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Apprenticeships make good financial sense for businesses, research shows

Apprenticeships make good financial sense for businesses, research shows

The skills shortages and limited opportunities for upskilling artisans, not only in the retail industry but industry at large, prompted the Retail Motor Industry Organisation (RMI) to join forces with merSETA and the Institute of the Motor Industry (IMI) UK to embark on a research project. “We needed to ascertain whether it made financial sense for automotive employers in South Africa to take on apprentices,” says Jakkie Olivier, CEO of RMI. After the project was completed in 2018, the resounding answer was yes. South African automotive employers can achieve up to a 200% return on their investment from contracting or employing apprentices.

“We focussed the research on three occupations namely auto mechanic, body repair and spray paint. The research criteria was made-up of three parts. Firstly, to apply modern data collection and analysis techniques at automotive employers for the three trades. Next to ascertain the estimated business value in Rands that an apprentice can be expected to deliver, and lastly to develop a Return On Investment (ROI) calculator for use by employers,” he explains.

Olivier says small and medium sized employers are reluctant to contract and train apprentices because they perceive that apprentices don’t pay their way and it’s costly to train them. “This research disproves this. Historical there has been a lack of measurable apprentice performance and productivity data. Essentially no access to current and reliable information. We believe this problem has been resolved by the ROI Calculator which is available, free of charge to employers.”

It is a web-based, easy and user-friendly tool. Employers only need to input three items - expected sold hours for the selected occupation, the charge-out rate applicable in the business, and the apprenticeship duration. Using this information, the ROI Calculator’s algorithm calculates the estimated ROI for the apprentices as if they were employed by the business. “It incorporates actual employer costs including: time and level-based national minimum apprentice wages; training; level and trade testing; and ancillary costs and opportunity costs to calculate a truly reliable ROI,” he says. All data remains anonymous.

Olivier says using the calculator is an easy process and is encouraging all businesses to use it before dispelling the possibility of taking on an apprentice.  “The ROI Calculator shows without doubt that when well-recruited and guided through an apprenticeship, an apprentice can pay back the investment (and more) that the employer made during the apprenticeship period. As the RMI, along with merSETA and the IMI, we are proud to promote the ROI Calculator. We need more automotive employers to recruit apprentices for the economic benefit of our sector and communities.”

“As an industry we have to address the automotive skills shortages, reduce unemployment and be part of real transformation. The reality is that there has been no real skills development and/or under-investment in human capital for many years in our country. Skills have been outpaced by technology and there has been a loss of businesses and profits. Improved skills will result in increased productivity. It is all about professional standards and changing of perceptions,” he concludes.

The ROI Calculator can be accessed on the following link: http://roi.merseta.org.za/

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Automotive Export Manual 2019