Annex A. Apprenticeships and the Scottish labour market

Scotland’s skills challenges and labour market

Current and projected skill needs

Digitalisation, automation, ageing populations, the transition to a low-carbon economy and the COVID-19 pandemic are having a major impact on the labour market skills needed across OECD countries, and therefore also on the role of apprenticeships and the skills that need to be formed through apprenticeships (OECD, 2020[1]).

Like other OECD countries, Scotland (United Kingdom) has experienced changing demand for skills in recent decades. For example, the share of high-skilled jobs increased by 9.3 percentage points between 2005 and 2020 (Rogers and Richmond, 2015[2]; Scottish Government, 2021[3]) (Figure A A.1). This is in line with OECD trends, where the relative importance of high-skilled employment increased in recent decades (OECD, 2017[4]). According to Oxford Economics (2021[5])), employment in high-skilled occupations accounted for almost half of Scotland’s total employment (48%) in 2021 and this share is projected to remain stable in the next decade. Nearly all sectors of industry have a serious shortage of skills at these higher levels (Thomas and Gunson, 2017[6]). At the same time, 46% of jobs in Scotland – or 1.2 million – are at high risk of automation up to 2030 and beyond (Thomas and Gunson, 2017[6]). Evidence from OECD countries shows that the jobs at highest risk of automation are routine jobs with low skill requirements and often low wages, while the lowest risk applies to a broader range of jobs from professionals to social workers (OECD, 2018[7]).

Figure A A.1. High-skilled employment is on the rise in Scotland

Just as automation and digitalisation can lead to both job creation and losses, the green transition will also contribute to job growth in some sectors and occupations, and losses in others. Oil and gas, cattle farming, and aviation could lose jobs due to measures to reduce carbon emissions. Other sectors, such as those concentrating on renewable energy, including insulation measures, wind and solar power, will grow. Sectors involving responses to climate change, such as flood and water management, will also develop quickly. Scotland has legislated to address climate change by committing to becoming carbon net-zero by 2045 (Scottish government, n.d.[9]). The transition to a low carbon economy is expected to create jobs in major sectors like the building and energy sector – with the right policies and funding in place (Figure A A.2) All of these changes will create a further need for reskilling and upskilling.

Figure A A.2. Scotland is expected to see green job creation – with the right policies and funding in place

At the same time, an ageing population is changing the demographic mix of the workforce in Scotland (Figure A A.3, Panel A). This will increase the need for upskilling and reskilling and will also change skill needs in the labour market related to changing consumption patterns – a trend that is widely shared across OECD countries (OECD, 2017[11]). Brexit could also have an impact on the population through changes in migration – Scotland has so far relied on a rising migrant population and workforce (Figure A A.3, Panel B and C). A recent estimate expects migration to be lower than 2019-20 levels (Scottish Fiscal Commission, 2021[12]).

Figure A A.3. Population ageing and uncertainty over migration are changing Scotland’s workforce

Labour market challenges

The Scottish labour market was performing well prior to the COVID-19 pandemic. In 2019, it recorded a historically low unemployment rate of 3.6% of the working-age population (16-64 year-olds). Scotland’s unemployment rate is significantly lower than the OECD average yet shows a similar trend as in other OECD countries (Figure A A.4). However, the pandemic inflicted a sudden and massive shock. Nearly three-quarters of jobs in Scotland, or 30% of the eligible workforce, had been furloughed with government support, according to July 2020 figures. The unemployment rate (aged 16+) for May-July 2021 was 4.3%, having peaked at 4.9% a year before (ONS, 2021[14]).

Figure A A.4. Scotland had a historically low unemployment rate until the COVID-19 pandemic

Likewise, Scotland has a relatively high employment rate. It reached 75% of the working-age population in 2020, compared to 69% on average across OECD countries. However, a substantial share of workers are not in full-time employment. Part-time employment in Scotland (26%) is relatively high compared to other OECD countries, and as in most OECD countries, is also increasing (Figure A A.5). The number of part-time workers increased from 614 900 in the first quarter of 2005 to 714 000 in the first quarter of 2020 (Scottish Government, 2021[17]).

Figure A A.5. Part-time employment is relatively high in Scotland

While Scotland is doing well in terms of employment, its labour productivity is relatively low, which implies the need to boost skills and training (OECD, 2017[19]; OECD, 2004[20]). Gross value added (GVA) per worker in the United Kingdom (USD 86 139 in 2018) is lower than leading apprenticeship countries such as Austria (102 554), Denmark (101 951), Germany (92 391), the Netherlands (96 008) in 2019 and Switzerland (104 190) in 2016 (Figure A A.6)

Figure A A.6. Scotland’s productivity is relatively low, compared to leading apprenticeship countries

Trends in skill and training needs

As described above, several global trends such as the digital and green transition are changing skills needs in Scotland, and this has implications for the role that apprenticeships can play and their content.

