L. Lassnigg / P. Steiner Financial Aspects of Apprenticeship in Austria

Transcription

1 Financial Aspects of Apprenticeship in Austria Results of an Empirical Study PAPER AT THE EUROPEAN CONFERENCE ON EDUCATIONAL RESEARCH (ECER 97) FRANKFURT/MAIN, SEPT , 1997 Lorenz Lassnigg / Peter Steiner (Institute for Advanced Studies) Vienna, September Introduction Aspects of Data Collection General Results Concerning Features of Apprenticeship Estimation of Costs and Returns of Apprenticeship Methods of Estimating Costs and Returns Gross Costs Returns Net Costs and Returns Comparison with Other Studies Summary

2 1. Introduction This article summarizes the main results of the study Die betrieblichen Kosten der Lehrlingsausbildung 1 ( Companies Costs of Apprenticeship Training ), which was carried out on behalf of the Kammer für Arbeiter und Angestellte (Chamber of Labor). The purpose of the study was the estimation of the of apprenticeship in Austria. An important point was the comparability with already released studies in Austria 2 and Germany 3. Besides a calculation of the and returns of apprenticeship with four different concepts, attention was paid to several features of internal training. 2. Aspects of Data Collection A stratified sample (by occupation and state) with a size of 1,622 was drawn out of a basis of 44,037 enterprises. After the interviews had been carried out by the Institut für empirische Sozialforschung (IFES, the Institute for Empirical Social Research) and sample-neutral missings 4 had been eliminated, a net sample of 1,481 enterprises remained. 1,085 cases of this sample were usable for exploration (i.e % of gross sample). The interviews were carried out by trained interviewers between August 23 and October 13, The location of the interviews was the respective enterprise and as informant the person responsible for the administration of apprenticeship was chosen. For ensuring the study s representativity a check and some corrections of data were made. 5 Finally note that due to missing values the calculated results are based on different sample sizes General Results Concerning Features of Apprenticeship This part of the article presents some results which characterize the environment of apprenticeship, i.e. the enterprises utility of apprenticeship, infrastructure for internal training (personnel and equipment), temporal structure of training. The first aspect is the enterprise s utility of apprenticeship or the reasons why enterprises employ apprentices. As shown in Table 1 the most important point is the recruitment of young workers who meet the enterprise s requirements (90.7 % regard this point as very important or important). The next important 2

3 point is the recruitment of trained workers who are not available on the labor market (85.3 %). Remarkable is the fact that the cost aspects of apprenticeship play a relatively minor role. Table 1: Utility of apprenticeship Percentage of enterprises which regard the aspect of utility as very important or important % Recruitment of young workers who meet the enterprise s requirements 90.7 Recruitment of trained workers who are not available on the labor market 85.3 Possibility of employing the best apprentices as trained workers 74.4 Avoiding high personnel fluctuations because internally instructed workers are highly obliged to the enterprise Minimizing the risk of wrong personnel decisions which is always present when recruiting external workers Improvement of enterprise s reputation 51.0 Reducing number of unskilled and semiskilled workers by equivalent usage of trainees 47.1 Saving high of initial period of externally trained workers 41.8 Saving of recruitment of workers on the labor market 28.0 Cost and quality of apprenticeship are mainly determined by the training infrastructure. The following components of infrastructure can be distinguished between: 1. training workshop or a similar equipment, 2. full-time instructors, 3. side-line instructors with loss of productivity due to instruction of trainees. This restriction of diminished productivity was made, since each training enterprise is obliged by law to have at least one side-line instructor (master). The study showed that 59.8 % of all enterprises with apprentices have no special training infrastructure, i.e. in those enterprises training is realized within the normal work situation as a sort of on-the-job-training. This kind of training is carried out by an instructor without any loss of productivity % of enterprises have only side-line instructors (instruction diminishes productivity) and no other training equipment. The remaining 11.8 % provide a full training infrastructure, 82 % of those have a training workshop or a similar equipment. Table 2 shows for each infrastructure component the percentage of enterprises which are equipped with this 3

