Correlating apprenticeships and direct employment

One of the main findings of Prof Howard Gospel’s report on direct employment, published by JIB last week, was that ‘ use of non-direct employment has a negative effect on apprenticeship training’.

The historical record backs him up. Between the 1960s and the 1990s, much of the civil and building sector – with main contractors in the lead – switched away from direct employment and towards ever greater reliance on labour-only subcontracting and various forms of ‘self-employment’, much of it false. Over the same period, annual recruitment of civil and building apprentices and trainees collapsed, from 112,000 in 1966 to fewer than 9,000 in 1998. 

construction and engineering services businesses require stronger incentives to train

For the electrical contracting sector, the following chart demonstrates the consequences of higher and lower levels of direct employment in different parts of the UK. At one end there is Scotland, with relatively high levels of both direct employment and under-25s in the workforce. At the other, London, the worst performing region on both measures, with other parts of the UK falling somewhere between each of the two extremes.

Industry ‘skills shortages’, therefore, can in large part be understood as a consequence of changing business and employment practices. and more specifically the negative impact these have had on firms’ ability and willingness to train the next generation of skilled workers. 

How else can one explain, for example, the fact that in the academic year 2018/19, employers took on 6,120 new electrical apprentices, but in the same year almost four times that number of people (24,100) began studying an electrical installation diploma course full time? Or the fact that in Germany - with levels of self-employment only around one-sixth those of the UK – firms recruit over 40,000 electrical apprentices annually?

So, what can be done to turn things around?

First, the proportion of the workforce that is directly employed needs to increase, Firms that employ are much more likely to train, and so must be  encouraged to grow, both in number and size. Disincentives to direct employment, such as the UK’s current income tax and national insurance rules, must be removed, and ideally reversed.

Secondly, construction and engineering services businesses require stronger incentives to train, and to do so on a larger scale than many do currently. Procurement and supply chain requirements need to get much more demanding, and their proper implementation policed and enforced. Peer pressure – through benchmarking and sharing of good practice, for example – could also have an important role to play, at both a local and industry level.

In electrical contracting, there has already been some progress in the right direction

Finally, and most importantly, the various ‘rat-runs’ open to business and individuals to operate without the correct – or, in some cases, any – qualifications need to be shut down. In electrical contracting, there has already been some progress in the right direction, with certification bodies due to enforce tougher qualifications requirements under the latest version of the Electrotechnical Assessment Specification. 

There seems a fair chance that this work will now be further built upon and extended as the wider construction and built environment  sector moves to implement the installer competence recommendations laid out in the Setting the Bar report.

ECA remains in the vanguard of many of these developments:

• Arguing for stronger measures in support of direct employment;
• Proposing improvements to procurement rules and supply chain policies to boost apprenticeships and other training
• Championing apprenticeships as benchmark standards for competence.