Quality apprenticeships: The new degree?

More policymakers are looking beyond tertiary education to apprenticeships as a possible way of strengthening the labour market and improving job prospects for the young. But not any apprenticeship will do.

©Christopher Furlong/Getty Images/AFP

Under the guild system in medieval Europe, a journeyman was someone who, having finished his seven-year apprenticeship, travelled from town to town offering his services for a day’s wages (hence “journeyman” from the French “journée”, meaning a day). After a few years of this itinerant life, he might submit a “masterpiece” to the relevant guild, whose members would evaluate his work and decide whether to admit him to the guild and confer the title of “master” upon him.

A young person starting out today might never get a chance to present a masterpiece. The statistics are harrowing. The OECD estimates that around 20% of young people in Italy, Mexico and Spain are neither working nor in education and training. In Greece and Turkey that figure rises to 27%. In desperation over their repeated failure to find a job, many young people give up. Others continue on the treadmill of internships, and are often unpaid, despite the fact that they carry out the same tasks as their salaried colleagues.

Governments are beginning to give serious attention to apprenticeships as an answer to high (and increasingly longterm) unemployment. The three European countries which proved most resilient to the 2008 downturn all have strong traditions of apprenticeships. Germany, Austria and Switzerland register less than 9% youth unemployment, compared to the OECD average of just over 16%. The success of Germany’s dual education system has aroused the interest of its stricken neighbours. Students in Germany can opt for one or two days a week of vocational training alongside regular schooling. Part of this training occurs in the workplace, for which apprentices are paid about one-third of a trained worker’s salary. Earlier in 2013, Greece, Italy, Latvia, Portugal, the Slovak Republic and Spain signed memoranda with Germany to help them develop similar systems. No one is suggesting that apprenticeships alone can resolve the crisis, but more countries now believe they can do a lot to help. In June, the OECD included apprenticeships as one of the key points in its Action Plan for Youth. The G20 countries (consisting of the world’s largest economies) have also called for greater investment in apprenticeships.

A fair question to ask is: why did it take so long? Germany, for example, introduced its dual education system in 1969. One reason is bias. University education has long been vaunted as a secure route to financial stability and personal fulfilment. Young people in vocational training are often stigmatised as being “not quite up to” the rigours of academia. This prejudice has cowed many young people into pursuing university studies for which they have neither the inclination nor the flair, and discouraged them from the more satisfying alternatives. Governments should abandon their absolutism towards university education and instead encourage young people with the desire to enter an apprenticeship, and they should focus especially on young school leavers, who are more than twice as likely to be unemployed than university graduates.

One successful initiative–and one that aims beyond traditional apprenticeships in manufacturing, for instance–is the UK’s £25 million apprenticeship scheme to train young people, while paying them, as commercial pilots, lawyers, engineers  and accountants. These “higher level” apprenticeships are on par with university programmes. Companies will also benefit. Europe’s aviation sector, for instance, will need 92 500 pilots by 2030. The UK scheme has caught on. In 2012, some 3,700 people were in higher apprenticeships, a 68% increase from the previous year. The plan also aims to bring under-represented groups, such as women, into such professions.

The scheme is successful in part because it established apprenticeships in fields without such traditions, and in which future job growth is likely.

 In the United States, the US Office for Apprenticeships provides seed capital to companies to develop training programmes in high-growth industries, such as information technology, health care, biotechnology and geospatial technology. In 2007, high-growth industries accounted for 46% of newly registered programmes, with 30% of all apprentices enrolled in them.

But for apprenticeships to spread through more countries, a number of obstacles need to be overcome, such as a lack of certification and rigid age restrictions, which effectively block apprentices from switching career paths or entering university, should they so choose. Employers may be reluctant to invest in apprenticeships because they fear their apprentices will be “poached” by other firms, and so may instead offer only internships and other short-term contracts. Firms may even claim that these are legitimate training programmes when they are nothing of the sort. Italy addressed this abuse of confidence in 2011 by setting the duration of apprenticeships at a mandatory six-month minimum to make them worthwhile, and at a three-year maximum to ensure that employers do not exploit apprentices by arbitrarily prolonging their training. Should a firm wish to hire an apprentice, it must have a record of hiring at least 50% of those it has trained in the past. This way, companies can tap into the skills pool only if they have already put something into it. In Australia, apprentices are certified as soon as they have demonstrated their competence in their chosen area, rather than when they have completed a stipulated training period.

Given the costs, companies could be more likely to offer apprenticeships if labour unions and the government share the burden. In Germany, for instance, social partners work together to set professional standards and exams, which are formally issued by the Ministry of Economic Affairs and Technology, and determine apprentices’ salaries through collective wage negotiations. Canada and France relieve some of the pressure on employers through tax credits. France also gives additional social security exemptions to employers, especially those employing a disadvantaged or disabled young person.

In the best of times, government cash no doubt helps. But it is one thing to finance apprenticeships when there are jobs to be had, and another when youth unemployment spirals into the millions. Can governments afford to finance an entire generation?

Labour reforms that help create jobs would help pave the way forward and are at least as important as government support. Let’s not forget that Germany’s strong tradition of apprenticeship did not prevent it from being labelled the “sick man of Europe” in the 1990s. However, labour market reforms since then have been part of its recent successes. The OECD cautions that attempts to skirt serious reform through the adoption of early retirement schemes in a bid to open up jobs to young people won’t work: the costs are heavy and the benefits few. Until the social bias towards university qualifications is removed and policymakers restore dignity to “vocational training”, an unacceptable number of young people will be locked out of rewarding and productive jobs. With quality apprenticeships, tomorrow’s journeymen (and women) will have that chance to learn and work in promising careers, and who knows, become “masters”, too.

Lyndon Thompson

For more information, contact Mark Keese at the OECD.

References

OECD (2013), The OECD Action Plan for Youth, www.oecd.org/els/emp/Youth-Action-Plan.pdf

The Economist (2013).“Ein neuer Deal? –Germany’s vaunted dual-education system is its latest export hit”, The Economist

BBC News (2012), “Apprenticeships scheme to train pilots and lawyers”

“Apprentices ‘more employable’ – survey”, BBC News

© OECD Observer No 295 Q2 2013




Economic data

GDP : +0.5%, Q4 2014
Employment rate: 65.9%, Q4 2014
Annual inflation : 0.60% Mar 2015
Trade : -3.0% exp, -3.7 imp, Q4 2014
Unemployment : 6.993% Feb 2015
More moderate expansion ahead? Composite leading indicators
Updated: 12 May 2015

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