4 component in dependence on the enterprise s size and occupational category. The percentage of enterprises without any training infrastructure lies above the total mean for the occupational categories trade and transport, tourism and hairdresser (more than 70 %). Relatively well equipped, especially with training workshops, are enterprises with trainees in the occupational groups metal-working and electrical engineering. Less than 35 % of those enterprises provide no organized training. Regarding the size of enterprise one can see an obvious dependence between the professionalism of training and the enterprise s size. The bigger an enterprise, the better organized and/or equipped their training is. Table 2: Training infrastructure Percentage of enterprises with no training infrastructure side-line instructors full-time instructors training place training workshop Aggregate Occupational categories: Clerical work Trade and transport Technical services Metal working Electrical engineering Wood processing Building industry Tourism Hairdresser Other occupations Size of enterprise: 2-5 persons persons persons and more persons As shown in Table 3 the activity of an apprentice consists of an average of 46.0 % productive work (skilled and unskilled) and 18.9 % internal instruction. The remaining activity refers to external education and instruction and other activities (e.g. periods of planning and evaluation). The proportion of productive work increases from 37.7 % for the first year of apprenticeship to 54.0 % and 60.2 % for the third and fourth year, respectively. In accordance with this development, a shift from unskilled to more skilled work takes place, whilst the period for 4

5 internal instruction decreases. The proportion of productive work is above average for the occupational categories wood processing, building industry, clerical work and tourism, for trade and transport and hairdresser below average. There is no evidence that trainees in enterprises without training infrastructure do more productive work and obtain less instruction than trainees in well equipped enterprises. Hence the difference in training is more likely to be in the quality rather than in the quantity of training. Table 3: Activity and degree of workmanship of an apprentice Percent 1 st year 2 nd year 3 rd year 4 th year 1 st -3 rd year Internal instruction Unskilled work Skilled work Ext. education, other periods Degree of workmanship During the training period the degree of workmanship of an apprentice (with respect to a skilled worker) by carrying out difficult (skilled) work increases from 15.1 % for the first year to 61.0 % and 68.5 % for the third and fourth year, respectively (Table 3). As expected the degree of workmanship lies above average for trade, transport and clerical work, for technical occupations (technical services, metal working, electrical engineering) below average. 4. Estimation of Costs and Returns of Apprenticeship 4.1 Methods of Estimating Costs and Returns For the purpose of comparability with other studies and comparison of methods, different concepts of estimating net or net returns were used. The schemes for calculation of, returns and net results are shown in Tables 4-6. In practice, and returns were first calculated for all apprentices within the specific (main) occupation of an enterprise (in dependence on the year of apprenticeship). Then the mean results are obtained by dividing and returns by the number of apprentices in the specific occupation. 5

6 Table 4: Calculation of gross Full / Average Working (payments to trainees, voluntary social contributions, other expenditures) Partial / Marginal Working (payments to trainees, voluntary social contributions, other expenditures) + Material expenditure (for instruction) + Material expenditure (for instruction) + Costs of full-time instructors + Costs of full-time instructors + Costs of side-line instructors + Costs of capital goods (training workshop, capital goods) + Administration expenditures = Gross cost I = Gross cost II Number of apprentices in the specific occupation Number of apprentices in the specific occupation = Gross cost I per apprentice = Gross cost II per apprentice Table 5: Calculation of returns Equivalence concept Average returns Substitution concept Marginal returns Percentage of unskilled and skilled work with respect to total activity of an apprentice * Degree of workmanship * Wage of a trained and un- /semiskilled worker Workers to be employed and overtime to be made by renunciation of all apprentices * Wage of a trained and un- /semiskilled worker Workers to be employed and overtime to be made by renunciation of one apprentice * Wage of a trained and un- /semiskilled worker = Equivalence returns = Substitution returns Number of apprentices in the specific occupation = Equivalence returns per apprentice Number of apprentices in the specific occupation = Average substitution returns per apprentice = Marginal substitution returns per apprentice Table 6: Calculation of net and net returns Full / Average Partial / Marginal Gross cost I Gross cost I Gross cost II 6

