This is a follow on from our earlier blog Barriers to Engaging in Apprenticeships- Employer Perspective.
We saw that constraints to participating in apprenticeships are different for MSMEs (micro, small and medium enterprises)-in comparison to large organisations- owing to their size, resource make-up, and business needs.
Which brings us to explore ways which can make it simpler for MSMEs to get involved in apprenticeship systems. Our readings have shown that MSMEs typically do better in apprenticeship frameworks that are collaborative in nature, allowing multiple firms to come together to discuss needs, share networks and resources, with strong direct contact with local training providers and government agencies. Trying to break into apprenticeship systems solo, although possible, requires a considerable amount of motivation and conviction which can be an uphill task. An apprenticeship system for a newcomer can be confusing and a blur given its various facets, different schemes, regulation, legislation, multiple government departments, and stakeholders etc. Ergo, coming together in local industry/sector groups has been found to be much more efficient and reduces the fear of the unknown.
Training Provider-Employer Link
In our earlier blog, we stated a lack of contact with local training providers as a barrier for smaller firms. The India Skills Report 2019[i] stated an alarming drop in the employability of ITI pass-outs. Although the reason was not mentioned, among other factors it can be a fair assumption that there is possibly a big disconnect between the skills acquired by ITI pass-outs and what local employers want.
Conversely, if local skills training is a two-way process between employers and training institutes, where employers are asked for input on what kinds of skills would be useful for their businesses, the probability to then successfully place suitable candidates post basic ITI training with potential employers for higher skilling or apprenticeship programmes becomes much higher. This especially holds true in the Indian context where basic ITI or similar training has become the norm for entry into apprenticeship programmes offered by large firms or PSUs, which may well be mirrored by smaller firms.
When employers are part of collective forums, a local provider-employer consultation group for instance, where they are able to share views, it empowers them with confidence to thwart a belief perception that small employers have no voice. Employers should be able to make informed choices on which apprenticeship providers to use by having insight into the quality of service of providers.[ii]
Another barrier which we found was a lack of knowledge and awareness of how apprenticeships are structured, how to go about seeking information, and how to start an apprenticeship programme. A big question is also how offering an apprenticeship programme will be of financial benefit for employers. Smaller firms typically seek quick to productivity and quick to return on investment. With limited resources and possible cash flow constraints investing in an apprentice is a risk. And lack of information and support can only compound the risk.
Improving employer understanding of how apprenticeships can be a suitable option vis-à-vis other forms of work-based training also helps to create a willingness to consider apprenticeships as a viable skilling route for employers. Demystifying apprenticeship frameworks would also encourage smaller firms to become knowledgeable ‘consumers’ of apprenticeship training.ii
Knowledge is power. We have tried to provide visibility into some of the common questions that employers may have with our posts:
- What’s in it for businesses to engage with apprenticeships?
- Getting an Apprenticeship Program Off the Ground – A Toolkit for Employers – Part I and Part II
- Financial Benefits of Apprenticeships
- Do Employers See a Return on Investment in Apprenticeships? A Cost-Benefit Analysis
We now look at a few alternative training frameworks which have been specifically designed to encourage and improve the engagement of small and medium-sized employers:
Group Training Associations
Larger organisations by virtue of size and resources typically take on more apprentices which give them a greater ‘purchasing power’ when it comes to dialogues with local training providers. To counteract this and level the playing field for smaller firms, Group Training Associations (GTAs), a concept used in the UK, are a possible solution. ‘The GTA model is a demand-led model, because it is about employers determining what the skills requirements are for their businesses, and then the GTA providing that provision to meet the skills needs.’ Neil Bates, CEO Prospects Learning Foundation (a GTA).ii
Groups of employers pool resources to set up a GTA with local government support to procure capital and equipment. Such a framework allows for the distribution of some of the burden and responsibility while enjoying the advantage of access to a larger pool of resources- an efficacious way for small firms to come together to hire apprentices. The apprentice is hired directly by an employer but the training is jointly provided within the GTA. When groups of same sector/industry employers participate in such a model the training requirements are often similar enabling a highly targeted skill-building approach and the offer of high-quality apprenticeships.
In our view, similar participatory frameworks for greater SME engagement could be possible with the support of government such as state Skill Development Agencies/Corporations and Sector Skill Councils whose mandate is to facilitate and coordinate skill development efforts across the country, build TVET frameworks and think innovatively about greater participation of employers for job creation. A framework such as the GTA could fit well to achieve some of these objectives.
Apprenticeship Training Agencies
The chief characteristic of an Apprenticeship Training Agency (ATA), again a UK based concept, is that it takes away the risk of recruiting an employee, which is a big enabler to remove barriers for small and medium-sized employers. ii
The National Apprenticeship Service (UK) describes the primary benefits of the ATA model as follows:
‘[To] offer a unique approach to the recruitment of apprentices. They are specifically designed to support small and medium-sized employers who wish to take on an apprentice but are unable to take the risk in the (an uncertain) current economic climate. They support the sharing of employees among employers, whilst ensuring the quality of the apprenticeship experience.’
An ATA is set up as a business for the employment and development of apprentices. In the ATA model, an apprentice is the employee of the ATA and are hired out to host employers (in return for a fee) who use a contracted training provider to deliver the apprenticeship training. The host company pays the ATA a fee for the hire of the apprentice (a recruitment cost), which is made up of the salary and a service charge to cover the cost of managing the employment and support of the apprentice. The ATA takes on the administrative responsibility of payroll, support, and monitoring of the apprentice by virtue of being their legal employer.
Such a model yields a greater degree of flexibility for both apprentices and employers. If for some reason an employer is not able to complete an apprenticeship training the ATA places the apprentice with another suitable employer. This also increases the pool of available apprenticeship positions in sectors that have a prominent presence of small businesses.
Besides, the ATA takes away the administrative and insurance hassles from employers thereby reducing some risk and making it much more conducive for smaller firms to engage in apprenticeships. Such a system is complementary to a direct hire apprenticeship approach, and does not seek to replace it. Nonetheless, it does offer an attractive option for smaller firms.
Our Takeaway- Building MSME Empowerment
Innovative thinking allows for the design of MSME-friendly apprenticeship training frameworks where employers are in charge and feel motivated to engage in apprenticeship systems. Local employer networks working together with industry and government agencies are able to infuse confidence in MSMEs to partake in skill development programmes through the medium of a ‘collective voice’.
The ability to be part of a collective apprenticeship framework goes a long way in removing some of the barriers for smaller firms to get their foot in the door.
[i] India Skills Report 2019, CII, Wheebox
[ii] Department of Business, Innovation & Skills-BIS Research Paper Number 162, Employer Influence on Apprenticeships, 2014