SMF Briefing: The value of apprenticeships – wages

The SMF is currently undertaking research to look at what types of apprenticeships create the most value, in terms of both wages and firm performance.

This in turn will help inform policy recommendations on how Government should support the next phase of the apprenticeships programme.

There is strong political commitment to the apprenticeships programme as a part of the strategy to achieve a high quality workforce that can help improve UK productivity and economic growth. Apprenticeships have the potential to provide opportunities for gaining training whilst working, thereby improving career opportunities and helping to fill skills gaps across a range of sectors. The Government is planning to implement a new levy on businesses, designed to raise funding that will allow sustainable long-term investment in high-quality apprenticeships.

This briefing paper summarises early findings from the first part of the project, which looks at the value of apprenticeships to workers in terms of how much extra earnings an apprenticeship delivers.

In summary, we find that:

  • Level 3 apprenticeships deliver high wage returns, providing a premium of 16% on hourly earnings compared to having only a Level 2 qualification.
  • But the picture is much more mixed for Level 2 apprenticeships. On average, we do not find a statistically significant wage premium attached to undertaking a Level 2 apprenticeship, although there are differences by sector.
  • Manufacturing delivers especially high value apprenticeships across both Level 2 and Level 3 apprenticeships.
  • The next phase of the apprenticeship programme needs to focus much more on delivering high quality apprenticeships that meet skill demands and increase productivity. The Government should consider how its new levy system can be designed to incentivise the provision of higher quality apprenticeships.

Download The Report: PDF

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