How much can you save by hiring an apprentice

Reports are coming in that apprenticeship placements are on the increase:

In the Thames Valley (ok – I know this because we have an office here) more than ten thousand young people took up an apprenticeship in the academic year 2010/11, up a quarter on the previous year. In some areas the number has even doubled.

It’s great that this is providing employment for more young people, and helping companies recruit more staff, but is it worthwhile for you? We have looked at some of the numbers to see how cost-effective taking on an apprentice really is:

The minimum wage for apprentices is £2.60. This applies to everyone in the first year of their apprenticeship. If the scheme lasts for longer then from the second year the minimum wage is age dependent. This works out as a minimum of £95 per week (36.5 hour week). As an employer you then need to give the apprentice time to study – so in most cases it’s not realistic to get a full “working week” out of the apprentice. Having spoke to a few training providers it’s clear that if the apprentice has a day a week to study then that is quite generous. On the whole, the apprentice should be spending most of their time working for you.

The threshold for paying national insurance is £107 so as an employer you have no liability there if you pay the minimum level for an apprentice. Over a year, the cost of an apprentice is therefore £4,940. If they are 18 or under then the training cost is covered by funding as well.

If you recruit a 18 year old – not on an apprenticeship, then the minimum wage is £4.98 an hour. Assuming a 36.5 working week that puts the cost at £181.77. Factor in employer national insurance contributions and the cost increases to around £188 per week. This works out at around £9,776 per year. This is nearly double the cost to you – and your employee doesn’t get the formal training that comes with an apprenticeship.

It may not be right for every business, but once you start comparing a cost to the business of £4,940 to one of £9,776, then it becomes clear that it’s worth exploring more!