Retail & Leisure

When the apprenticeship levy is rolled out in April 2017, there will be changes to the funding for apprenticeship training for all employers, and those with a pay bill over £3 million each year are required to invest in apprenticeships.

What this means for the sector

The retail sector is a vital component of the UK economy, and due to its sheer size, it is anticipated that it will contribute £235m to the Levy in in the first year. One of the biggest challenges faced by large employers is how to fully utilise their digital account in the most productive and cost effective way. To get the best out of apprentices, employers will need to spend significant resources on the development of their apprenticeship programmes; training and operating infrastructure; and support for the apprentices themselves. These associated costs can be considerable, and employers will not be able to use the funds from the levy towards these. Where margins are tight already, there may be a disinclination to apply resource around this, however a failure to do so may well leave some retailers struggling to compete in the longer term.

The retail sector may also face challenges due to the fact that a large number of roles require fewer certifiable skills and current employees can only qualify as apprentices if they are learning significant new skills. It may also be the case that there are not many higher skilled and/or managerial level job openings at the end of the apprenticeships. One outcome could be that the levy forces a shift from low skilled towards higher and/or more multi-skilled job roles. It may of course also mean that there is a far greater level of investment into automation around many lower-skilled job functions, and a decreased overall staff base but with much higher levels of customer service skills. Recruitment and staffing structures may therefore look very different in future in the retail sector.

How other competitors are approaching the levy may of course heavily influence these decisions. Whilst big corporate retailers will have the resources to create bespoke apprenticeship programmes linked to well established talent development platforms; mid–sized and smaller retail outlets should carefully plan how to efficiently use the funds available to them to create maximum advantage. Unless this investment results in obvious significant benefits, many employers may simply view it as just an additional 'tax' to pay.

Find out more

For more information on the operation of the levy, and our thoughts around the issues above in more detail please click here.

Tags: Retail and Leisure2017