With just two weeks until Scottish Apprenticeship Week, I’d like to start with some genuinely good news. This past year looks set to register the highest numbers of new engineering apprenticeship enrolments in a decade, and every one of them is a welcome addition for a sector where skills are the most talked about constraint on output growth.
It’s especially welcome as the majority of our engineering apprenticeships are modern apprenticeships, delivering the range of practical, hands-on skills that make up the largest part of the deficit that our industry is experiencing.
Heartening as it is, it’s not nearly enough. The widening gap between supply and demand – both current and near future – should feel like trying to work every day in a building where the fire alarm is sounding from the minute you arrive and never stops.
READ MORE: Why apprenticeships are a win-win for everyone
Post-Covid recovery has clarified some unwelcome home truths. For apprenticeships, it underlines that our industry demographic age profile, which used to make us wince, now keeps us awake at night. It’s also shown how little slack there is in the system with last week’s reported unemployment rate in Scotland at just 3.3%.
Sustaining our current decade-high number of apprentice starts wouldn’t even meet the ambition of simply keeping up with the rate of losses through retirement, and that’s before we consider the massive opportunities in engineering and manufacturing that are already in sight.
ScotWind offshore wind projects alone commit more than £25 billion of spend in Scotland, with over half coming from manufacturing, and this doesn’t include potential subsequent hydrogen production projects allied to offshore wind. Add to that the future design and shipbuilding of potential naval assets and commercial vessels, a growing space and aerospace sector, plus decarbonised transport and heat solutions that will need to be built and installed. All need the kinds of practical skills that we just don’t have enough of today.
If you can hear that alarm faintly now, prepare for a volume increase when we examine our current actions to close the gap. Peter Farrer in his capacity as chair of the Scottish Apprenticeship Advisory Board (SAAB) pointed out less than two weeks ago here in The Herald that – as a percentage of Scotland’s total skills and education spend – less than 3% , or £100 million, of the £3.4bn was invested in apprenticeships.
If Scotland was your business, and you counted up the billions of pounds of potential value, only to learn that the number-one risk to securing it was a lack of work-based learning skills, what would you do if you found out you were only spending £100m a year – just 3% of your budget - on this critical area? Any back-of-envelope calculation on return on investment would surely justify multiple increases?
A review of the 2023/24 Scottish Government Budget released in December offers no encouragement, given that the funding made to Skills Development Scotland - which is responsible for modern apprenticeships in Scotland – was reduced from £226m in 2022/23 to £216m for 2023/24, while in the same timeframe the overall skills budget rose by just under £100m.
The Organisation for Economic Cooperation and Development (OECD) recently prepared guidance for SAAB on “strengthening apprenticeships in Scotland”, and for those of us who look with envy at the prevalence and quality of work-based learning apprenticeships in Germany and Switzerland, it is no surprise to see useful comparisons outlined for where Scotland can improve. The report’s comments on the less-generous funding model in Scotland for apprenticeships compared with tertiary degrees prompted me to look at how the financial burden is split between private and public sector here and in Germany.
For engineering apprenticeships in Scotland, we would estimate that a minimum of 90% of the financial burden is carried by employers, whereas in Germany, the private-public split is 75%-25 %. That extra assistance makes it financially easier particularly for small to medium-sized businesses to engage, and that level of enhanced funding is maintained even though an impressive 60% of their school leavers are destined for an apprenticeship.
Industry has a responsibility to lead on demand, but in the last year we have seen examples where that demand has not been met due to lack of funding.
When budgets understandably have no room to increase, hard decisions on priorities have to be made. I worry that despite the size of economic prosperity this scale of engineering manufacturing brings, it will float right past us unrealised, unless we change those priorities now.
Paul Sheerin is chief executive of Scottish Engineering
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