22nd February 2016
Did you know that level 5 Higher Apprenticeships lead to greater lifetime earnings than undergraduate degrees from non-Russell Group universities?
Recent research has delivered a robust challenge to the view that degrees are the best way to maximize income in your career. Factors challenging the status quo include the amount of debt university students now accrue, an excess of graduates versus the available graduate jobs, and also (as discussed in our last blog) the rise of apprenticeships.
Late last year The Sutton Trust released a report that focused on the growing area of apprenticeships (the government is looking to create 3 million by 2020) and the potential for these opportunities to act as major drivers of social mobility.
The report’s findings make for interesting reading given they challenge some long-held assumptions that having a degree inevitably leads to a more successful career and higher income.
Here are some of the headlines from the report.
The earning potential of the best apprenticeships already rivals that of degrees:
- According to the latest modeling by the Boston Consulting Group, lifetime earnings for a level 5 Higher Apprentice equate to £1.5 million versus £1.4 million for non-Russell Group degree holders when student debt repayments are taken into account.
- On average, a Higher Apprenticeship at level 4 and an undergraduate degree from a non-Russell Group university result in similar lifetime earnings.
- Meanwhile, holding an Advanced Apprenticeship at level 3 results in slightly better earning potential than that of someone whose highest qualification is at A-level.
Nevertheless, shortcomings persist:
- The current majority of apprenticeships are intermediate (level 2), which offer only marginally better lifetime earnings than secondary school qualifications alone.
- Research by Oliver Wyman cited in The Sutton Trust report suggests that the most elite apprenticeships are disproportionately populated by those from wealthier backgrounds, who are often given specialist preparation by their school.
- There is a sharp gender divide in apprenticeships. For instance, engineering apprenticeships remain male-dominated (96% are male); beauty therapy apprenticeships female-dominated (99% are female). It was recently reported that, because of this imbalance, female apprentices earn over £1 an hour less than male ones.
- According to the latest data for 2014/15, less than a third (32%) of apprenticeship starts were by people under 19, but over a third (36%) were by those aged 25 or older. This limits the potential of apprenticeships as a vehicle of social mobility.
- The perceived lower value of apprenticeships persists in UK culture. This perception extends to teachers and parents, who tend to recommend degrees over apprenticeships for their students or children. This needs to be addressed, but can only happen in unison with reform of the apprenticeship system.
It’s clear that the best – and particularly higher level apprenticeships – hold fantastic potential for young people, but there is still work to be done to ensure that all apprenticeships offer the same kind of opportunities. (Keep reading below)
The Sutton Trust report’s findings suggest apprenticeship providers, employers and the government should look to create more Advanced and Higher apprenticeships. There should also be clear progression pathways so that young people undertaking Intermediate Apprenticeships can easily step up to the next level of apprenticeship upon completion.
Furthermore, many teachers lack awareness of what apprenticeships are available. Greater efforts need to be made to inform students about the options available to them and to challenge preconceptions about apprenticeships and highlight their benefits.
Hopefully the proposed law to raise the profile and status of apprenticeships will prompt some significant strides in the right direction (https://www.gov.uk/government/news/new-law-will-end-outdated-snobbery-towards-apprenticeships)! Although there’s a way to go, apprenticeships increasingly present an exciting alternative to university with growing potential to match or even exceed the lifetime earnings of a graduate.
By Dan Keller
 Kirby, P (2015) Levels of Success: The Potential of UK Apprenticeships