Demand for higher-level skills, soft skills and basic skills will increase

As high-skilled employment is growing, higher-level vocational programmes are increasingly in demand (OECD, 2022[21]). Multiple factors are driving the demand for higher-level technical skills, at Scottish Credit and Qualifications Framework (SCQF) Level 7/ International Standard Classification of Education (ISCED) Level 4) and above, as opposed to traditional trades and crafts which are more often at upper secondary level (SCQF 5-6 or ISCED 3; see Table A A.1 for details of the ISCED and SCQF educational levels). Some expanding sectors, such as healthcare, make extensive use of skills at higher technical levels. In some contexts, higher-level vocational programmes are also a vehicle for skilled workers to increase their specialisation, or to acquire broader skills in management or running a small business.

One effect of digitalisation, automation and computerisation is to increase the relative importance of skills that are difficult to computerise – notably social and emotional skills – also called “21st century”, or “interpersonal” skills. Scotland uses the terminology of “meta-skills” which are closely akin to these categories, although not identical. Scotland is now addressing meta-skills systematically (Skills Development Scotland and Centre for Workbased Learning, 2018[22]). While these skills have always been important, they are becoming one of the unique selling points of human workers, since the associated tasks cannot readily be undertaken by machines. A UK study shows the growing importance of interpersonal skills, relative to physical and analytical skills (Adecco, 2017[23]). Meta-skills are challenging to identify and measure, but progress is being made on this front (Kankaras, 2019[24]).

Dynamic modern economies, and ambitious young people, now need and expect initial vocational training to provide pathways to further learning, and not merely the skills for a first or specific job. In Scotland, for example, the avenue from Modern Apprenticeship to higher education, including Graduate Apprenticeship, is a vital pathway. Such pathways depend heavily on the acquisition of foundation competences that will allow individuals to thrive in new learning contexts. These foundation competences include numeracy, literacy and, increasingly, digital competences, as well as traits such as adaptability and willingness to learn new skills. However, young people in Scotland score relatively poorly in foundation competences. In the 2018 Programme for International Student Assessment (PISA), Scotland’s mean score for reading among 15-year-old students is at a similar level to England (United Kingdom), and below the top five performing countries. For mathematics, Scotland is below England and 17 other countries, and for science below England and 12 other countries (Scottish Government, 2019[25]). Therefore, efforts may be needed to motivate young people and boost their foundation skills, to encourage and enable them to take up an apprenticeship opportunity. Moreover, apprenticeship programmes may need to include remedial activities if learners are to be able to move on to other forms of further or higher education later on if they aspire to do so. Strengthening off-the-job learning and expanding Foundation Apprenticeships can help with this.

Employer support for training is on the decline

An important labour market trend that could have an impact on apprenticeship participation (and training participation more broadly) is the decline in employer support for training. Over the past 15 years, the share of individuals who received job-related training in Scotland fell from 12% in 2005 to 9% in 2020. For employed individuals the share fell from 16% to 12%. Those with lower qualifications receive significantly less training (Figure A A.7).

In particular, part-time workers have seen a larger fall in training, although their participation levels have been going up again since 2018. This requires attention because of Scotland’s large number of part-time workers (see above). Other factors, such as growth in platform work and zero-hours contracts, mean that a growing number of workers lack an employer with a long-term interest in their skills development. Data from OECD countries show that workers in such non-standard forms of employment participate less in job-related training than those in more standard jobs (Figure A A.8). As zero-hours contracts are concentrated among the low skilled in the United Kingdom (OECD, 2017[26]), this represents a double challenge to increasing participation in training.

Figure A A.7. Scotland has seen a reduction in job-related training

Figure A A.8. Workers in non-standard forms of employment participate less in job-related training

The apprenticeship system in Scotland

Changing skill needs and the decline in the availability of employer support for training mean the apprenticeship system will have to adapt, but it also has a key role in tackling these challenges. A changing labour market highlights the importance of apprenticeships, as they have the ability to develop the skills that employers are looking for, smooth the transition into the world of work for young people, and provide adults with lifelong learning opportunities (OECD, 2018[28]).

Apprenticeships and social progress

Vocational education and training (VET) involves programmes, including apprenticeships, designed to give learners the knowledge, skills and competences specific to a particular occupation, trade, or class of occupations or trades. The evidence suggest that they offer a good path into employment. As Figure A A.9 shows, young people (aged 15-34) in Scotland who completed upper secondary VET have better employment outcomes (87%) than their counterparts from general education programmes who did not continue to tertiary education (76%) and are even comparable to tertiary graduates (88%). Leading apprenticeship countries, including Austria, Denmark, Germany, the Netherlands, Norway and Switzerland have even better outcomes; VET systems in all these countries have strong work-based learning and industry connections.

