UK SMEs are already struggling to fund apprenticeships and further economic shocks in the pipeline may force firms to reject them completely despite the need for skill employees to boost business growth.
That’s the warning of engineering and manufacturing skills charity Enginuity which said it is concerned that some businesses may have already reached a “tipping point” on apprenticeships, despite recent government announcements providing additional financial incentives for businesses and guaranteeing young people employment or training.
The charity, which revealed that the true cost of employing an engineering apprentice can be more than £157,000 during the three-year programme, conducted research which found that 25% of SMEs surveyed did not employ any apprentices at all.
Another 84% said labour costs were the single biggest pressure on having to raise their prices followed by energy and utility costs and raw materials at 61%.
In findings conducted before the Middle East war began, more than 60% were pessimistic about the year ahead and the same amount cited a lack of technical qualifications as a challenge to recruitment.
Ann Watson, CEO of Enginuity, said:
“It is a mixed picture, but for many in the sector the situation was bad to begin with and it has got a whole lot worse in recent weeks. The current energy crisis due to war in the Middle East is piling yet more economic pressure.
“Direct contact with many organisations in recent days makes us extremely concerned. With 25% of respondents not employing any apprentices at all, and others telling us that they may stop employing them, this could prove disastrous for the skills system in the UK.”
Chris Houston, managing director of steel fabrication and engineering company Tadweld, said:
“In 2023 the minimum wage for an apprentice welder was £6 an hour. Whilst that may seem low, apprentices attend college one day per week and we pay them for that time too.
“They’re in training for most of the time they are with us, working alongside a skilled fabricator, so we’ve always seen apprentices as an investment rather than an employee able to produce high volumes of work.
“In 2024 the apprentice national minimum wage increased to £7.50 an hour, and then in 2025 it increased to £10 an hour. That’s a staggering 66% increase in two years. It makes offering apprenticeships exceptionally expensive.”
Government figures issued last month revealed that under 19 apprenticeship starts have fallen to their lowest level in five years.