that funding remains focused on apprenticeships only, but increases access to 16-24 years, small and medium enterprises and learning at Level 2 and 3 as well as Level 4 and above.

Recommendation 2

The DfE, ESFA and IfATE should recognize that the number of apprenticeship places and especially the quality of programs will only be preserved if an increase is applied to the funding rates of many standards at lower levels.

Recommendation 3

The government should accept that the “learning rate” for wages has become an unwelcome distraction. It should be abolished. The current minimum wage structure should apply to apprentices and any upgrading or restructuring in the future.

By Aidan Relf, ​​Skills Consultant

Series Overview

Day 1

friday 21 october

  1. Louise Murphy, Economist, Resolution Foundation: The cost of living and the energy crisis for households
  2. James Kewin, Deputy CEO, Sixth Form Colleges Association: The cost of living crisis and 16-19 year olds in full-time continuing education

Day 2

Saturday October 22

  1. Becci Newton, Director of Public Policy Research, Institute for Employment Studies: The cost of living crisis and 16-18 year olds in employment with apprenticeship
  2. Zach Wilson, Senior Analytics Officer and Andrea Barry, Analytics Manager, Youth Futures Foundation: The cost of living crisis and 16-24 year olds “not in full-time education”

Day 3

monday october 24

  1. Nick Hillman, Director, Higher Education Policy Institute: The cost of living crisis and full-time higher and postgraduate education
  2. Liz Marr, Pro-Vice-Chancellor – Students, The Open University: The cost of living crisis and part-time higher education in England

Day 4

tuesday october 25

  1. Steve Hewitt, Continuing Education Consultant: The Cost of Living Crisis: Access to Higher Education and Foundation Year Programs
  2. Sophia Warren, Senior Policy Analyst, Policy in Practice: The cost of living crisis, universal credit, jobs and vocational training

Day 5

Wednesday October 26

  1. Paul Bivand, Independent Labor Market Analyst: Economic inactivity of the over 50s, cost of living crisis and adult education
  2. Aidan Relf, ​​Skills Consultant: The Cost of Living Crisis and Employer Demand for Level 2-7 Apprenticeships

Day 6

Thursday October 27

  1. Mandy Crawford-Lee, Executive Director, UVAC: The cost of living crisis and employer demand for 4+ level apprenticeships and part-time technical training
  2. Simon Parkinson, Managing Director, WEA: The Cost of Living Crisis and Adult Community Learning

Day 7

friday october 28

  1. David Hughes, Managing Director, AoC: The Cost of Living Crisis and FE Colleges
  2. Jane Hickie, Executive Director, AELP: The Cost of Living Crisis and Independent Training Providers

Day 8

Saturday October 29

  1. Susan Pember, Director of Policy, HOLEX: The Cost of Living Crisis and Adult Education Providers
  2. Martin Jones, Vice-Chancellor and David Etherington, Professor of Local and Regional Economic Development, University of Staffordshire: The Cost of Living Crisis – Staffordshire University’s Response
  3. Chris Hale, Policy Director, Universities UK: The cost of living crisis and universities

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