Do Apprenticeships Make Financial Sense For Your Business?

For two years, the RMI, merSETA and IMI UK embarked on a research project on whether is makes financial sense for automotive employers in South Africa to take on apprentices. 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.

South African automotive employers can achieve up to a 200% return on their investment from contracting or employing apprentices. Click To Tweet

The research focussed 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.

The data collection and analysis included utilisation which referred to worked hours in proportion to attended hours, efficiency which was sold hours compared to work hours, and productivity – sold hours in relation to attended hours. A ratio was then formulated to identify the ROI.

What’s interesting is that small and medium sized employers are reluctant to contract and train apprentices. Why? Because the perception is that apprentices don’t pay their way and it’s costly to train them. This perception has now been disproved by scientific research. Historically 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 will calculate, in seconds, 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.

The ROI Calculator intelligence already has productivity data (in the form of standard productivity curves) attributed to actual apprentices enrolled on the Competency Based Modular Training programme installed. All data remains anonymous.

It is such an easy process – there are literally three steps. As an employer all you need to do is log on to http://roi.merseta.org.za/, follow the steps and a headline figure of the gross benefit in Rands is displayed, with a choice of three apprenticeship durations.

This information is supplemented by a graph showing the net monthly Rand benefit and cumulative ROI. A second click of a button reveals a graph of the rolling monthly net benefit up to the end of the apprenticeship where the full apprentice ROI is displayed.

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 Apprentice ROI Calculator to you. We need more automotive employers to recruit apprentices for the economic benefit of our sector and communities so we are appealing to all our RMI members to make use of this ROI tool.

We urge you to be proactive by employing apprentices and investing in the youth for increased productivity. 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. Consider an apprentice. Use the ROI Calculator. You may be surprised by the results. It is never too late to make a difference.