The FINANCIAL — A new report “Productivity and Lifetime Earnings of Apprentices and Graduates” jointly released on August 5 from Barclays and the Centre for Economics and Business Research (Cebr) has revealed that the average gap in lifetime earnings potential between apprentices and graduates is just 1.8 per cent, with the average ‘Lifetime Earning Premium’ (LEP) difference for the two study paths at just £2,200.
In some sectors, apprentices’ LEP outstrips that of graduates by over 200 per cent – in industries such as Arts, Media and Publishing (270 per cent) and Agriculture, Horticulture and Animal Care (211 per cent). In other sectors, there is a significant difference in the LEP for apprentices including Social Sciences (10 per cent) and Languages, Literature and Culture (29 per cent).
The report rebukes a range of common misconceptions about apprenticeships including that they are only relevant for those looking for careers in vocational or manual industries; Business, Administration and Law accounted for the most apprenticeship starts in 2014/15 (29 per cent), closely followed by Health, Public Services and Care (26 per cent). There were over 89,600 apprentice starts within the Retail and Commercial Enterprise Sector, and over 74,100 within the Engineering and Manufacturing Technologies sector.
In addition, the report makes it clear that apprenticeships are a popular and feasible career path regardless of age – with 43 per cent of apprenticeship starts by people aged 25 and over in 2014/15 enrolling on programmes such as the Barclays Bolder, which has no upper age limit.
The report also reveals that apprenticeships have grown substantially in popularity over time –uptake has more than doubled in the past decade, with almost half a million started in the 2014/15 academic year. Barclays predicts these figures will grow exponentially in the coming years as potential university applicants face a challenging and unpredictable financial landscape – with maintenance grants abolished and continuous increases in tuition fees creating a potential financial burden and putting university out of reach for many.
Encouragingly, a new ‘Degree Apprenticeship’ was introduced in 2015 that allows apprentices to earn a full university equivalent qualification in their chosen sector without paying rising university tuition fees. Barclays is supporting the Degree Apprenticeships and has a target of offering at least 50 places on this scheme in 2016. Additionally, the Apprentice Levy introduced by the UK government this year is set to create three million apprenticeships in England by 2020.
Mike Thompson, Head of Apprentices for Barclays said: “The figures released today shows quantifiably for the first time that apprentices are getting a ‘hidden pay cheque’, through earning while working, that is comparable or in some cases higher than university graduates. This bonus means they can fast track themselves to home or car ownership – as well as through their careers without worrying about long-term student debt. At Barclays, we firmly believe that apprenticeships should be considered a viable and valuable career path and a genuine alternative to university, and these new figures strongly back that up.”
Rajini Jayasuriya from Cebr, said: “Currently, approximately 35 per cent of roles in the electricity, gas and water industry are vacant as a result of insufficient skills to meet business demands, but just 0.4 per cent of graduates chose to work in this sector in 2014/15. For the UK economy to grow further, the skills shortage will need to be addressed. Apprentices can fill the UK skills gaps, whilst offering a high level of productivity to the businesses they work for. Cebr’s findings suggest that through their apprenticeship programmes alone, Barclays make a key contribution to the UK’s stock of human capital, increasing net productivity by at least £3.3 million. The average net productivity gain for each Barclays Accountancy apprentice over the course of their programme is £18,000. This productivity boost not only benefits the apprentices themselves, but spills over into the whole economy and narrows the gap between the UK and its competitors abroad.”
Mike Thompson continued, “Today, apprenticeships are available in a huge range of sectors and levels and are open to everyone, regardless of age, social background or qualifications and are fast becoming one of the most worthwhile career paths allowing people to earn and learn at the same time. With increased tuitions fees driving up the cost of university and putting it out of reach to some, we forecast that apprenticeships, particularly Degree Apprenticeships, will become increasingly more important to the UK economy, and predict exponential growth in their uptake in the near future. We have seen enormous productivity and value in bringing apprentices in to our business and strongly encourage others to follow our lead.”