Aspects of Apprenticeship

Paul RyanUniversity of Cambridge

Productivity, Investment in Human Capital and the Challenge of Youth Employment

University of Bergamo December 2010

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Apprenticeship: definition

• ”Training programmes that comprise both work-based training and formal education. in most countries at upper-secondary level, and that lead to a qualification in an intermediate skill, not just to semi-skilled labour”

• Apprenticeship is distinct in principle from– Full-time vocational education– Youth employment and on-the-job training – Labour market programmes

S. Wolter and P. Ryan (2010), ‘Apprenticeship’, in E. Hanushek, S. Machin and L. Woessmann (eds), Handbook in the Economics of Education, vol 3., p.523. Oxford: Elsevier.

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Topics

1. Apprenticeship: merits and limitations2. Institutional attributes3. Apprentice discontent, organisation

and activism

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1. Merits

• Pedagogical benefits– Cognition: ability to learn– Motivation: desire to learn

• Skills and competence: closeness of learning to production

• School-to-work transition: youth activity and youth employment

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Youth inactivity rate: Share of 20-24 year olds not in employment or education

OECD Factbook 2010: Economic, Environmental and Social Statisticshttp://stats.oecd.org/Index.aspx?DatasetCode=CSP2010

ISLNLD JP

NDNK

NORLU

XCHE

SVNAUS

AUTCZE IRL

SWE FIN NZLCAN

OECDFRA

PRTDEU

ESTBEL

USAMEX

HUNESP

GRCGBR

POLSVK ITA

BRA ISRTUR

0

5

10

15

20

25

30

35

40

45

50

1997 or first available year 2007

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Apprenticeship: volume

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Limitations• Pedagogy– Some individuals learn better abstractly– Low educational attainment as constraint

• Skills– Quality (learning content) may be low– Integration of learning at school and workplace

• School-to-work transition– Activity is vulnerable to fluctuations (output, youth

population); so apprenticeship provides structural rather than conjunctural benefits

– Effect on pay is weaker than that on employment

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2. Institutional attributes

1. Statute law2. Employers’ representation3. Employees’ representation4. Educators’ representation5. Apprentice contracts

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Institutional attributes: evidenceCH DE CZ NL FR UK IRL SW KOR

Statutory basis (year) 2004 1969 n.a. 1966 1987 2009 1993 none none

Employer assoc coverage 37 72 n.a. 79 74 54 39 55 n.a.

Bargaining coverage (%) 40 68 n.a. 80 90 30 n.a. 90 10

Works councils’ powers 0 H n.a. H L 0 L H 0

Educators repr’n Y Y n.a. Y ¬ 0 Y n.a. n.a.

S. Wolter and P. Ryan (2010), op cit.

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Institutional analysis

• Markets and institutions• Economics (and political economy)– Market failure– Functionalist solutions

• Political science– Agency and adaptation– Dysfunctions

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E.g.: is social partnership important?

• Issue: employee representation, via trade unions, works councils, in setting training standards, monitoring training quality, etc.

• Analysis– Quality-related information and incentives – Rent seeking– Ideological conflict

• Evidence– Positive association across countries between training volume and

union density/coverage (above)– Extreme cases: Germany, UK– Counter cases: Sweden, Switzerland

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E.g., contractual position of apprentices

• Germanic countries– Regulation by statute law– Apprenticeship and employment contracts differ in

• Duration: fixed training period• Pay: an allowance rather than wage• Rights: e.g., right to strike

• Anglo-Saxon countries– Regulation by common law– Erosion in UK of the distinction between contracts of

apprenticeship and employment (‘service’)– An employment contract will be required from 2011 for

participants in the UK’s Apprenticeships programme

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Why is employee status required for Apprentices in England?

1. History. To distance the programme from the reputation of its predecessor (Youth Training Scheme), in which ‘trainee status’ became associated with low pay and low quality (exploitation)

2. Structure. To respond to (i) the dominance of training companies as prime contractors for

public contracts, and (ii) low employer commitment to apprentices

by strengthening the links between the Apprentice and the employer

Department for Innovation, Universities and Skills (2009), World-Class Apprenticeships. London: DIUS/DCSF

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Employee status and apprentice pay

• The separation of apprenticeship and employment contracts – reflects the intermediate status of apprentices – facilitates low apprentice pay (and low training

costs for employers)• Employee status is associated with higher

apprentice pay– Across time (e.g. Britain, 1970s, 1980s, 2000s)– Across countries

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Pay of apprentices relative to skilled employees (%)a

Metalworking Retailing All occupations

GB 2005 40.9 70.0 45.2

DE 2007 29.2 34.2 26.8

CH 2004 14.1 17.5 17.9

a. Base pay, unweighted average across all years of training, relative to pay of recently qualified workers in same occupation;P. Ryan, K. Wagner, S. Teuber and U. Backes-Gellner (2010), Table 23

