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Tech apprenticeship schemes - should they be hired or fired?

Cath Everett Profile picture for user catheverett March 11, 2019
While apprenticeships would seem to be a useful tool to close the tech skills gap, governments on both sides of the Atlantic seem to be struggling to get it right.

To the impartial observer, the apprenticeship situation in both the US and UK would appear to be in a bit of a mess, albeit in quite different ways.

While such programmes are reasonably well-established in the UK, the same is not necessarily true of the US.  Although they are widespread in the construction and mining industries here, other sectors, including tech and digital, are largely unfamiliar with the approach – even if the ongoing skills crisis does mean that momentum is growing.

But this lack of awareness is also not being helped by the mixed messages coming out of the White House. About eight months ago, President Trump - former host of The Apprentice! - signed an executive order to create a Council for the American Worker that was intended to consolidate existing federal programmes and fund new job training initiatives, with a special focus on expanding apprenticeship schemes. Unfortunately though, says Katie Spiker, senior federal policy analyst at the National Skills Coalition (NSC):

Instead of investing in policies that support these priorities, the administration has repeatedly called for massive cuts to programmes that would help businesses and workers and has recently proposed a consolidation of the Departments of Labor (DoL) and Education. President Trump’s own White House Council of Economic Advisors has said that US investments in skills training lags behind virtually all other developed countries. This means businesses are struggling to find skilled talent, and workers are left without pathways to advance their careers.

However, the President’s next budget request, which is due out this month, should provide a clearer indication of the administration’s investment aims, she believes. Another plus is how united Congress is against cuts to skills and technical education, which meant that only last year it boosted apprenticeship funding by $15 million.

Over the pond, meanwhile, the UK’s National Audit Office (NAO) issued a damning report earlier this month about the country’s apprenticeship offerings. It revealed that the scheme still had some way to go to demonstrate it was offering value for money, not least due to a failure to show any positive impact on national productivity.

The NAO also accused the Education and Skills Funding Agency, which is responsible for the controversial apprenticeship levy introduced in 2017 to fund the programme, of failing to ensure the quality of new apprenticeships. For example, it found that in the 2017/18 financial year, a third of all apprentices were being trained by providers that education watchdog Ofsted rated as ‘inadequate’ or requiring improvement.

The apprenticeship levy, which replaced more traditional direct state funding and was intended to boost employer investment in training, means that employers with a wage bill of more than £3 million are now required to pay 0.5% of that total into a digital account. They are then entitled to recoup this figure, along with a 10% government top-up, to cover the cost of either training their own apprentices or those belonging to members of their supply chain.

But the NAO report found that in 2017/18, eligible employers spent a mere 9% of available funds on new apprenticeships, the equivalent of only £191 million out of a total of £2.2 billion.

To make matters worse, the NAO also warned that the government was “very unlikely” to hit its target of creating three million apprenticeship starts by 2020 – that is, next year. Since the levy was first implemented, the total number of new starts has dropped by 26% from 509,400 to 375,800. As a result, the levels of people signing up would have to double this year for the government to stand any chance of hitting its goals.

UK tech is shining light

But the UK digital and tech industry does appear to be the shining light in an otherwise negative horizon. According to David Wackett, digital industry manager at training provider the City & Guilds Group, the sector has bucked the trend in terms of taking on new apprentices, even seeing a small rise of about 3,000. He explains:

IT and digital is a good sector to demonstrate success. Employers recognise there’s a skills shortage and that their requirements are fast-changing, so they can’t afford to wait. There’s a genuine need to get people in and trained up and working, and apprentices in the sector continue to be valued for their skills.

Stephanie Bishop, head of graduate and apprentice recruitment and programmes at Capgemini, agrees. She points to an increasing recognition that:

Grow-your-own-talent is the way forward. The Institute of Coding said the UK would need half a million more digital specialists by 2022, but there are only around 100,000 or so computer science students each year. Tech may have been one of the subjects that saw the largest increase in numbers terms last year with 4% more students choosing it - and that’s good as it means things are going in the right direction. But the supply of talent is still not growing fast enough.

Interestingly, while graduates may still be the single biggest source of new recruits for the tech industry, demand for higher apprenticeships (level four and above) rose by 12,000 across the board last year.

