What is a Managed Apprenticeship? Publications
This paper describes an investigation into apprenticeship-type training programmes offered by tertiary education institutions.
Author(s): Paul Mahoney, Tertiary Sector Performance Analysis, Ministry of Education
Date Published: March 2015
Most people who qualify for a trade do so via the industry training system, in an in-work and off-job training arrangement organised through an industry training organisation (ITO). Some polytechnics and institutes of technology (ITPs), (and other types of provider) also offer workplace-based training leading to qualifications that are the same as those offered through ITOs.
These programmes are often referred to as 'Managed Apprenticeships'. The fact that there are two pathways to trades qualifications has led to speculation about the quality and value of the two approaches. However, because we haven't had information about which programmes and which institutions follow an apprenticeship model, there has been little evidence on which to base detailed analysis.
We have conducted a search of ITP programmes, consulted with ITPs and have analysed administrative data to identify Managed Apprenticeships – where it is clear that there is similar provision across the ITP and the industry training sectors.
The scope of this search was on programmes that most closely resembled New Zealand Apprenticeships hosted by ITPs, that is we define a Managed Apprenticeship as follows:
- the apprentice is enrolled at a polytechnic or institute of technology (for the purposes of this analysis, but they can be hosted by other provider types)
- study leads to a national qualification at Level 4, consisting 120 or more credits
- study is funded through the student achievement component
- the participants are in work and training in a field that applies to their employment
- training is governed by a tripartite training agreement between the institution, the apprentice and the employer
- ITOs have little or no involvement in training administration.
How much provision is there?
- Managed Apprenticeship provision is relatively small.
- We identified a total of eight qualifications offered in 13 institutions that could be considered to be Managed Apprenticeship programmes.
- At the height of Managed Apprenticeships in 2008, there were approximately 1,900 managed apprentices, across three narrow fields of study: automotive engineering (including electrical), carpentry and plumbing and gas fitting.
- The numbers of managed apprentices dropped during the global financial crisis, when employers were taking on fewer staff, but numbers have begun to grow slowly following the recession, reaching over 1,141 in 2013.
- Managed Apprenticeships are about a third of funded polytechnic provision in the relevant fields at Level 4, but they represent only 19 percent of equivalent industry training provision.
The performance of Managed Apprenticeships
- Managed Apprenticeships qualification completion rates vary across institutions. A few institutions have poor results. Other institutions show good completion rates, with two institutions averaging over 50 percent of apprentices gaining a qualification within five years.
- A comparison of the qualification completion rates for plumbing and gas fitting qualifications between Managed Apprenticeships and equivalent industry training shows that rates are similar. But proportionally more carpentry and automotive engineering industry training apprentices gained qualifications over five years than equivalent managed apprentices.
- There is also wide variability in completion rates between providers. So while overall, industry training apprentices do better than managed apprentices, at some providers the reverse is true.
- Overall, completion rates for Managed Apprenticeships are lower (38 percent) than for equivalent non-apprenticeship provision in polytechnics (43 percent) and equivalent industry training provision (44 percent).
Outcomes for managed apprentices
- Longer-term outcomes for managed apprentices who complete their qualification are good, with a high proportion (61 percent) in employment five years after study.
- Five years after completing their qualifications, managed apprentices are employed at equivalent rates to polytechnic graduates who took qualifications at the same level in the same field, but who weren't in a Managed Apprenticeship programme.
- Managed apprentices are employed at slightly lower rates after qualification completion than equivalent industry training apprentices.
- Managed apprentices are more likely to be overseas five years after study, compared to equivalent polytechnic-based graduates and equivalent industry training apprentices.
Comparing the costs
- We compare the cost to the government of completing Managed Apprenticeship programmes and industry training apprenticeships to determine the relativities between different types of provision in terms of inputs and outputs.
- We compare the cost in three ways:
- we estimate the raw cost of completion (which is the total government funding paid, divided by the number of completed qualifications)
- we calculate the effective cost of completion (which takes the raw cost and adjusts for differences in the length and composition of programmes)
- we estimate the value for money spent and the efficiency of delivery.
- The main influence on the raw cost of completion of Managed Apprenticeships is the qualification completion rate. The raw cost of completing one of the Managed Apprenticeship programmes with a high completion rate is lower than the cost of completion of the corresponding industry training apprenticeship.
- Under this measure, higher completion rates mean lower rates of non-completion are attached to the total provision bought to attain it, therefore lowering the cost.
- Some Managed Apprenticeship programmes at some polytechnics have relatively low completion rates. Those programmes have high costs of completion and offer poor value.
- The effective cost of completion calculates the average cost to government of qualification completion per EFT or STM consumed. It takes the raw cost of completion and divides it by the number of EFTS or STMs completers consume. It allows the effect of non-completion on the cost of completion to be examined but by controlling for the differences in the size of qualifications.
- The effective cost of completing Managed Apprenticeship programmes is higher than the corresponding effective cost of completion of industry training apprenticeships, reflecting the higher funding rate paid by government for polytechnic enrolments. But on this measure, the Managed Apprenticeship programmes with high completion rates come close to the cost of equivalent industry training programmes – much closer than the actual funding rate differential would suggest.
- This suggests that the Managed Apprenticeship qualifications with higher completion rates offer good value. But those Managed Apprenticeships programmes with low completion rates have high effective costs of completion.
- Our two value for money measures look at the completion of the components of qualifications – credits – and compare this to the cost inputs (EFTS and STMS consumed).
- Looking at the funding value of credits successfully completed against total funding, we see that Managed Apprenticeship represented less value for money than equivalent industry training. For each $1 spent in Managed Apprenticeships, we gained 95 cents of "credit value", compared to $1.19 in equivalent industry training.
- When we compare the true cost paid of gaining credits, we see that the cost of a credit value unit is $1.05 in Managed Apprenticeships, compared to 84 cents for industry training. This is 125 percent the cost of equivalent industry training.
- Although industry training is absolutely cheaper than Managed Apprenticeships, as the difference in the cost of a credit unit is not as wide as the funding rate difference, (the EFTS rate is 89 percent higher than the STM rate), Managed Apprenticeships has a better input to output ratio than equivalent industry training. This implies that Managed Apprenticeships may be a more efficient means to achieve credits than equivalent industry training.
- The proportion of inactive trainees in industry training (21 percent of industry training apprentices gained no credits in 2012 compared to 14 percent of Managed Apprentices) contributes to the lower value of industry training expenditure.
Note: There are several caveats to these findings:
- We use 2014 funding rates because the analysis is trying to determine what might happen in the future, based on past performance. We recognise, however, that funding rates have changed and, in particular, that industry training funding was changed significantly in 2014.
- We use direct costs only rather than indirect costs to government such as lower-wage tax credits and Student Loan write-off costs because of the difficulties in limiting and measuring these. As such, we recognise that our cost comparison does not represent full cost to Government.
- We acknowledge that completion rates and data reporting practices in industry training and in polytechnics have improved significantly during and since the period covered by the report.