Establishing an optimal and equitable funding arrangement is a core aspect of designing Quality Apprenticeship systems. Who shares the financial burden, and how can a fair distribution of costs among the relevant stakeholders be determined? In considering the financial model, it is clearly important to consider the costs and benefits of Quality Apprenticeships, and how they accrue to apprentices, employers and governments alike.
The aim of this chapter is to outline the costs and benefits of Quality Apprenticeship training, which will inform subsequent discussions and negotiations on funding arrangements. Linked to the matter of funding arrangements is the issue of incentives for employers and apprentices to promote their participation in apprenticeships. Depending on the socio-economic context surrounding skills development and desired policy outcomes, governments may provide financial incentives to promote the participation of employers in Quality Apprenticeship programmes. They may also provide stipends and additional support to vulnerable groups, women and disabled persons. Incentives may be financed by taxpayers (i.e. public expenditure to support Quality Apprenticeships), and/or by employers (i.e. via a grant from a fund set up on the basis of an employers’ levy) and distributed to apprentices and/or employers who train apprentices.
Cost distributions arrangements vary, but the most commonly observed pattern of cost distribution is the following:
- Employers bear the costs of on-the-job training, wages/allowances and social security contributions
- Apprentices receive lower remuneration/ allowance than skilled workers
- Governments finance off-the-job training in TVET institutions, the administration of the scheme and incentives for employers, where they exist.