7 Equivalence returns Average substitution returns Marginal substitution returns = Net equivalence /returns = Net average substitution /returns = Net marginal substitution /returns It can be noted that the estimated and returns have a high variance (compare the graph on page 13). Although there are significant dependencies between cost and return variables and some other variables (e.g. category of occupation, size of enterprise, organization of training, degree of used capacity, reasons for training), these variables cannot reduce the variance considerably. Another dependency of and returns could be given by the interviewees personal view on apprenticeship. For lack of space here it is possible to display results in dependence on occupational categories, size of enterprise, training infrastructure and degree of capacity utilization only. For more details please compare the above-mentioned study of the authors, which contains a detailed appendix of tables. 4.2 Gross Costs Table 7 shows gross cost I with the main cost components for all enterprises as an aggregate and broken down by occupational categories, categories of enterprise s size, training infrastructure and degree of capacity utilization. Gross cost I amounts to an average of ATS 182,100 per trainee and year % of gross cost I (ATS 134,600) are caused by working (mainly payments to trainees) and 21.4 % by of side-line instructors. All other expenditure components play a relatively minor role (4.7 %). After subtraction of payments to trainees (ATS 126,500), which represent the compensation for productive work, the proportionate of side-line instructors (ATS 38,900) and administration expenditures (ATS 1,400) from gross cost I one obtains direct training of ATS 15,300 per year. These direct training consist of expenses for full-time instructors (ATS 3,000), training workshop and capital goods, e.g. tool (ATS 2,900), material for instruction (ATS 1,200) and voluntary social contributions/services and other expenditures (ATS 8,100). Table 7: Gross per apprentice and year 7

8 Percentage of gross cost I ATS 1,000 Working Material expenditure Fulltime instructor Side-line instructor Costs of capital goods administration expendit. Gross cost I Gross cost II Aggregate Occup. categories: Clerical work Trade and transport Technical services Metal working Electrical engineering Wood processing Building industry Tourism Hairdresser Other occupations Size of enterprise: 2-5 persons persons persons and more persons Training infrastruct.: No infrastructure Only side-line instr Full infrastructure Degree of capacity utilization: - 77 % % % % A detailed examination of the with respect to the occupational categories and the enterprise s size leads to differences in height and structure. The span of gross cost I reaches from ATS 112,200 for hairdressers to ATS 262,900 for electrical engineering. Due to their highly organized training the occupational categories metal processing and electrical engineering have relatively high proportions of expenses for instructors (side-line and full-time) and capital goods. Compared to that, occupations in the categories hairdresser, trade and transport have very low expenses for instructors. Gross are also affected by the size of the enterprise (measured by 8

9 the number of the employees). As the size of the enterprise increases, also gross increase mainly due to higher expenditures for training infrastructure (instructors and capital goods). As could be expected, enterprises with an organized training have higher gross cost I (ATS 239,300 and ATS 269,900) than enterprises without any training infrastructure (ATS 133,200). Responsible for this difference are the of instructors (side-line instructors with diminished productivity and full-time instructors) and capital goods (training workshop, tools and equipment). Since the expenditures for side-line instructors and capital goods are not contained in gross cost II the difference diminishes (Table 7). The degree of capacity utilization has no obvious influence on gross and their structure. 4.3 Returns Two methods were used for evaluating the returns. On the one hand the equivalence concept and on the other hand the substitution concept in two distinct approaches, the marginal and average approach 7. Due to the differences in methods they lead to different results, which are practically not correlated. Apart from the distinct methods, deviations are also caused by the fact that the interviewees have problems quantifying the values in question. Table 8 contains for the three approaches the returns of apprenticeship broken down by occupational categories, enterprise s size, training infrastructure and degree of capacity utilization. In total the average substitution returns (substitution of all trainees) amount to ATS 141,900, marginal substitution returns to ATS 120,000 and equivalence returns to ATS 114,500. Relatively high returns are obtained within the occupational categories clerical work, trade and transport, low returns within the occupation hairdresser. The size of enterprise and the equipment with training infrastructure seem to have no influence on returns of apprenticeship. But there exists a dependence of substitution returns (average and marginal approach) on the degree of capacity utilization. (This dependence is not given for the of apprenticeship.) With an increasing degree of capacity utilization (especially by full capacity utilization) the returns of apprenticeship increases. For full capacity utilization the average substitution returns amounts to ATS 254,100, whilst enterprises without a full capacity utilization have returns of between ATS 104,000 and 136,100. This fact indicates the increasing value of an apprentice assigned to productive work with an increasing degree of capacity utilization. It is interesting that the equivalence returns are not dependent on capacity utilization, although the calculated returns 9

