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Although many business owners think that training of apprentices is a burden on their business, research proves that they are a very worthwhile investment says Jakkie Olivier, CEO of the RMI
The first six months of 2018 is history, which means that we have only six months left to achieve our objectives as business people – six months to make a real difference not only in our respective businesses and industries that we operate in, but also in the broader economy. In the South African context we have become accustomed to high unemployment figures, low economic growth, high interest rates and taxes, ongoing and disruptive strike action, restricted business opportunities due to an over-regulated economy, low profitability and operating margins for most businesses, low educational levels, and a serious shortage in various critical skills across the motor industry and other sectors of the economy.
For purposes of this month’s column, it is worth repeating the previous and continued appeal to the motor industry entrepreneurs to reconsider youth training through apprenticeships as a guaranteed means of securing a return on your investment in the workforce employed by businesses. The RMI cares deeply about the automotive industry’s future skills base, hence our ongoing partnership with the UK-based – and which operates globally – the Institute of the Motor Industry (IMI). The RMI’s vision for skills development aligns perfectly with government initiatives and industry needs, and we believe firmly that skills development is the catalyst for reducing unemployment, stimulating economic growth and ensuring a return on investment for employers. This means more profits to employ more people, more re-investment in business growth and sustainability – and ultimately satisfying the consumer with professional maintenance and services on their vehicles by skilled and professional people.
Research commissioned by the UK Government and carried by the IMI across the United Kingdom to determine the return on investment (ROI) from automotive mechanic apprenticeship training, showed unequivocally that there is a significant financial return to businesses within the period of the apprenticeship, from apprentice productivity in terms of hours sold when netted against full apprentice costs. These results have been confirmed explicitly within the South African market in further ground-breaking ROI research, commissioned by merSETA and powered by the RMI and IMI, and working very closely with large and SME automotive employers to identify what value South African employers gain from hiring and training an apprentice. The ROI project focused on 3-trades for South African employers hiring apprentice automotive mechanics, body repairers or spray painters.
The powerful and independent research utilising real employer data over two years, has resulted in an on-line South African 3-trade Apprentice ROI calculator requiring just three simple steps to estimate ROI before hiring the apprentice. Typically, in less than two years into the 3-4 year apprenticeship programme, the businesses reached a break-even point from apprentice sold hours alone, recouping the costs of the initial employer investment.
The ROI project also confirmed that an apprentice, when well-supported in the workplace, will be productive very early on and a future asset to the business. After the initial period, the productivity of the apprentice relative to the costs continue to increase, resulting in increased income for the business – approaching a growing return expected during the apprenticeship training period of a qualified technician. A well supported apprentice could be expected to produce an ROI often in excess of 200% by the end of his apprenticeship.
RMI members are encouraged to become proactive by employing apprentices and investing in the youth for increased productivity and apprenticeship ROI benefits. The business would not only benefit financially from training, but we could become involved in addressing the skills shortages in our industry, reducing unemployment and being part of real transformation.
In order to assist automotive businesses in overcoming their reluctance and possible negative perceptions of apprentice training, we invite all RMI members and employers to access the free online ROI calculator (3 steps to apprentice ROI) which will be announced and launched by merSETA in the coming weeks.
As a value-add over and above the financial return for employers when indenturing apprentices, skills development also adds to B-BBEE scoring as one of the priority scorecard elements. Through training, employers also qualify for learnership and apprenticeship tax rebates, employment tax incentives, and SETA mandatory and discretionary grants. Training is clearly the way to go and remains a strategy priority for the RMI in the future.
RMI members who would like to find out more or who are serious about making a difference should contact the RMI training department for assistance, guidance and advice.