I thank the committee once again for this opportunity.
While I understand that the committee is concerned about uptake and the reputation of apprenticeships among young people and their families, the main focus of my opening remarks is the take-up of apprenticeships by employers. Employer buy-in is critical, as the apprenticeship and traineeship models depend on employers taking on apprentices.
I do not underestimate the challenge of shifting attitudes in a society that still defines educational achievement in terms of CAO points and direct entry to higher education. I am convinced, however, that if we could offer real alternatives to ambitious and capable young people and, most critically, real progression opportunities up to advanced degree level through apprenticeships, attitudes could be changed. Apprenticeships would no longer be second-best options.
It is almost six years since IBEC was invited to participate on the then Government's review of apprenticeship training. At the time, it was felt that the apprenticeship system, which was limited to 26 craft-based occupations, did not reflect the broad skill needs of the Irish economy. The review suggested a new model of business-led apprenticeships that could boost skill levels across the economy and help to get people into quality, sustainable jobs. A lot of effort has been put into the new apprenticeships project to turn this aspiration into a reality. IBEC has at times been frustrated at the speed at which the new apprenticeships have come on stream but, in retrospect, this probably should not be a surprise. This is a major shift for businesses in terms of how they recruit and train people, and for the education system in terms of how it delivers programmes.
We submitted a detailed submission to members in advance of this hearing on how we believe the number of new apprentice registrations could be significantly increased. As members heard at last week's committee meeting, registrations are a year behind schedule in terms of the targets set out in the action plan to expand apprenticeships and traineeships for the period 2016 to 2020.
Our recommendations can be grouped around three main themes: marketing, support for employers hiring apprentices, and governance and streamlining the new apprenticeship approval process.
As the committee heard last week, the apprenticeship campaign has made significant progress in raising the profile of apprenticeships with key stakeholders, such as guidance counsellors, learners, business and the media. However, a targeted campaign on the value proposition of apprenticeships for firms is needed. SMEs and owner-managers are a particularly difficult business segment to address in terms of expanding take-up but they are incredibly important. They tend to be time poor, have limited numbers of staff to support apprentices and may not even be aware of how the potential talent delivered through the apprenticeship system could improve their business.
A major obstacle to the expansion of new apprenticeships, especially among SMEs, is cost. There is strong evidence that the cost of paying a salary and subsistence while the apprentice is off the job becomes a major disincentive. Our submission includes a case study which demonstrates that the total cost of a newly recruited apprentice manufacturing engineer is approximately €90,000. Therefore, we believe that the cost of funding new apprenticeship off-the-job wages, plus travel and subsistence costs where necessary, should be supported through the National Training Fund. This would also address the anomaly whereby similar costs for traditional craft apprenticeships are subvented.
I now wish to address the issue of governance and streamlining the approval process. The landscape around the development and promotion of apprenticeships is fragmented with multiple actors. These include the Department of Education and Skills, SOLAS, the Higher Education Authority, Quality and Qualifications Ireland, two apprenticeship advisory committees, education and training boards, higher education institutions, multiple industry groups, and trade unions. This can lead to disconnections and delays. We believe the time has come to consolidate these different elements into a dedicated agency, working with business consortia and education providers, to oversee the funding, development and promotion of apprenticeships.
The new apprenticeship project has been developed under the legal framework of the Industrial Training Act 1967. At one level, it is testimony to the amount of goodwill that exists towards apprenticeships in the system that any new apprenticeships have been delivered through a 40 year old legal framework that was designed for a different industrial era.
All the legal requirements in the 1967 Act around protections, rights and responsibilities of apprentices and employers are still valid. However, other requirements have made the development of new apprenticeships and the registering of new companies a bureaucratic process. This can be seen in the 12 steps laid out in the apprenticeship plan. The Government committed to an overall timeframe of 12 to 15 months from development to roll-out. This has not been achieved and, in some instances, proposals that were approved after the first call in January 2015 have not come on stream.
There is a major challenge around keeping companies engaged which originally expressed interest in the apprenticeship project. Given the constantly changing business environment and skills requirement, the system needs to respond more swiftly.
Having said all that, I will finish by acknowledging the progress made and stating that business remains firmly committed to the apprenticeship project. The project is gaining momentum. If we address some of these outstanding issues, it can be significantly scaled up, deliver new opportunities for young people, and improve the competitiveness of business.
I thank the committee for this opportunity and look forward to answering its questions.