Figure A A.9. Young people who completed upper secondary VET have good employment prospects

Apprenticeships depend heavily on work-based learning, which is a particularly effective means of developing both hard skills using the latest industry tools and techniques, and interpersonal skills such as teamwork and negotiation, all in a real-word environment, under the guidance of an experienced practitioner. Evidence from European countries shows that young adults with vocational qualification who gained work experience during their studies have higher employment rates than those who did not gain such experience (OECD, 2020[31]). Indeed, leading apprenticeship countries with strong work-based learning elements show lower levels of young people who are neither employed nor in education or training (NEET) (Figure A A.10) and higher levels of employment than most other OECD countries.

Figure A A.10. Scotland still has a higher NEET rate than some leading apprenticeship countries

Most countries spend substantially more on tertiary education institutions than on those providing upper secondary VET, despite their comparable employment outcomes for young adults in many countries. Although no separate data for Scotland are available, the United Kingdom stands out as having one of the greatest spending disparities between its VET and tertiary education systems. In 2018, the United Kingdom had the second largest gap between spending per student in upper secondary VET and tertiary education (after Luxembourg) among OECD countries with available data (Figure A A.11). Similarly, the United Kingdom has high spending on tertiary education relative to gross domestic product (GDP) per capita, while its spending on VET was only average (OECD, 2020[31]). While these figures only cover part of a country’s total expenditure on VET, and employment rates are not the only relevant outcome measure, these data highlight the strong returns on investment that VET can have.

Figure A A.11. UK expenditure on VET is relatively low, but spending on tertiary education is high

Apprenticeships are also beneficial for employers. They can often reduce recruitment and turnover costs and expand recruitment choices. Often, firms recoup all or most of their costs during the apprenticeship period although the benefits depend on the hours apprentices spend at work, the type of work involved, and the productivity level of each apprentice (Lerman, 2019[33]). In 2016, Switzerland estimated that Swiss companies involved in VET programmes enjoyed an average net benefit of CHF 3 170 per apprentice per year. These companies gained an additional benefit of about CHF 10 700 on average per apprentice if they hired the trained apprentice after completing the apprenticeship (SEFRI, 2019[34]). In addition, the high level of occupational mastery achieved by apprentices may also increase the pace of innovation and the ease of implementing new technologies (Lerman, 2019[33]).

Apprenticeships offer social benefits as well. By providing an alternative to general education or school-based vocational programmes, apprenticeships can be particularly attractive to those with limited interest in academic teaching and learning and/or in developing skills in a traditional classroom setting or have weaker academic skills. For instance, collaborative, experiential and contextualised learning is often used to teach vocational skills, and this may better suit certain students (OECD, 2021[35]) Moreover, by providing employment opportunities for migrants, VET is an essential integration tool: in Germany, migrants are more likely to continue working in the same firm where they did their apprenticeship than their native peers (Jeon, 2019[36]). Scotland also uses apprenticeships as an effective tool to support inclusion and pathways for all, particularly students from disadvantaged backgrounds. For example, almost 70% of Modern Apprenticeship starts are from the three lowest quintiles of the Scottish Index of Multiple Deprivation (SIMD) and the same holds for about 50% of Graduate Apprenticeship starts (Figure A A.12) (see below for a discussion on the difference between the different types of apprenticeship in Scotland).

Figure A A.12. Apprenticeships offer opportunities to students from more deprived backgrounds

Types of apprenticeship

There are three forms of apprenticeships in Scotland, constituting the “apprenticeship family”: Modern Apprenticeships (MAs), Foundation Apprenticeships (FAs) and Graduate Apprenticeships (GAs).

Modern Apprenticeships

Modern Apprenticeships are the “typical” apprenticeship in Scotland: industry-designed programmes which support employees to acquire certificated competences required to deliver their job role through work-based learning and/or off-the-job training (Kuczera, 2013[38]). MAs, introduced in 1994, extend across SCQF Levels 5-11 (ISCED 3-7). They are predominantly provided at levels 5 to 7, but also exist on levels 8/9 (referred to as technical apprenticeships) and 10+ (referred to as professional apprenticeships). They have a much wider range than many international comparators, where apprenticeships are usually found primarily at ISCED Level 3. The field of construction accounts for 23% in 2019/20 (27% in 2020/21) of MA starts, followed by sport, health and social care (20%), reflecting policy priorities, employer demand and contribution rates (Figure A A.13). Off-the-job training and assessments are delivered by learning providers contracted by Skills Development Scotland (SDS). MAs for those aged 16-24 are given priority for funding. Learning providers receive lower funding contributions for older apprentices, leaving employers to make up the shortfall. Despite this priority given to youth, the proportion of modern apprentices aged over 24 has increased from just 21% of starts in 2013/14 to 39% in 2019/20. In the same year, 22% of starts were for those aged 20-24 and 39% for those aged 16-19 (SDS, 2020[39]). These changes may also reflect the demographic changes in Scotland noted in the previous section (Figure A A.3). MAs have grown in recent years, at least until the arrival of COVID-19 (see Chapter 1). Most of the headline indicators for MAs are positive (Table A A.2).