10 are determined by the trainees proportion of productive work. This result supports the difference between the two methods. The substitution method is a more economically oriented approach, the equivalence method is a more accounting oriented approach, which measures the returns without consideration of efficiency. Table 8: Returns per apprentice and year ATS 1,000 Equivalence returns Average substitution returns Marginal substitution returns Aggregate Occup. categories: Clerical work Trade and transport Technical services Metal working Electrical engineering Wood processing Building industry Tourism Hairdresser* Other occupations Size of enterprise: 2-5 persons persons persons and more persons Training infrastructure: No infrastructure Only side-line instr Full infrastructure Degree of capacity utilization: - 77 % % % % * Due to small sample sizes unreliable values In addition to the returns of apprenticeship also the of the initial period (for getting acquainted with the work) that were saved by employing their own fully trained apprentices instead of externally trained workers was calculated. Therefore the initial period (until the full degree of workmanship is reached) of a newly employed un- or semiskilled person was compared to the initial period of an own trained apprentice. The difference in initial periods was quantified by the wage of the un- or semiskilled person. The savings by employing a trained 10

11 apprentice instead of an un-/semiskilled worker amount to an average of ATS 3,800 per apprentice. They vary between ATS 15,300 for clerical work and ATS -3,800 (additional of an employed apprentice during initial period) for wood processing. If the savings are only brought in relation to the number of apprentices employed after having finished their training, then the savings reach an average of ATS 20,000 (ATS 63,600 for clerical work and ATS -19,800 for the building industry). Additional after taking over their own trained apprentices arise in the occupational categories wood processing, building industry and tourism, since due to physical underdevelopment the trained apprentice reaches the full degree of workmanship later than an adult worker. It can be noted that for the following calculations these savings are not taken into account. 4.4 Net Costs and Returns For the full cost approach the average net amount to ATS 40,200 (substitution method) or ATS 66,800 (equivalence method) per apprentice. Net returns by apprenticeship are obtained by 39.2 % of all enterprises according to the substitution method and 28.7 % according to the equivalence method. In this context the difference is caused by the distinct methods of measuring returns. Which value is the more appropriate one cannot be decided because it mainly depends on the point of view. As Table 9 shows, net higher than the average can be observed within the occupational categories electrical engineering, metal processing and the remaining category. Net below the average appear in the categories hairdresser, clerical work, trade and transport. For the occupational categories clerical work and trade and transport the substitution method leads to average net returns with around 50 % of all enterprises having net returns. The height of net depends on the size of the enterprise. The bigger the enterprise, the higher its net. Especially the enterprises with more than 25 employees have net that are clearly above average. The dependence of equivalence returns on capacity utilization is also reflected by the equivalence net. Enterprises with full capacity utilization have very high net returns, which amount to ATS 57,600 per apprentice and year. Depending on the quality of training, enterprises with their own training infrastructure have higher net than those without organized training. Table 9: Net and net returns per apprentice and year Full / Average Partial / Marginal 11

