The Bank of England has confirmed that the cost-of-living crisis is very likely to lead to an economic recession by the end of 2022. The headline rate of inflation is around 7% and the Bank of England believes it will reach as much as 10% by autumn. A combination of COVID-19 and its related lockdowns and the Russian invasion of Ukraine has further escalated the cost of gas, oil and other vital commodities. This in turn impacts daily living costs, and the costs of running a business and can lead to companies falling into economic difficulty.
Understandably, if you have started an apprenticeship, you may be worried about losing your position or being the first person asked to leave your organisation, but this is not necessarily the case. Apprenticeships are often more common during times of economic stress as the costs of employment are lower than a regular employee. Let’s first look at the impact of recession on employment.
Previous Recessions and the Impact of Coronavirus on Employment
Evidence shows that the 2008-2009 recession impacted people’s wages and livelihoods for many years beyond the recession itself. The Resolution Foundation’s research found people who entered the world of work during this crisis took six years longer to recover wages than those who had been working for longer. Young people statistically take longer to find their feet again and recover their income after a recession period, so it is more important to make the most of the opportunities available.
The redundancy rate from September-November 2020 was 16.2 per 1000 in the age group 25-34. This was a fivefold increase on the same period in the previous year and the research from previous recessions shows how hard younger people struggle in these environments. For apprentices and people looking to start an apprenticeship in the coming months, there should be no immediate reason to worry.
The Impact of the Next Recession on Apprentices
Apprenticeships are 95% funded via the government and the Apprenticeship Levy so they offer organisations an affordable alternative to traditional training options. Organisations that may have had to cut back on training and utilise their Apprenticeship Levy effectively to bring in new talent and upskill the workforce. It is also likely that employers will be more interested in hiring young apprentices aged 16 to 17 due to the salary savings and related incentives that come with hiring a younger employee.
How Apprenticeships can help organisations during a Recession
As already explained, apprenticeships are funded via the Apprenticeship Levy so organisations can make a saving on both their training and hiring budgets. Businesses can use their government funding to retrain their staff in new areas to plug skills gaps or bring in new and enthusiastic employees who bring something fresh to the business. Recruiting enthusiastic school leavers gives organisations the opportunity to shape their future workforce and nurture a new generation of loyal employees for the business.
An upcoming recession is always a worry for businesses, but especially for young people making their first steps into the world of work. An apprenticeship is a viable option for both parties to weather the storm and develop valuable new skills and career options, and it has multiple benefits for the organisation too.
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