The government must pay young people to enter traineeships

8 Jan 2022, 10:13



Traineeships are getting good outcomes but are being crowded out by other subsidised programmes, writes Jane Hickie

As we enter 2022 with sluggish economic growth, rising inflation and stubborn rates of youth unemployment, it’s more vital than ever that we equip our young people with the skills employers need.

All evidence shows that traineeships have fantastic outcomes. Young people undertaking a traineeship are far more likely to have positive outcomes than those that don’t.

But with such a crowded field of training and employability programmes, traineeships often get overlooked. That’s why the government should be paying young people to do them.

If the government is to reach its ambition of trebling the number of participants on traineeships, now is the time to incentivise learners.

What are the benefits?

Traineeships are intended for people aged 16 to 24 who aren’t in employment and have had little work experience. They offer work experience with relevant on-the-job training; and offer support to improve English, maths and key digital skills, too.

They’re also great for employers. Traineeships are flexible and designed to allow providers and employers to tailor them to the needs of local employers. They are shorter programmes than apprenticeships, so can be easier for smaller employers to commit to.

Employers need to be able to offer at least 70 hours of safe, meaningful and high-quality work experience. There is a £1,000 incentive per traineeship, and employers can claim for up to ten placements in each region they operate in. These incentives ensure taking on trainees is an attractive proposition for employers.

Around three-quarters of all trainees have successful outcomes (either taking on work, starting an apprenticeship or further study) within 12 months. This compares to fewer than half of all non-trainees.

Government research on traineeships shows that trainees are over six times more likely to take on an apprenticeship than non-trainees.

What are the challenges?

In 2020 the Treasury made a significant financial commitment to re-energise the traineeship programme. This commitment included increasing the core funding, as well as increased participation funding and a new employer work placement incentive payment – in place until July 2022.

However, the progress of the traineeship programme has been hamstrung by traineeship referrals remaining lower than expected. Too many young people are being automatically referred by Jobcentre Plus work coaches to competing provision run by the Department for Work and Pensions, such as Kickstart and now Restart.

At £7,000 per participant, the cost of Kickstart is more than twice that of the next most expensive employment support scheme. The obsession with referring all young people to Kickstart might help to meet internal departmental government targets, but it won’t necessarily offer the best outcomes for individuals. What matters most is the right pathway for the learner.

It would be too simplistic to look at low learner demand and suggest traineeships have no future. Quite the opposite: traineeships still produce exceptional outcomes ̶ whether that’s trainees moving on to apprenticeships, jobs or further study. This means that stimulating more demand from young people should be an immediate priority.

How can we solve this?

Given the pandemic, it is vital to ensure that the DWP and the Department for Education have a coherent and integrated employment and skills strategy.

However, there are concerns that the wage subsidy incentives for Kickstart participants – currently the national minimum wage for 25 hours per week for six months, as well as national insurance and pension contributions – causes other opportunities to be crowded out.

Limiting traineeships to those willing to take on an unpaid placement risks them being a last resort for our young people.

So a government-funded subsidy – perhaps similar to the apprenticeship rate, which is £4.30 per hour – for trainees would be a godsend for them.

It would also be a strong signal that traineeships are a viable way to move quickly into a job, further study or an apprenticeship.

It’s time to give trainees the support they deserve. Let’s give traineeships a fair chance to succeed by paying participants.