12 Net equivalence /returns Net average substitution /returns Net marginal substitution /returns ATS 1,000* %** ATS 1,000* %** ATS 1,000* %** Aggregate Occup. categories: Clerical work Trade and transport Technical services Metal working Electrical engineering Wood processing Building industry Tourism Hairdresser*** Other occupations Size of enterprise: 2-5 persons persons persons and more persons Training infrastructure: No infrastructure Only side-line instr Full infrastructure Degree of capacity utilization.: - 77 % % % % * Minus values represent net returns ** Percentage of enterprises with net returns *** Due to small sample sizes, values are unreliable The following scatter plot shows on the one hand the (practically not existing) correlation between average net and equivalence net and on the other hand the high dispersion of net for both methods. 12

13 Net (ATS 1,000 with means) Substitution and equivalence concept ,2 600 Net equivalence , Net average substitution For the partial approach the marginal net amount to ATS 22,300. The difference between marginal and average net can be explained mainly with the distinct gross. The influence of capacity utilization on net marginal is stronger than on net average. 5. Comparison with Other Studies This study (abbreviated A/95) was also carried out to compare the results with those of previous Austrian and German studies. Both studies, carried out by Stepan et. al. (A/91) 2 and Bardeleben et. al. (G/91) 3, refer to data from For comparison with German results a fourth method of calculating and returns of apprenticeship (another partial approach) was applied. 8 Gross for all three studies are shown in Table 10. Compared to the results of the A/91 study the recent A/95 study shows a decrease of 8 % in gross cost I per apprentice (corrected for inflation). In 1991 working were lower, material expenditure and full-time instructor were higher than The percentage of side-line instructor stayed constant. 13

14 Table 10: Gross per apprentice and year - comparison with the previous Austrian study Percentage of gross cost I ATS 1,000 Working Material expenditure Full-time instructor Side-line instructor Costs of capital goods administration expendit. Gross cost I Gross cost II** A/91* A/ * Adjusted for inflation ** Only a partial sum was calculable for comparison (without the occupational category other occupations) Since the German study used slightly different definitions of cost components, the results of our study were adapted (Table 11). In Germany gross cost I (converted into ATS and adjusted for inflation) amounts to ATS 238,400, which clearly exceeds ATS 182,100 of the recent study. With one exception all cost components are in Germany higher than in Austria. Only payments to apprentices are in Germany (ATS 102,700) considerably lower than in Austria (A/95: ATS 126,500). But if the gross relevant for decisions (to employ an apprentice) are compared, the difference in gross diminishes. Decision relevant gross and gross cost II differ in of capital goods, which are contained in the decision relevant concept. Table 11: Gross per apprentice and year - comparison with the German study Percentage of gross cost I ATS 1,000 Payments to apprentices Other staff (apprentices) Full-time instructor Side-line instructor Costs of capital goods and material Other Gross cost I Decision relevant gross G/91* A/ * Converted into ATS and adjusted for inflation The Austrian study A/91 shows for both substitution concepts higher returns than the study of 1995 (see Table 12). But the German equivalence (ATS 94,400) are lower than in Austria (ATS 114,500). 14

15 Table 12: Returns per apprentice and year - comparison with other studies ATS 1,000 Equivalence returns Average substitution returns Marginal substitution returns** G/91* A/91* A/ * Converted into ATS and adjusted for inflation ** Only a partial sum was calculable for comparison (without the occupational category other occupations) Due to the higher gross cost I and also higher returns of the A/91 study net average substitution are nearly balanced out (ATS 47,700 vs. ATS 40,200). For the marginal concept a relatively large difference remained. The German study G/91 shows considerably higher net equivalence of apprenticeship (ATS 144,000). This is caused on the one hand by higher gross and on the other hand by lower returns. The absolute difference diminishes if the decision relevant net are considered. The net for this concept amount to ATS 51,100 in Germany and ATS 27,200 in Austria. Table 13: Net and net returns per apprentice and year - comparison of studies Full / Average Partial / Marginal Net equivalence /returns Net average substitution /returns Net marginal substitution /returns** Decision relevant net /returns*** ATS 1,000 ATS 1,000 ATS 1,000 ATS 1,000 G/91* A/91* A/ * Converted into ATS and adjusted for inflation ** Only a partial sum was calculable for comparison (without the occupational category other occupations) *** Decision relevant gross minus equivalence returns 6. Summary The study showed that the estimation of and returns of apprenticeship is a very comprehensive task because there are distinct methods of estimation, each of which point out a specific 15