Box A A.1. Comparing SCQF and ISCED

Apprenticeship programmes in Scotland exist on SCQF levels 5 to 11, which is broadly equivalent to ISCED levels 3 (upper-secondary education) to 7 (master’s). Level 4 and 5 work-based learning covers ISCED levels 2 (lower-secondary) and 3. The table below maps the different programmes to their SCQF and ISCED levels.

Table A A.1. Mapping the Scottish Credit and Qualification Framework to ISCED
SCQF levels	National courses/ Higher education	Apprenticeships courses & SVQ				ISCED levels
12	Doctorate					Level 8 (Doctorate or equivalent)
11	Master’s degree		MA (undertake off-the-job training or on-the-job training or both depending upon the occupation): MA (SCQF Levels 5-7); Technical Apprenticeships (Levels 8/9); Professional Apprenticeships (Levels 10+)	GA		Level 7 (Master’s or equivalent)
10	Honours degree					Level 6 (Bachelor’s or equivalent)
9	Ordinary degree					Level 6 (Bachelor’s or equivalent)
8	Higher National Diploma (2 year)			(SCQF 8: Higher apprenticeship)		Level 5 (Short-cycle education programmes)
7	Higher National Certificate (1 year)/ (New) Advanced Higher / Baccalaureates				SVQ	Level 3 (Upper secondary education programmes)
6	(New) Higher / Skills for Work Higher	FA (apprentices are not employed, rather they complete the apprenticeship whilst at school)
5	National 5 (Intermediate 2) / Skills for Work National 5 (Credit Standard Grade)	Level 4 and 5 work-based learning
4	National 4 (Intermediate 1) / Skills for Work National 4 (General Standard Grade)	Level 4 and 5 work-based learning				Level 2 (Lower Secondary education programmes)
1-3	National 1-3 / Access 1-3/ Skills for Work National 3 (General Standard Grade)					Level 2 (Lower Secondary education programmes)
Note: ISCED Level 4 (post-secondary non-tertiary) is not used in Scotland.
Source: Scottish Government (2015[40]), Scottish qualifications and equivalent UNESCO ISCED levels, https://www.gov.scot/publications/scottish-qualifications-unesco-isced-levels/; Cedefop (2019[41]), Cedefop European database on apprenticeship schemes, https://www.cedefop.europa.eu/en/publications-and-resources/data-visualisations/apprenticeship-schemes; https://scqf.org.uk/about-the-framework/interactive-framework.

Figure A A.13. Higher-level Modern Apprenticeships are becoming relatively more important

Table A A.2. Outcome indicators for Modern Apprenticeships
Indicator	Outcomes	Reference
Completion	78% of apprentices complete their programme.	(SDS, 2016[43])
Employment	90% of MA completers were in work six months after completion, compared to 63% of non-completers.	(SDS, 2016[43])
Quality	Four out of five rate the quality of training they receive as 8 or more out of 10; 96% would recommend their apprenticeship to others; 43% of learning providers were rated very good and 4% rated excellent in 2019-20 based on the Quality Assurance and Improvement Framework.	(SDS, 2019[42]) (SDS, 2020[44])
Productivity	Almost 90% of employers reported that completing an apprenticeship had significantly improved the MA’s ability to do their job; over 80% of employers reported that MA’s ability to work with others and communications skills improved over the course of the apprenticeship.	2020 survey of employers (SDS, 2020[45])
Well-being & career development	79% of MA completers reported a pay rise compared to 72% of non-completers; 84% of those in a MA for more than 12 months report a pay rise compared to 73% of those in a MA for less than 12 months.	(SDS, 2019[46])

Foundation Apprenticeships

Foundation Apprenticeships were introduced in 2014. They are a work-based option for students entering the senior phase of secondary school, primarily 16-17-year-olds. They are usually taken over two years, with the work placement usually undertaken in the second year. Typically, FAs involve students going to a workplace one whole day or a couple of afternoons a week for a programme delivered through a three-way partnership between the “home” school where the student is enrolled, employers, and a learning provider that delivers the off-the-job element of the programme. FAs lead to a SCQF Level 6 (ISCED 3) qualification, and are delivered alongside traditional school qualifications, such as Highers and Nationals, at the same level. During 2016-20, 9 550 FA places were taken up at SCQF Level 6 (Figure A A.14). FAs at SQCF Level 6 cover 12 frameworks (related to occupations; see below), with 30% of starts in the field of social service children and youth, followed by social services & healthcare (Figure A A.15).

In 2018, a pilot of work-based learning (WBL) at SCQF Level 4 and 5 was launched and became part of the FA initiative in 2020 (SDS, 2020[47]). These also aim to embed WBL into the senior phase of secondary school to offer an alternative to classroom-based learning, allowing employers to make a structured contribution to school learning through project-based learning with the employer. They are intended to offer a pathway to other work-based learning opportunities, including FAs at SCQF Level 6, and Modern and Graduate Apprenticeships (see Figure A A.14). The scheme is currently still in the pilot phase, and in 2020, 1 265 students pursued programmes in construction, hospitality, and automotive sectors in selected schools across Scotland (SDS, 2021[48]). The Level 4 and 5 pilots were evaluated during 2021 (SDS, 2021[48]) – initial evaluation shows that it has been successful in improving employability skills and work-readiness, as well as successfully developing the meta-skills of self-awareness, and social and innovation skills (Field, 2020[49]).

