06Challenge 4: Small and medium sized enterprises fall behind in offering apprenticeships
In 1993, when Modern Apprenticeships were created, the majority of apprenticeship employers were small firms.50 But more recently, the creation of apprenticeships has been dominated by large employers. Across the UK, only 21 per cent of organisations with 10-24 employees currently offer apprenticeships, compared to 31 per cent of those with 25-99 employees, and 49 per cent of those with 100+ employees.51
In the 2014 Employer Perspectives Survey, 21 per cent of employers who do not currently offer apprenticeships reported that this was because they felt that apprenticeships were not suitable for the size of their establishment.52 This partly reflects the difficulties that SMEs can face in trying to create apprenticeships and fill their vacancies.
One of the reasons is that while large, well-known companies, particularly in engineering and technology, tend to receive large numbers of applications per vacancy, smaller companies without the same reputation and scale often struggle to attract applicants.
But the biggest constraint for SMEs taking on apprenticeships is the additional strain it creates for small and minimally resourced human resource and administrative departments. Understanding the system, finding training providers, choosing the right framework, recruiting and managing apprentices are all more time-consuming and costly for small businesses, which results in lower levels of engagement and recruitment.53
The following case studies illustrate two models in which local partners have supported SMEs in creating apprenticeships through providing HR and administrative support to offset their costs.
Case study 8: Glasgow Guarantee: local councils supporting HR and administrative functions on behalf of employers
As part of the Glasgow Guarantee to provide training and employment opportunities to young people in the city (see above p.14), Glasgow City Council offers a service which manages some of the administrative and HR functions associated with apprenticeships on the behalf of employers. They advertise vacancies, handle recruitment, and sometimes shortlist, depending on the preference of the partner firm. Young people apply to the council for vacancies rather than to the employer, and the council also handles feedback to unsuccessful applicants.
Unlike many of the other examples, Glasgow Guarantee partners found that SMEs were particularly interested in the scheme, in part because of the recruitment support offered. And a survey of employers’ experience found that while their initial motivations for being involved had been in order to access the wage subsidies, those most likely to use the scheme again would do so because of the recruitment support provided.54
Case study 9: London Apprenticeship Company: supporting small businesses through Apprenticeship Training Agencies
Apprenticeship Training Agencies (ATAs) were introduced in 2009 as part of the National Apprenticeship Service to lower the costs to employers of taking on an apprentice by taking on HR and administrative functions. There are now around 50 ATAs across the UK, which receive funding support from the Skills Funding Agency. Established to address the obstacles that businesses, and particularly small and medium sized business face in delivering apprenticeships, ATAs act as a recruitment agency, recruiting, hiring and establishing the training plan for the apprentice.53
ATAs act as a stepping-stone for SMEs in recruiting apprentices. Typically the apprentice is employed by the ATA for around three months while the employer pays a set fee, and is then taken on directly by the employer.53
The London Apprenticeship Company was set up in 2009 with support from the Greater London Authority and was the first ATA to open in the UK. It works with both local authorities and businesses to support apprenticeships, and has supported more than 500 businesses to create over 1,000 apprenticeships. It provides a full range of support services for apprentices, helping recruitment, advertising, providing mock interviews and presentations, negotiating pay, employing apprentices on the behalf of companies, and offering supervision and pastoral support. The LAC also brokers government grants such as the Apprenticeship Grant for Employers.57
These two examples highlight how local partners can provide additional support in administration, human resources and financial management to help small and medium sized employers to take on apprentices where they otherwise may have been unable to.