The Net Costs and Benefits of Apprenticeships in

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					Employer Investment in the
     Health Sector

  Presentation to the NHS Employers: Get Britain Working &
              Apprenticeship Network Meeting
                      6th December 2012

                       Terence Hogarth
             Institute for Employment Research
                    University of Warwick
    The Fifth Net Benefits of
  Training to Employers Study
• Since the mid 1990s a series of studies have been
  conducted to identify how much employers invest in
  workplace training
• The studies have looked at Apprenticeships across a
  common set of sectors: engineering, construction,
  retailing, etc.
• Since the mid 2000s the studies have also sought to
  identify the financial benefits to the employer (generally
  show that employers recover their training costs over one
  to two years)
• Fifth Net Benefits Study was extended to look
  Apprenticeships in the health sector
Net Benefits of Training in the
       Health sector
The health sector identified as one sector with potential to
increase take up of Apprenticeship. The health sector study
addressed the following questions:
i. Why do employers in the health sector invest in
     Apprenticeships?
ii. Where employers invest, what is the size of that investment?
iii. To what extent is employer participation in Apprenticeships
     sensitive to the level of public funding?
iv. Over what period are employers’ training costs recouped?
v. What benefits do employers derive from Apprenticeship
     training?
                       The Method
•       24 employer case studies of where workplaces (mainly
        hospitals) had taken on an apprentice
•       Conducted across four SHAs
•       Assessed three broad frameworks:
    •      Clinical support (mainly nursing support)
    •      Business Administration
    •      Engineering
•       Results indicative based on relatively few, in-depth
        observations
                                                        Apprenticeship Starts in
                                                         Health and Social Care
                                                                                                                                                            600,000
                                               70,000
Health and Social Care Apprenticeship Starts




                                                                          Health and Social Care
                                                                                                                                                            500,000
                                               60,000
                                                                          Grand Total




                                                                                                                                                                      All Apprenticeship Starts
                                               50,000                                                                                                       400,000


                                               40,000
                                                                                                                                                            300,000

                                               30,000
                                                                                                                                                            200,000
                                               20,000

                                                                                                                                                            100,000
                                               10,000


                                                   0                                                                                                        0
                                                        2002/3   2003/4     2004/5      2005/6     2006/7   2007/8   2008/9   2009/10   2010/11   2011/12
      Health Specific
   Apprenticeships Starts
                 Health Dental Nursing                                                                    2,190
                                                                        820

     Health Clinical Healthcare Support                                                           1,870
                                                                  660

              Health Pharmacy Services                                  850
                                              30

    Health Healthcare Support Services                                  830
                                                    180

                  Health Optical Retail            120
                                                   120

Health Maternity and Paediatric Support         120
                                              40

           Health Perioperative Support        70
                                              30

                Health Emergency Care          60
                                               60

              Health Pathology Support        50
                                              30
                                                                              2011/12   2010/11
Health Allied Health Profession Support        50
                                              20

                                          0               500        1,000        1,500         2,000         2,500
                                                                Number of Apprenticeship Starts
        Why Employers Invest in
           Apprenticeships
Principal Reasons:

•   Establishing a vocational pathway into several occupations (principally where Level 2
    and 3 qualifications are required but with an expectation that Apprenticeships will
    eventually be delivered at Level 4)
•   Widening the pool of people who might enter into employment in the NHS
•   A means of attracting more young people into the sector given the ageing of various
    Trusts’ workforces
•   Corporate social responsibility and a need to ensure that young people, in particular,
    have access to high quality training whilst being in employment
•   Providing existing employees with a structured learning programme leading to Level
    2 and 3 qualifications as part of their continuing professional development