Graduate Apprenticeships

Scotland launched its tertiary level Graduate Apprenticeships in 2017/18. They are undertaken in co-operation with most universities in partnership with employers, and lead to a university degree. The programmes range from SCQF Level 8 to 11, but the overwhelming majority of students are at Levels 10 and 11. Students spend most of their four-year programmes with their employer, with different release schedules for education at the university. More than half of the higher education institutions in Scotland are already involved in the programmes. The programme has grown rapidly, so that in the third year of delivery in 2019/20 there were 1 160 starts on the programme (SDS, 2021[37]), with almost 1 400 funded full-time equivalent places being made available in 2021/22 (SFC, 2021[50]).

GAs have expanded rapidly to offer programmes in 13 different fields, mostly in technical fields including engineering, cybersecurity, and information technology, but also in accounting and business management (which appeared particularly attractive to older students). In 2019/20, 506 employers were engaged in the programme, up from 141 in 2017/18 and 346 in 2018/19 (SDS, 2021[37]). Of the GA students starting in 2018/19 two-thirds were male; half were over 24, and nearly 28% over 34. Just over 10% were allowed to enter the second or third year of the programme directly, in recognition of prior learning (SDS, 2021[37]).

Figure A A.14. Foundation Apprenticeship starts and destinations

Figure A A.15. Foundation and Graduate Apprenticeship starts by field of study, in 2019/20 financial year (to April 2020)

Trends in apprenticeship take up

Apprenticeship numbers have increased significantly in Scotland in recent years, except for the period of the COVID-19 pandemic. Between 2013/14 and 2019/20, MA and GA starts increased by 10% (see Chapter 1). Despite this recent growth, aided by a strong improvement strategy and the development of new types of apprenticeships, apprenticeships remain a small part of the overall skills system. Only about 6% of 16–19-year-olds were in apprenticeships between 2016 and 2020. Compared to leading apprenticeship countries such as in Austria, Germany and Switzerland, the number of apprenticeships is small in Scotland – for example, Switzerland has three times as many apprentices relative to its total workforce as Scotland (Figure A A.16). In contrast, Scotland has a large share of tertiary-educated 25-34-year-olds compared to most OECD countries. Although some of these tertiary-educated adults in Scotland will have completed a vocationally oriented tertiary programme like a GA, the numbers are still relatively small (see above).

Due to the pandemic, overall MA and GA starts were 33% lower in 2020/21 than the year before. An employer survey 1 found that 38% of employers in Scotland had to make apprentices redundant in 2020 (Open University, 2020[51]). During 2020/21, 936 Modern Apprentices were made redundant, up 538 from the year before. Of those, 342 MAs continued their apprenticeship with a different employer, and there were 285 approved applications to the Adopt an Apprentice programme enabling former MAs to complete their training (SDS, 2021[52]). In 2021, 55% of employers in Scotland reported they found it more difficult to recruit new hires, including apprentices, in the past six months than in the same period last year, with nearly two-thirds (63%) of Scottish businesses reporting a skills shortage and 59% having struggled due to the skills shortage (Open University, 2021). In light of the impact of the COVID-19 pandemic on different aspects of the economy, education and society, and young people being disproportionally affected, SDS has launched a national campaign encouraging employers to retain and recruit apprentices. The campaign aims to demonstrate that apprenticeships are a proven way for employers to develop talent and gain real business benefits and can be part of the solution to provide employers with the skills they need to adapt, sustain and strengthen their business (Scottish Government, 2020[53]).

Figure A A.16. Scotland’s use of apprenticeships is still weak relative to the size of its workforce

Apprenticeship governance and institutional set up

Standards and frameworks

The Scottish apprenticeship systems is underpinned by Standards and Frameworks.

An apprenticeship standard is “an industry agreed set of knowledge, skills and behaviours identified as being necessary to the achievement of a given SCQF Level of education and professional competence and capable of being consistently assessed over time”.
A framework is “a structure that provides employers, employees and learning providers with guidance on the features and mandatory and optional components (e.g., qualification (s), design, recruitment, delivery, assessment, QA and experience) associated with a Scottish Apprenticeship within a given area of occupation and level. A framework will provide guidance on the expectations for procurement, delivery, awarding and review.”

In 2019, SDS in conjunction with SAAB, developed a new approach to Apprenticeship development, intended to ensure that it was employer led and owned with direct engagement from all parts of industry. This direct engagement has been achieved using technical expert groups (TEGs) that include a variety of employers, trade unions, apprentices, and representatives of wider society.

