Providing vocational training: An investment that pays off for businesses!

Businesses invest in great measure in training their young talent and future skilled labour supply. According to the results of a new representative survey by the German Federal Institute for Vocational Education and Training (BIBB) on the costs and benefits of in-company vocational education and training, the expenditure of businesses has increased by about 600 euros to EUR 5,398 in real terms per apprentice and year compared to the previous survey in 2007. Yet this investment pays off especially when the apprentices are offered a permanent contract after their apprenticeship, because this saves on recruitment costs, reduces dependence on the external labour market and avoids potential costs of lost business due to labour shortages. More than 80% of businesses confirm that they provide vocational education and training in order to qualify a skilled labour force that they intend to use in the business in the long term. This is why the majority (59%) of the more than 3,000 surveyed businesses providing vocational training say they are "very satisfied" or "satisfied" with the cost-benefit ratio of providing vocational education and training. Only 11% proved to be dissatisfied. The results of the BIBB survey have been published in the latest issue of the BIBB REPORT, Issue 1/2015.

In the vocational training year 2012/2013, businesses had to budget average gross costs of EUR 17,933 per apprentice and year. EUR 11,018 (62%) of this total sum were expended for the apprentice's labour costs and EUR 4,125 (23%) for labour costs for training staff. Investment and material costs were EUR 925 (5%) and other costs were EUR 1,866 (10%). These latter include, for example, chamber fees and costs for external training courses and administrative expenses in the provision of vocational education and training.

Yet apprentices do not solely generate costs. With their work they contribute to the production of wares and services. When deducting this productive contribution totalling an average of EUR 12,535 from the gross costs, the resultant average net costs expended by businesses in the vocational training year 2012/2013 are EUR 5,398 per year and apprentice. In 2012/2013, about 28% of apprentices generated net revenue for the businesses providing their vocational training.

The average net costs in East Germany were EUR 6,314, whereas in West Germany they averaged at EUR 5,242. Because of the different levels in apprenticeship remuneration, wages and salaries, both the gross costs and the revenue generated by the productive contribution of apprentices were higher in West Germany than in East Germany. However, the difference regarding revenue was higher than that regarding gross costs, so that higher net costs were registered for East Germany. Significant differences were recorded also between the vocational training fields. The highest net costs were accrued in the civil service (EUR 8,032) and in industry and commerce (EUR 6,146). The net costs were significantly lower in the skilled trades (EUR 4,390), the independent professions (EUR 3,705) and in agriculture (EUR 1,293).

Differentiation according to various occupational fields reveals that the highest amount of gross costs (EUR 19,092) are expended in the technical occupations (for example, industrial mechanics, information technology specialist). Since these are also the occupations with the lowest generated revenue (EUR 10,153), the net costs are the highest in this group at EUR 8,939. The net costs are the lowest in the commercial occupations at EUR 3,522. The fairly high gross costs (EUR 18,206) in this occupational group are balanced by the highest generated revenue (EUR 14,684). In the skilled trades (for example, carpenter, trained chef), the net costs are at EUR 4,257. The gross costs in this occupational group are EUR 16,116, whereas the generated revenue of EUR 11,859 is lower than in the commercial occupations.

Businesses generate further significant cost savings when offering apprentices a permanent contract following completion of the apprenticeship. On average, businesses took on about 60% of their apprentices. They thus save on recruitment costs, which would accrue in hiring qualified professionals from the external labour market. According to the BIBB survey, businesses expended an average of EUR 8,715 for recruitment. Businesses benefit also from other advantages, the value of which, however, cannot be expressed in monetary terms. For instance, a company can teach its apprentices also company-specific skills and knowledge in addition to the curriculum defined by the training regulation.

Detailled information in: BIBB REPORT, Issue 1/2015: "Ausbildung in Deutschland weiterhin investitionsorientiert – Ergebnisse der BIBB-Kosten-Nutzen-Erhebung 2012/2013" (publication available in German only). The report can be downloaded free of charge on the BIBB website under www.bibb.de/bibbreport-1-2015

Images are available under www.bibb.de/pressefotos.

Contact at the BIBB:
Felix Wenzelmann
Anika Jansen
Gudrun Schönfeld

Specimen copy requested.