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3. Apprentice discontent, organisation and activism

Background

• Apprentice pay and training quality varies greatly across time and place

• Companies’ motives for training apprentices– Investment-oriented: future skill supplies– Production-oriented: current production cost

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Distribution of net cost of training an apprentice, Swiss employers, 2004

Muehlemann, S., J. Schweri, R. Winkelmann and S. Wolter (2005), ‘Structural model of demand for apprentices’, CESifo Working Paper 1417, Munich

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Potential influences on apprentices’ satisfaction during training

• Actual situation during training – Pay – Productive effort– Training quality– Availability and appeal of alternatives

• Expected situation after training – Access to employment (skilled or not)– Pay

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Modes of expression of discontent

• Exit– Quit training (drop out)

• Voice– Individual complaint– Collective organisation and

action• Through trade unions• Self-organisation

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Four instances of potential discontent and activism in ‘apprenticeship’

• British metalworking apprentices (1910-65)• German apprentices (1968-73)• Swiss apprentices (since WW2)• American doctoral students (since 1960)

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Apprentice strikes: Manchester, 1960

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Apprentice strike movements in UK metalworking: timing and size

Year # strikers Working days lost

1912 14,600 n.a.

1921 6,500 n.a.

1937 32,500 406,000

1939 2,200 19,000

1941 25,100 220,000

1944 17,000 150,000

1952 16,400 194,000

1960 36,900 347,000

1964 6,000 26,000

Mean (n=9) 17,500 187,000

Attributes of GB apprentice strikes

• Apprentices’ claims– Trade union representation rights– Higher pay (relative to regular employees)– Better training (to 1941 only)

• Outcomes– Coverage of apprentices by collective bargaining

(from 1937)– Higher relative pay (wage-age % scales)

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http://www.uaw2865.org/home/home.php 24

Ibid. 25

UAW rally in support of negotiations for a new contract, U. Cal.

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Strike, Teaching Assistants’ Association, Uni. Wisconsin-Madison, 2004

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Doctoral student activism in US

• Discontent and militancy associated primarily with– Pay and benefits (especially health insurance)– Productive contribution (‘doing the professor’s job’)– Career prospects: tenure track vacancies– Politics: place (Wisconsin and Berkeley), time (1960s)

• Outcomes: recognition and contractual gains– Union interest in recruitment: non-faculty unions– Labour law

• Public v. private universities (NLRB rulings on employee status)• Right-to-work v. other states (state law on recognition rights)

Teaching Assistant unionism, US, 2002(UAW: United Automobile ... Workers; AFT: American Federation of Teachers)

University Bargaining Agent Collective agreement

Public U. California UAW Yes

U. Mass UAW Yes

U. Michigan AFT Yes

U. Wisconsin AFT Yes

Private New York (NYU) UAW Yes (to 2004)

Brown UAW No

Columbia UAW No

Yale HERE No

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German and Swiss apprentices• Near-absence of apprentice strikes in CH and DE– Even though apprentice pay is low in CH (above)– Exception: 1968-73 in Germany– No right to strike for apprentices in either country

• Evidence of discontent? Surveys of satisfaction– DE: two-thirds of (second year) apprentices express

dissatisfaction; associated with productive work (-), overtime hours (+) and pay (-)

– CH: half of unionised apprentices dissatisfied; associated with year of training (+) and payment of 13th months per year (-)

Share of apprentices dissatisfied with pay (%)

Share stating dissatisfaction

Germany 2008

Switzerland 2007

All n.a 52

Year 1 n.a. 47

Year 2 67 n.a.

Years 3, 4 n.a. 60

Small plants (E<10) 82 n.a.

Large plants (E>499) 31 n.a.

DE: 6000 second year apprentices in 15 occupations; CH: 1800 apprentice members of UNIA (trade union). U. Beicht and A. Krewerth (2010), Geld spielt eine Rolle!, BIBB-Report 14/10. Bonn: BIBB.

Unia (2008), Auswertung der Umfrage der Unia Jugend zu den Lehlingsloehnen in der Schweiz (2007/2008). Basle30

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Trainee discontent and activism: possible inferences

• Low pay during training does not by itself generate discontent and activism

• Two key differences between the UK+US and DE+CH pairs– External regulation of training quality– Expectation of skilled employment after training

• Low pay relative to productive contribution plus weak career prospects may together do so

• Details– Large programmes may be necessary (safety in numbers)– Where trainee activism occurs, its links to trade unionism tend

to be complex and fraught

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Conclusions

• Apprenticeship can contribute positively to school-to-work transitions in general, according to the quality of training involved

• The institutional requirements for a successful system are complex and unclear; important issues include: – Social partnership in its administration– Contractual status of apprentices

• Apprentice discontent can lead to activism when quality and pay are both low, as is common in weakly regulated training systems

• O doctoral students, many issues for further research!