By Emily Jones
03 08 2020
Latest figures show the huge impact of the coronavirus pandemic on apprenticeships, with the number of starts remaining well below pre-crisis levels. Providers reported a total of 9,000 starts in May 2020 – a 60% drop compared to May last year. Young people have been hit the hardest, with the number of starts for 16-18 year olds plummeting by 79% and Level 2 apprenticeships falling by 74% compared to the same time last year. This increases the risk of rising youth unemployment.
We already know that workers aged 25 and under face the highest risk of unemployment as a result of the pandemic – just as they have in previous recessions. Our analysis highlighted that at the outset of the pandemic, younger workers were over twice as likely to work in the ‘shutdown sectors’ most affected by the crisis. Young people are more likely than older employees to have lost their jobs or have been furloughed and are more likely to have had a cut in pay since the outbreak. And young apprentices may be at an even higher risk. An employer survey conducted by the Sutton Trust indicated that on average, employers had furloughed 36% of their apprentices and 8% had been made redundant.
The government is therefore right to take action, to avoid long-term youth unemployment, which we know can have a scarring effect on young people’s prospects. Earlier this month, the Chancellor, Rishi Sunak, announced a set of measures to support young people’s inclusion in employment and learning. These included cash incentives for employers to hire new apprentices; a ‘Kickstart Scheme’ offering six-month work placements for 16-24 year olds; expansion of the traineeships programme; a third year in further education for 18-19 year old who struggle to find a job; and a funding boost for sector-based work academies. Given that an apprenticeship isn’t the right path for everyone, and some young people won’t be ready to step into an apprenticeship immediately, it was good to see investment across a variety of employment, training and education pathways.
The big question is whether these interventions will make a difference. There is evidence to suggest that – in normal times – grants for employers can encourage them to take on young apprentices, and even when accounting for deadweight, that the benefits of such incentives can outweigh the costs. But we are not in normal times. Within the current economic situation, will £2,000 be enough to incentivise employers to create new apprenticeship opportunities? Recruiting an apprentice involves a long-term commitment to investing in their skills. Apprenticeships last at least a year, and in many cases the apprentice will not be fully productive for some time. Beyond the cost of training and assessments – which can be covered by apprenticeship levy funds – employers have to cover the cost of the apprentice’s wage, and of supervising and supporting their development. In this context, it is unsurprising that apprenticeship starts plummeted at the outset of the crisis. Incentives alone are unlikely to work unless employers are confident of future demand, so while the new investment is welcome, improving wider labour market conditions quickly will be key to boosting apprenticeship starts. After all, apprenticeships are jobs.
As well as pace of change, we need to consider employers’ capacity to engage with these interventions at the scale required. With the best will in the world, can employers be expected to hire new apprentices at the same time as offering hundreds of thousands of high-quality Kickstart placements and tripling the number of traineeships? And let’s not forget that the first T Levels are due to start in the autumn, which will include the requirement for a substantial industry placement.
We also need to think about what these options look like from the young person’s perspective and how they are supported to decide what’s right for them. The measures announced last week included an additional £32 million for the National Careers Service for the next two years, but other intermediaries, like Jobcentre Plus advisors for example, will also be making referrals. We need to ensure that careers advice is high-quality, consistent and proactive. Otherwise there’s a real risk that the most disadvantaged young people become even more disadvantaged. We’ve argued for a Youth Guarantee so all young people have a guaranteed apprenticeship, job or training place – and that this needs to be backed up by action to engage young people to avoid a spike in those who are NEET.
There’s a lot to welcome from recent announcements, but we need to remember that these are emergency measures – the cash bonus for new apprentices, for example will last just six months, ending in January 2021. We also need a longer-term plan setting out what happens next – the Autumn Budget and FE White Paper should be key to any changes. While the government has been right to focus on preventing youth unemployment, we need to make sure that this doesn’t come at the cost of other at-risk groups, such as older workers with lower level qualifications or with disabilities. The longer-term plan should therefore include a range of ambitious measures to ensure that both young people and adults have opportunities to work and learn.
Emily Jones, head of research at Learning and Work Institute