The return on investment on firm based apprenticeships in South Africa

Abstract

The study sought to determine the return on investment of apprentice training in South Africa. This study was conducted within the confines of a case study on a South African manufacturing company, Aveng Rail. The study was conducted using mixed methodology and measured both tangible and intangible value in terms of return on investment. A quantitative analysis was conducted using a previously established mathematical model to measure return on investment based on the benefit to cost ratio of training. This entailed measuring the total cost of the apprenticeship over a three-year period and comparing it to the financial benefit of apprenticeships over the same period. The data sample included 185 tasks on which 15 apprentices worked over their apprenticeship period. The costs measured included: apprentices’ salaries, infrastructure, tuition and opportunity costs of management. The benefits measured included lower input costs in production and improved efficiency of artisans. Intangible benefits were measured using a qualitative analysis by means of interviews with managers involved in training apprentices. Interviews discussed the benefit and value that managers saw and experienced in training. A total of 12 managers were interviewed. The findings of this study suggest that Aveng benefits from training apprentices. The quantitative analysis showed an average return on investment of apprentices training between 21 and 36%. The managers interviewed also saw value in terms of improved efficiencies, developing a pool of resources for the industry, and the benefit of training individuals according to the specific needs of their companies.