Why Apprenticeships are Great News for Small Businesses

Why Apprenticeships are Great News for Small Businesses

Savvy SMEs know that apprenticeships benefit the employees, business growth and the bottom line

By Sophie Hardwick

It's National Apprenticeships Week, and apprentice employment expert Sophie Hardwick gives us insight into why SMEs need to employ young people...

Apprenticeships are in the spotlight and small businesses are beginning to embrace them with gusto.

Although the government has set a target of 3 million new apprenticeships by 2020, SMEs shouldn’t switch on to apprenticeships to help the government reach targets. They should wake up to apprenticeships because of all the great benefits they deliver. These are benefits SME owners and managers report time and time again when asked about their experiences of recruiting and employing apprentices.

Benefits of employing young people

Rob Drake-Knight runs Rapanui, an Isle of Wight clothing manufacturer with 20 employees, most of whom started out with the company as apprentices. The entrepreneur is keen to extol the virtues of apprenticeships and to counter the idea that inexperienced people can’t be extremely valuable to an ambitious SME. He says:

There’s a perception that you have to be a certain age to take on particular responsibilities but I think that’s a complete myth. I don’t think age matters in any way. Young people can do amazing things. Rob Drake-Knight, Rapanui

Filling the skills gap

Apprenticeships present an excellent opportunity to employ enthusiastic staff members who’ll grow with a business. They also enable businesses to offer new and existing employees training tailored to the requirements of their role.
Some sectors, like engineering and farming, have a growing skills gap. Rather than spending £1000s headhunting individuals who have the knowhow they need, the wisest companies train their own. Nigel Stewart is Technical Director at AC Gotham & Son, a fruit farming business in Kent. For his employer, apprenticeships represent the perfect recruitment model, as Nigel explains:
Young people coming in who want to learn from a zero skills base are great for us. Headhunting is very expensive and people don’t necessarily have the exact skills we require. It makes more sense to find young, enthusiastic people to fill the gaps. We’re not just training people to be tractor drivers anymore. We’re now training them in technical IT skills, as well as wider farming practices. Nigel Stewart, AC Gotham & Son

An apprenticeship is simply on-the-job experience and formal training, which combined, lead to a nationally recognized qualification. Apprenticeships cover a vast range of job roles and an apprentice is employed in the same way as any other employee, helping build commitment from both sides.

Lower employment costs

Employing an apprentice can be significantly more affordable than employing a regular junior member of staff. The minimum salary for apprentices is lower than the national average in order to encourage more employers to choose the apprenticeship route.

For 16-18 year olds and those that are 19+ in their first year the National Minimum Wage for apprentices is £3.30 an hour. For those 19+ in their second year and anyone 24+, it’s the minimum wage for their age. Many employers offer more than the minimum wage in order to attract stronger candidates. An associated incentive for employers is that National Insurance Contributions (NIC) for apprentices under 25 are to be abolished from April 2016.

Farming skills
Farming skills:

Apprentices at AC Gotham & Son receive training, helping to fill industry skill gaps.

Financial support for training

Additionally, apprentice training costs are often partly or fully funded. The size of the contribution (provided by the Skills Funding Agency, via the training organisations), varies depending on the apprentice’s age when they start their training.

As a guide, training is free for 16-18 year olds, there’s a 50% contribution required for 19-23 year olds, and if the apprentice is 24+, the apprenticeship training is normally paid for by the employer or the apprentice themselves, although again it’s worth looking around to see if there’s access to any other funds to support the training costs.

Individuals at 24+ often contribute a great deal to a business, therefore, paying for training can still be an attractive option for employers. Likewise, more mature apprentices are often keen to develop their skills and can access 24+ Advanced Learning Loans, to help them fund the training.

In addition to the lower employment costs and funded training, small businesses might also be eligible for the Apprenticeship Grant for Employers (AGE). This is for employers with fewer than 50 employees where apprentices are aged 16 to 24. Businesses that fit the criteria can claim support for up to 5 apprentices.

Jess Barnet runs The Treat Factory, a confectionary business with 3 stores in and around Nottingham. She chose apprenticeships as her main recruitment route for a team that now numbers 11. In large part, this decision was influenced by the government money Jess was able to access by opting to have apprentices. She says:

Two things attracted us to apprenticeships. Firstly, my husband and I both think apprenticeships are a good way for people to gain valuable work experience, increase their future employability and boost their skills. The second reason was that apprenticeships allow small businesses to access financial support from the government to invest in growing their teams Jess Barnet, The Treat Factory

Safeguarding skills

Apprenticeships present a significant opportunity to small businesses and are an invaluable way to retain important skills that are at risk of dying out without supported training.

Where to get help

Every day businesses are enjoying additional success and growth as a result of their apprenticeship programmes. If you’re thinking of running an apprenticeship, finding the right training provider is key. You can get started by using the Find a Training Provider tool on Gov.uk, or by calling the National Apprenticeship Service’s Small Business Team on 08000 150 600.

Another useful tip is to join Apprenticemakers, the free nationwide community for apprentice employers in all sectors, and at all stages of the apprenticeship journey, to gain support and guidance from other businesses that have been through the process.

Follow Apprenticemakers on Twitter: @Apprenticemaker and Facebook.