The new development approach allows the requirements of a job to be better understood by gathering information from employees on the skills, knowledge, and behaviours an individual needs in a role across the layers of meta, generic, specific, and local skills. This information is then reviewed and updated via a series of TEGs with a wider membership. SDS will continue to utilise Technical Expert Groups as the means of developing apprenticeship frameworks that reflect the needs of the labour market and to develop NOS as the underpinning standards.

Standards created in this way will allow the creation of clear pathways across different job functions and for current apprenticeships to be clustered into broad occupational groups that link to work based learning pathways from schools. What remains to be decided is the extent to which the new standards will appear in the form of a qualification regulated and supported by SQA and/or other qualification bodies, or as a free-standing standard.

Quality assurance and evaluation mechanisms

Four major stakeholders are involved in the quality assurance of apprenticeships: awarding bodies, SDS, SQA (as the accreditation body), Education Scotland and the Quality Assurance Agency (for GAs). Training providers must be approved by an awarding body to be eligible to contract with SDS for apprenticeships. SDS regularly undertakes monitoring through quality reviews of a sample of providers, employers and apprentices. It pays apprenticeship contribution instalments to training providers based on agreed milestones and the achievement of certificates. To support this process, SDS also offers providers continuing professional development on quality provision and assessment. The Apprenticeship Quality Assurance and Improvement Framework developed by SDS is based on a number of quality frameworks including the European Foundation for Quality Management and encompasses delivery, leadership, culture, outcomes and impact as well as employer involvement, innovation, diversity and equality aspects (SDS, 2021[62]). SQA (as the accreditation body) ensures the quality of qualification delivery by regulating approved awarding bodies and their accredited qualifications. Education Scotland also carries out independent reviews of Mas (off-the-job training) and FAs in major sectors. All these reviews and quality assurance mechanisms are aligned and complement each other, as are the results of the review.

Evaluations and pilots are widely used to enhance the performance of apprenticeships in Scotland. Regular statistics are published on apprenticeships, and there are surveys of employers and apprentices to explore their experience of the apprenticeship system and its outcomes, including labour market outcomes. While this is commendable, most of the evaluations appear to be directly undertaken in one way or another by SDS, which is also directly responsible for the initiatives (Field, 2020[49]). The latest audit by Audit Scotland was on MAs in 2012/13 (Audit Scotland, 2014[63]) and its recommendations have been implemented (Audit Scotland, 2018[64]). The framework for evaluating apprenticeships in Scotland has made much progress, as highlighted in Chapter 3 (see Box 3.9).

Governance, stakeholders and financing

Apprenticeship systems are run by multiple stakeholders with a shared responsibility for the development and management of the system. Such shared responsibility is critical to ensuring a dynamic apprenticeship system which serves the needs of the labour market and learners. The legislative framework that governs an apprenticeship system usually stipulates how the relevant stakeholders co-operate and divide their roles and responsibilities, but how they work in practice varies from country to country. As in many other countries, multiple stakeholders with a shared responsibility are involved in the apprenticeship system in Scotland (Table A A.3), but their roles and responsibilities are not defined in a legal framework. In Scotland, the supporting policy framework for apprenticeships is the Scottish Government’s youth employment strategy started in 2014, Developing Scotland's Young Workforce (Commission for Developing Scotland's Young Workforce, 2014[65]; Cedefop, 2019[41]).

