Theme 10: Maximising Available Funding
The ways in which apprenticeships are funded vary widely across different EU countries with a mixture of different funding arrangements evident including approaches that place funding responsibilities entirely or partially with employers, entirely as a government responsibility or through tax subsidies, social security funding or partial government reimbursements .
The recent DRIVES D5.2 Understanding the Marketplace Report summarises funding arrangements in place in key European automotive countries including the following:
- In Germany companies participate voluntarily in apprenticeship training and bear its costs. This is also the case in Hungary although training costs and some further expenses can be reimbursed.
- In Poland, VET education is jointly funded by employers and the Labour Fund, a special fund under the jurisdiction of the Ministry of Labour.
- In the UK employers with a pay bill of over £3 million per year pay a levy. For employers who do not pay the levy, costs are largely provided through government funding.
- Romania - Special social insurance fund covers the cost. In Italy employers are partially compensated to take on apprenticeships through a reduction of the social security contributions and in Spain employers training costs are reimbursed through public funding. Sweden - Each apprenticeship position is funded by a government grant from the state budget administered by the Swedish National Agency for Education
- France - To encourage the use of apprenticeship contracts, multiple financial subsidies are in place. In the Czech Republic there are tax incentives for companies co-operating with schools in relation to VET.
To date, data for apprenticeship funding in countries in Europe has not been systematically collected, with the responsibility for financing often shared between different stakeholders, further complicating the picture.
However, Cedefops recent study - Financing apprenticeships in the EU - systematically collected and analysed information on financing arrangements for apprenticeship schemes in EU countries and the UK for the first time .
The report demonstrates the wide variety of ways in which apprenticeships are financed and proposes a typology of financing arrangements for apprenticeships.
The report points out that given the huge variety of the financing arrangements across apprenticeship schemes, international comparisons are difficult. The study suggested distinguishing between three models of financing apprenticeships: a split financing model in which costs for off-the job training are basically paid by the State and costs for on-the-job training by employers; a jointed financing model in which costs are also shared, but in which employers do not just individually but also jointly contribute (including non-training companies) to the financing of apprenticeship via training funds; and a ‘single’ financing model in which the costs are paid (predominantly) by the State, including apprentice remuneration.
The report found that the majority of apprenticeship schemes follow the split model, with only three following the single model: Austria (supra-company apprenticeship), Portugal and Sweden (education contract).
The report is accompanied by an online database www.cedefop.europa.eu/en/tools/financing-apprenticeships that provides detailed financing information for each apprenticeship scheme covered.
What will be important for European automotive employers, particularly those operating across international boders will not only be accessible information on different apprenticeship financing financing schemes, something the recent Cedefop Report and online data base starts to provide, but also practical examples of innovative ways automotive employers can utilise the funding that is availble in different countries.
To date the DRIVES Project has collected one such example highlighting how a regional authority in England helps transfer unspent apprenticeship funding from large employers to local SMEs in need of apprenticeship funding, including SME automotive employers.
The aim is to identify and document further examples relavant to the European Automotive sector.
As EU members together with the UK start to focus on post-pandemic economic recovery measures there will be new opportunities together with challenges posed for apprenticeships.
As a concrete action under the European Pillar of Social Rights, the European Commission recently presented a Recommendation on Effective Active Support to Employment following the COVID-19 crisis (EASE). It outlines a strategic approach to gradually transition between emergency measures taken to preserve jobs during the pandemic and new measures needed for a job-rich recovery .
It suggests that policy packages should comprise three components: (1) hiring incentives and entrepreneurial support, (2) upskilling and reskilling opportunities, and (3) enhanced support by employment services, with a special focus on young people and workers of all ages in the sectors worst affected by the pandemic.
The importance apprenticeships can play in aiding recovery is explicitly mentioned. The announcement refers to how support for apprenticeships, especially in SMEs, can be effective to develop the skills required on the labour market and help young people and other vulnerable groups into employment.
An integral aspect of recovery plans announced in November 2020 is the European Commission Pact for Skills, described as a shared engagement model for skills development in Europe and the first of the flagship actions under the European Skills Agenda . A specific Skills Pact for Automotive Skills has been launched (The Pact for Skills - Skills Partnership for the Automotive Ecosystem) with the ambition to reach 5% of the workforce each year, resulting in 700,000 employees being up- and re-skilled along the automotive ecosystem in the coming years. Based on a re-skilling investment of on average €10,000 per employee, this represents an overall commitment of around €7bn from the private and public authorities .
It will be important that the potential for supporting and reshaping apprenticeships specifically supporting the EU automotive sector are maximised through this initiative.