But a general sense that Apprenticeships were on trial and employers
needed to be sure that Apprenticeships were good value and met the needs of
the organisation
    Estimating Employer
Investment in Apprenticeships
                                                 Year 1   Year 2   Year ...n   Total
       Total number of apprentices or
       trainees
       Number of apprentice or trainees who
       drop-out without completing
       Apprentice or trainee salary (£ p.a.)
       Salary of Fully Experienced Worker
       (£ p.a.)
       Trainee productivity (% of skilled
       workers)
       Supervision (per apprentice or
       trainee)
       % of Training Manager's time spent
       training
       % of Line Manager's time spent
       training
       % of Supervisor's time spent training
       Training Manager's Salary (£ p.a.)
       Line Manager's Salary (£ p.a.)
       Supervisor's Salary (£ p.a.)
       Total training costs per
       apprentice or trainee (£)
       Costs of recruiting the apprentice or
       trainee
       Course fees
       Supervision costs
       Apprentice or trainee salaries
       Employer's NI contributions
       Administrative costs
       Total cost
       Total training benefits per
       apprentice or trainee (£)
       Apprentice or trainee product
       Other income (please specify)
       Total benefit per apprentice or trainee
       Net cost per apprentice or
       trainee
       Net Cost including drop out
Estimate of Costs at Level 3 in
      Nursing Support
                                                                               Total
     Background Information
     Drop out rate (%)                                                             0.5%
     Apprentice salary (£ p.a.)                                                 £16,500
     Salary of Fully Experienced Worker + NI (£ p.a.)                           £22,100
     Apprentice productivity (% of skilled workers tasks undertaken by
     apprentice)                                                                   83%
     Supervision (per apprentice)
     Total labour costs of supervision (including employer NI contributions)     £5,800
     Total training costs per apprentice (£)
     Costs of recruiting the apprentice                                            £100
     Course fees                                                                   £450
     Supervision costs                                                           £5,800
     Administrative costs / Other costs                                            £300
     Apprentice salary (including Employer NI)                                  £17,850
     Total cost                                                                 £24,500
     Total Cost / Benefit to the Employer per apprentice
     Apprentice product                                                         £18,350
     Other income (please specify)                                                     £0
     Total benefit per apprentice                                               £18,350
     Net cost per apprentice                                                     £6,150
     Net Cost including drop out                                                 £6,200
Estimate of Costs at Level 2 in
      Nursing Support
                                                                               Total
     Background Information
     Drop out rate (%)                                                             5.8%
     Apprentice salary (£ p.a.)                                                   £7,800
     Salary of Fully Experienced Worker + NI (£ p.a.)                            £15,750
     Apprentice productivity (% of skilled workers tasks undertaken by
     apprentice)                                                                       85%
     Supervision (per apprentice)
     Total labour costs of supervision (including employer NI contributions)      £2,700
     Total training costs per apprentice (£)
     Costs of recruiting the apprentice                                                £650
     Course fees                                                                       £550
     Supervision costs                                                            £2,700
     Administrative costs / Other costs                                                £700
     Apprentice salary (including Employer NI)                                    £7,900
     Total cost                                                                  £12,500
     Total Cost / Benefit to the Employer per apprentice
     Apprentice product                                                          £13,350
     Other income (please specify)                                                      £0
     Total benefit per apprentice                                                £13,350
     Net cost per apprentice                                                      - £850
     Net Cost including drop out                                                  - £750
              Summary of Costs
.
            Broad Framework                    Level 2              Level 3

     Clinical Support                          -£750               £6,200

     Business Administration                  -£1,700              £5,400

     Engineering                             £10,100




Where existing employees are being trained costs to the employer are lower
  Employer Sensitivity to Costs
What would happen if employer costs increased?
• There was no scope for reducing wages because these would need to be
   centrally negotiated. No scope to reduce further training wages
• Little appetite to find an alternative training provider with lower costs –
   in most instances employers had shopped around for best deal
• Little scope to deliver training more efficiently
• Passing on more of the cost to the apprentice via training loans was not
   considered feasible since many of the apprentices were in relatively low
   paid jobs
• There might be scope for training to existing employees to be delivered
   through other programmes - including ones which did not lead to an
   externally accredited qualification
• Some might focus attention on apprentices who would attract full
   funding
Overall impression that training volumes would decrease if employer costs
increased substantially
    Summary of Payback Periods
.
      Broad Framework           Level 2    Level 3
                                             1 year,
      Clinical                   N/A
                                           7 months
      Business Administration     N/A        1 year
                                 1 year,
      Engineering
                                1 month
Benefits Derived by Employers
    in the Health Sector
•   Apprenticeships favourably regarded by employers
•   Employers felt they were able to widen the pool from which they
    recruited
•   Recognition that Apprenticeships provided a high quality training entry
    pathway where training can be readily monitored guaranteeing that it
    meets professional standards and organisational needs
•   Apprenticeships opened up the vocational pathway into clinical support
    roles – this may allow progression to Level 4 eventually
•   Nearly all apprentices completed their training
•   Even if not able to offer a job on exit from the Apprenticeship within the
    training workplace – usually employment found somewhere in local
    health service so adding to the overall pool of skills
•   The cost of Apprenticeships relatively modest and recouped by
    employers relatively quickly
•   High completion rates and costs quickly recouped suggests a low risk
    investment for the employer
Benefits Derived by Employers
        Across Sectors
The Fifth Net Benefits of Training to Employers study revealed a number of
benefits which accrued to employers which recurrently invested in
Apprenticeship:
• A flow of new ideas into the organisation which can be cascaded through
   the workforce
• A close bond between apprentice and employer where employer is able
   to shape attitudes to work
• A way of ensuring that the apprentice possesses the skills the
   organisation needs
• Higher retention rates because apprentices stay with the organisation
   longer
• A cadre of skilled employees from which supervisors and managers
   could be selected
Given that Apprenticeships relatively new to many health sector workplaces
which participated in the study, there is potential for the benefits listed
above to be increasingly derived by health sector workplaces.
                Links to Reports
The Fifth Net Benefits of Training to Employers:
http://www.bis.gov.uk/assets/biscore/further-education-skills/docs/e/12-814-employer-
investment-in-apprenticeships-fifth-net-benefits-study.pdf


Health Sector study:
http://www.apprenticeships.org.uk/About-Us/~/media/Documents/Publications/Net-
Benefits-to-Employers-of-Apprenticeships-in-He.ashx


IER Research on Apprenticeships:
http://www2.warwick.ac.uk/fac/soc/ier/research/apprenticeships-training
                  Thank You
Terence Hogarth
Institute for Employment Research
University of Warwick
Coventry, CV4 7AL
Tel: 02476 524420
Email: t.hogarth@warwick.ac.uk

				
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