Table A A.3. Key apprenticeship stakeholders in Scotland
Stakeholder	Roles and responsibilities
Scottish Government (SG)	The Scottish Government sets policy, targets and budget for apprenticeships; agrees strategy; and provides skills agencies with guidance. The Directorate for Fair Work, Employability and Skills is responsible for producing a skilled workforce. For its role in education policy, see OECD (2021[66]).
UK Government	The UK Government sets the national minimum wage via the Low Pay Commission, an independent body that advises the government. The UK Government also raises funds through the Apprenticeships Levy, introduced in 2017, directly from large employers in the United Kingdom, including about 4 000 levy-paying employers in Scotland. The Scottish Government receives a per capita share of the levy receipts.
Skills Development Scotland (SDS)	SDS, the national skills agency, manages operational policies and funding in, and contracting for delivery of, Modern Apprenticeships and other skills areas such as career services, Partnership Action for Continuing Employment (PACE) or redundancy support, support for businesses, pre-employment training programmes, the Employability Fund and a range of other smaller programmes. SDS has a budget of about GBP 260 million. It supports and co-ordinates employers, notably SAAB, AAG and TEG as the secretariat supporting employer engagement in apprenticeships. It also develops an evidence base of skills and training needs, by providing labour market intelligence, and apprenticeship quality assurance frameworks. It undertakes many other tasks relevant to skills areas.
Scottish Funding Council (SFC)	The SFC have statutory responsibilities set out in legislation. The SFC’s main responsibilities are to secure coherent provision by post-16 education fundable bodies (as a whole) of high quality further and higher education and the undertaking of research. In addition, the legislation requires the Council to have regard to skills needs, and issues affecting the economy in Scotland. SFC funds colleges and universities for teaching and research with a budget of about GBP 1.9 billion. It has been involved in apprenticeships since the Enterprise and Skills Review (2017). It also funds GAs and FAs (college based) from 2021/22.
Scottish Qualifications Authority (SQA) – Accreditation Body	SQA Accreditation quality assures qualifications offered in Scotland by approving awarding bodies and accrediting their qualifications. They do this by regulating awarding bodies and their qualifications against published regulatory requirements. They are the national accreditation body and have a regulatory role in MAs and FAs.
Scottish Qualifications Authority (SQA) – Awarding Body	SQA Awarding body is the national body responsible for developing, maintaining, and improving a framework of national, higher national and vocational qualifications. This includes those included in modern and foundation apprenticeships. These can be gained at Scotland’s schools, colleges, employers and training providers. As with other Awarding bodies they develop and submit qualifications for accreditation to SQA accreditation.
Scottish Apprenticeship Advisory Board (SAAB)	Created following the “Developing the Young Workforce – Youth Employment Strategy”, SAAB gives employers and industry a leading role in developing apprenticeships, ensuring that apprenticeships meet industry and economic needs and offer fair work, and job opportunities. It is responsible for providing advice and making recommendations to the SG on the guiding principles, operational policy, systems and structures supporting apprenticeships. It defined the principles of Scottish Apprenticeships, based on consultation with business and other organisations.
Apprenticeship Approvals Group (AAG)	The Modern Apprenticeship Group became the AAG in April 2020. The AAG aims to ensure that apprenticeships meet the needs of employers and provide high-quality learning opportunities to individuals. It is chaired by an employer and represented by sector-specific employers, trade unions, SDS, the Scottish Government and SQA. It reports to the Minister.
Technical Expert Groups (TEGs)	TEGs are advisory groups for occupational clusters and lead the design and development of apprenticeship standards and frameworks, providing the expertise to identify the skills and knowledge the workforce needs. They consist of representatives of employers, technical experts, professional bodies, awarding bodies, providers, trade unions, SDS, AAG and SQA.
Education Scotland (ES)	ES is a Scottish Government executive agency charged with supporting quality and improvement in Scottish education. ES is primarily responsible for school and early childhood education. Its role includes the evaluation of the quality of learning and teaching in Scottish schools and education services through inspection and reviews of Scottish education. It also has responsibility for providing support and resources for learning and teaching via the Education Scotland online service. Building upon and complementing SDS’s current quality assurance arrangements that require all non-college training providers to demonstrate they are meeting SDS quality standards, ES carries out external reviews of MAs (Education Scotland, 2020[67]). In their reviews, ES assesses the performance of MA training components by industry sector, focusing on the contribution made by training providers and the quality of the training they deliver.
Employers	Employers are the key actor in apprenticeships. They are represented through SAAB, AAG and TEG as well as multiple employer and sectoral organisations (see Chapter 2 for more details) and are involved in the design and delivery of apprenticeships. Individual employers provide work placements, on-the-job training, in some cases also off-the-job training, and work with training providers. Employers use apprenticeships both for developing their existing workforce and finding and developing new employees.
Scottish Enterprise	Scottish Enterprise is Scotland’s national economic development agency and a non-departmental public body of the Scottish Government. It supports companies and the Scottish Government’s Economic Strategy. Highlands and Islands Enterprise and South of Scotland Enterprise Agency play a similar role.
Trade Union	Trade unions play a smaller role in Scotland’s apprenticeship system than in some countries but they are represented in the apprenticeship governance structure including SAAB, and they actively promote apprenticeships on many occasions.
Sector Skills Councils (SSCs)	SSCs/SSOs represent each sector, although their presence varies across sectors. They set apprenticeship standards and sector workforce data and feed labour market perspectives to apprenticeships and qualification structure. However, their roles and presence are diminishing in Scotland.
Centre for Work-based Learning	The Centre is a partnership between SDS, the University of Strathclyde, Heriot-Watt University and Robert Gordon University. Its vision is to establish the value of work-based learning in the Scottish education and training system.
Apprentices/learners	The core of the apprenticeship system. They may be classed as school students (FAs) or employees (MAs and GAs); they may already have been working for their employer before starting an apprenticeship or been taken on in that role. Current and former apprentices are also involved in the process of creating new apprenticeship standards.
Learning providers	This term covers independent training providers, further (higher) education colleges, higher education institutions, employers and schools offering or supporting apprenticeship training at different levels. Approved providers receive SDS and SFC funding for the delivery of the apprenticeship framework.
Awarding bodies (ABs)	ABs approve centres and work with them to ensure high quality delivery of qualifications and carry out activity designed to assure the quality of the qualifications awarded. Abs, such as EAL, CIOB, ICE and the SQA, develop, validate and assess qualifications, ensure quality education and training for the learners who are taking its qualifications, and award certificates to candidates who successfully complete the qualification.
Note: The above describes the current situation as of 2022 with regards to the design, development, assessment and certification of apprenticeships. However, work is ongoing to change and improve some aspects of this.
Source: Based on multiple sources including background reports; OECD interviews; FISSS (2021[68]), Modern Apprenticeship Online, https://fisss.org/sector-skills-council-body; Cedefop (2019[41]), Cedefop European database on apprenticeship schemes, https://www.cedefop.europa.eu/en/publications-and-resources/data-visualisations/apprenticeship-schemes; Scottish Government (2019[69]), Skills Development Scotland – Guidance 2019-20, www.skillsdevelopmentscotland.co.uk/media/45837/letter-of-guidance-2019_20.pdf.

