23rd August 2016
Beating rising labour costs: an employer’s guide to apprenticeships
Here on the Integrity Software blog, we’ve been talking about skills shortages in the construction industry for many years – yet the problem shows no sign of easing. In the past, we’ve discussed some ways to mitigate the effects of rising labour costs, particularly by utilising construction costing software. Today, we look at another potential solution to these rising costs: apprenticeships.
How to hire an apprentice
Taking on an apprentice is a little different to your normal hiring methods. Here’s a quick breakdown:
- Find the right apprenticeship course. Courses have set criteria, so find the course that best suits the needs of your business.
- Find a training provider. As the employer, you probably won’t be offering formal assessments and training – instead, you’ll need to find a college or other local training provider to carry out the off-the-job portion of the apprenticeship.
- Figure out funding. Research the various grants and funding options.
- Look for candidates. If you’re providing the formal training yourselves, advertise the apprenticeship as you would any other job role. Otherwise your training provider will probably do this for you.
- Create an apprenticeship agreement for your chosen apprentice. Be clear about your expectations, pay, apprenticeship length and other important requirements.
There’s certainly a reasonable amount of admin work to do to hire your first apprentice, but once you’re familiar with the process it becomes easier.
Benefits and costs
As the apprentice’s employer, you’ll be required to pay them the national minimum wage. That’s currently £3.30 for apprentices under the age of 19 or aged 19+ and in the first year of the apprenticeship. After an age 19+ apprentice’s first year, they’re entitled to the standard minimum wage for their age group. You’ll need to provide at least 30 hours of work each week (or 16 in exceptional circumstances). Apprenticeships last between one and four years depending on the qualification level.
As for the business benefits, it’s likely that an apprentice will turn into a valuable employee – and you won’t be required to pay them as much as a standard employee. Additionally, training is usually paid for by the government – you’ll only need to pay their wages. Apprenticeships cut recruitment costs, increase retention and help you tailor your workforce based on your company’s specific needs.
As we mentioned above, your training provider is given funds from the government to train your apprentice – with all the funding provided for apprentices under 19, and only half for those aged 19-23. If you’re carrying out the formal training part of the apprenticeship in-house, you can also apply for this training funding. Additionally, grants are available to some businesses to help cover the other costs of apprenticeships.
The apprenticeship levy
Big changes are coming to apprenticeship funding – check out our post on the apprenticeship levy for more details. In short, larger businesses will face a tax that will be used to fund apprenticeship training. Recently, we learnt a little extra about the specifics of this reform, which is set to come into force in April 2017.
Overall, the number of construction apprenticeships is in decline. The government hopes that apprenticeship reforms will boost numbers, but given the tough economic climate and continued uncertainty, construction companies may be unwilling to invest. Apprenticeships aren’t the answer for every business in construction, but they may just be the solution for your business.
In last year's autumn statement, Chancellor George Osborne announced a £3 billion 'tax' on big business – which went almost entirely unnoticed by the mainstream press.
It’s no secret that labour costs in the UK construction industry are rising quickly, thanks in no small part to the ever-worsening skills shortages that the sector faces.