Mirroring this trend, Capgemini, which has been running an apprenticeship scheme since 2011, this year doubled its apprentice numbers to 120, while at the same time continuing to take on about 250 graduates. Although the scheme covers 10 different areas of the business, the largest single strand is IT and digital. Bishop says:

There’ll always be demand for graduates, but over time, I wouldn’t be surprised if we took on a similar number of apprentices. We recruit into similar roles for both, but apprentices tend to be school leavers – although times are changing and we expect to start seeing more older workers too. The difference is that graduates come with a bit more maturity and are a bit more client-ready, while apprentices may require more of a long-term investment, but their skills are tailored specifically to our needs.

While the majority of apprenticeships on offer are degree-level, Bishop notes that, as average student debt levels hit £50,000, most applicants are coming from disadvantaged backgrounds. This means that offering such schemes can also provide an effective means of boosting diversity too.

Although the professional services firm introduced its first degree-level apprenticeships in 2015 in conjunction with Aston University in Birmingham, in September last year, it also implemented a joint scheme with one of its customers, Anglian Water. Capgemini took on five apprentices dedicated to its Anglian account, while Anglian took on four, the aim being to provide both sets with exposure to both the water and tech industry.

Nonetheless, as City & Guilds’ Wackett points out, a key issue with today’s apprenticeship system is that it tends to be predominantly a big company play. Not only do larger organisations have the resources to set up and run such schemes but, unlike many smaller players, they can also afford to pay apprentices wages while giving them the day off a week required to attend educational classes.

Money worries

A similar dynamic prevails in the US. As the NSC’s Spiker points out, federal tax and workforce policies have historically done little to address the start-up costs of developing, implementing and running such programmes. This is despite the fact that the best way to support the apprenticeship needs of tech employers, particularly if small- or medium-sized, is via ‘industry partnerships’.  These consist of a collaboration between employers, community and technical colleges and community organisations. Spiker explains:

Since small- and medium-sized businesses often lack the resources to establish apprenticeships, and workers need help accessing the training, childcare and transportation they need to succeed in these programmes, industry partnerships help ease those burdens. These kind of partnerships already exist all over the country [32 states currently have policies in place] but federal investment is necessary to scale them to all areas and in all industries.

A key problem here is that funding for public entities involved in workforce development, such as Workforce Investment Boards, American Job Centers and adult education providers, has been slashed by 40% since 2001, while career and technical education has been cut by 30%, making it “nearly impossible” for local administrations to invest in new approaches.

Congress has given the DoL more than $400 million to fund apprenticeships over recent years, plus President Trump pledged a $150 million in grants last year to strengthen apprenticeship provision among marginalised groups, particularly in the tech sector – although they have yet to be awarded. But a lack of defined parameters as to where states should spend such money means it has gone on everything from undertaking business outreach to increasing staff numbers to administer schemes rather than focusing on the creation of much-needed industry partnerships. Nonetheless, believes Spiker, this situation could change:

At the end of the last Congress, a bipartisan group of Senators introduced the EARNS Act, which would have added more Congressionally-imposed structure to how DoL spent these apprenticeship dollars, and would have supported industry or sector partnerships. It hasn’t been reintroduced in the new Congress but we expect it to be.

But things are not entirely plain sailing for larger employers either. According to a recent City & Guilds report entitled ‘Flex for Success?’,  challenges in the UK include a lack of:

  • Suitable apprentices in the area (31%);
  • Availability of the necessary training (30%);
  • Information and support (22%);
  • Buy-in from the board (22%).

A further 29% also found that the off-the-job training on offer was unsuitable for the business, while a vast 92% were keen to see more flexibility in how they could spend their levy allowance – if given the option, an average 45% of funds would be assigned to non-apprentice training.

Despite such concerns, Capgemini’s Bishop believes that apprenticeships still have a useful role to play in terms of plugging skills gaps. She concludes:

I think more and more organisations will start using the apprenticeship levy not just for school leavers but to create more diverse talent pools by re-skilling and up-skilling people like returners and older workers. Apprenticeships are definitely here to stay and we’ll continue to invest in them, particularly in areas such as digital and tech where there’s a continuous struggle to find experienced hires.

My take

While the availability of more apprenticeship schemes on both sides of the Atlantic would appear to make sense to address the tech and digital industries’ ongoing skills shortage, much work remains to be done to make the approach feasible for the many rather than just the few.

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