16 aspect. Subsequently net of apprenticeship vary between ATS 22,300 (marginal substitution concept) and ATS 66,800 (equivalence concept) with 28.7 % to 39.2 % of enterprises having net returns. In addition these results have a high variance, which can be partly explained by occupational categories, size of enterprise, training infrastructure and degree of capacity utilization. Low net arise in the occupational categories clerical work, trade and transport as well as in smaller enterprises and enterprises without any training infrastructure. High net arise in enterprises with technical occupations, with many employees and with highly organized training. With respect to the training infrastructure for apprentices two groups of enterprises can be identified. Namely one group without any training infrastructure (only with side-line instructors established by law, but without any reduction in productivity caused by instruction) and subsequently with relatively low net of apprenticeship and another group with organized training and correspondingly high net. So one can assume that there also exists a difference in the quality of training. For establishing the qualitative differences with certainty an additional study including quality aspects of training would be essential. For this purpose also the apprentices should be interviewed. Simultaneously one could take into account long term aspects of apprenticeship (utility of apprenticeship, e.g. avoiding personnel fluctuation, risk minimization) and try to quantify them. 16

17 Notes 1 Lassnigg, L., Steiner, P.: Die betrieblichen Kosten der Lehrlingsausbildung, Materialien zu Wirtschaft und Gesellschaft Nr. 67, Kammer für Arbeiter und Angestellte für Wien, Wien Stepan, A., Ortner, G., Oswald, M.: Die betrieblichen Kosten der Berufsausbildung, Bildung und Wirtschaft Nr. 4, IBW, Wien Bundesinstitut für Berufsbildung: Kosten und Nutzen der betrieblichen Berufsausbildung, Erste repräsentative Untersuchungsergebnisse, Bonn & Berlin Sample-neutral missings include enterprises which have closed down in the meantime, did not train any apprentices in the specific occupation, and some wrong addresses. 5 Other data were used to compare missing enterprises of the gross sample with enterprises of the net sample with respect to some variables. For those variables with significant differences between groups the influence on cost and return variables was examined. Since there was no significant influence observable, no evidence for a lack of representativity (nonresponse bias) is given. In addition to that, for several variables (e.g. payments to apprentices, information on expenditures, requirements of substitution by renunciation of apprentices) systematic plausibility checks were carried out to cancel out wrong responses. Finally, for some variables concerning wages, payments to apprentices and expenditures it was essential to interpolate missing values to ensure a statistically usable sample size. 6 The following table shows for each aggregate the sample size (unweighted and weighted). The results of the study refer to the weighted sample, since the weights were used for projection. Due to different sample sizes the sum of two or more variables equals in general not the aggregate variable, e.g. gross cost I (Table 7) minus equivalence returns (Table 8) is not equal to net equivalence (Table 9). This ensures for each cost/return variable the maximum size of cases and hence the highest possible reliability. Sample sizes Unweighted Weighted 17

18 Cases % Cases % Aggregate 1, , Gross cost I 1, , Gross cost II 1, , Equivalence returns , Average substitution returns , Marginal substitution returns , Net equivalence returns , Net average substitution returns , Net marginal substitution returns , For enterprises with only one apprentice in the specific occupation average substitution returns and marginal substitution returns are of course equivalent. 8 The decision relevant are calculated as follows: Calculation of decision relevant gross : Working (payments to trainees, voluntary social contributions, other expenditures) + Material expenditure (for instruction) + Costs of full-time instructors + Costs of capital goods (training workshop, capital goods) = Gross cost I Number of apprentices in the specific occupation = Decision relevant gross per apprentice Calculation of decision relevant net and net returns: Decision relevant gross Equivalence returns = Decision relevant net /returns 18