The financing of apprenticeships mirrors the governance arrangements. In Scotland, it is based on a co-financing model between employers and the government. Employers are supposed to cover the cost of in-company training, including the costs of supervision, equipment and apprentice wages. Apprenticeship wages are determined by the employer but must meet the UK-wide Apprenticeship National Minimum Wage (ANMW) and employers are encouraged to pay the living wage in accordance with Scotland’s Fair Work policy and the UK National Minimum and Living Wage. All Modern and Graduate Apprentices must be legally employed in relation to Scottish employment law and the rights and responsibilities are the same as for any other employees and employers in Scotland. Foundation Apprenticeships are considered a form of schooling so Foundation Apprentices are not employed and do not get a wage as they are still in school.

On the government side, SDS pays a contribution towards Modern Apprenticeships, while Graduate Apprenticeships and Foundation Apprenticeships that have college delivery are fully funded by the SFC. SDS contracts with about 225 learning providers, who may subcontract some of the training to other providers. Of these 225, about 70% are independent training providers, 22% are employers and 8% are further education (FE) colleges (SDS, 2019[70]). The Scottish Government’s letter of guidance to the SFC, the Programme for Government, and Spending Reviews set important context and will be looking for the right balance between flexibility and accountability for the significant investment of public funds as well as for value for money (SFC, 2020[71]).

Apprenticeship policies and funding

Apprenticeships should be designed and delivered in line with skills needs and skills policies. Scotland has already undertaken several measures to strengthen the fundamentals of its apprenticeship system. Table A A.4 lists apprenticeship programmes and their financing and Table A A.5 lists the major skills policy and other relevant policies that have aimed to make apprenticeships more relevant and stronger. In addition, Scotland’s labour market strategy (developed well before the COVID-19 crisis) identifies in-work poverty, job quality, inequality of access to labour market opportunities as challenges, proposing to tackle these challenges through fair work and jobs, and investment in skills including apprenticeships (Scottish Government, 2016[72]). Co-ordination with other parts of the education and skills system has been addressed by the Enterprise and Skills Review (Scottish Government, 2017[73]).

Table A A.4. Apprenticeship programmes and their financing
Apprenticeship programmes and funding in 2020-21
Programme/policy	Description	Spending
MA	See Modern Apprenticeships above.	GBP 61 million (Lower than starting budget GBP 80.7 million due to the pandemic)
GA	See Graduate Apprenticeships above.	GBP 16.89 million
FA	See Foundation Apprenticeships above.	GBP 14.57 million
Pathway Apprenticeships (part of Young Person’s Guarantee)	Provide a new route into the work-based learning for young people. Created for school-leavers up to the age of 18 who might be facing fewer options due to the economic impact of COVID-19. Around 1 200 opportunities were available in the first phase, offering 26 weeks of training with a GBP 100 weekly allowance. Pathway Apprenticeships were contracted for starts up until March 2021.	GBP 0.78million
Adopt an Apprentice scheme	Support for apprentices who have been made redundant as a result of the pandemic and allow recruit and retain apprentices (Scottish Government, 2020[53]).	GBP 0.65 million
Apprenticeship Employer Grant (discontinued)	The grant aims to help increase the number of employers able to take on an apprentice or upskill an existing staff member. Announced in December 2020, recognising the challenging circumstances for employers as a result of coronavirus (COVID-19), and the impact on opportunities for young people. The grant will provide: GBP 5 000 for employers taking on or upskilling a Modern Apprentice aged 16-24, and for those aged up to 29 years who are disabled, care leavers or from a minority ethnic background. GBP 3 500 for employers taking on or upskilling an apprentice aged over 25.	GBP 19.1 million
Source: Various sources provided by Skills Development Scotland.

Table A A.5. Strategic overview, policies and measurement frameworks that are relevant to apprenticeships
	Summary	Objective	Involved actors
National Strategy for Economic Transformation (forthcoming)	A new national strategy for delivering greater, greener and fairer prosperity for the coming 10 years.	Underway	Business leaders, academics and economists have been appointed to a new Advisory Council to help shape this strategy.
Scotland’s Future Skills Action Plan (Scottish Government, 2019[74]).	Identify skills and labour market challenges and the role of the skills system in Scotland’s labour market.	In response to challenges ahead, to build a strong skills system that can contribute to economic growth, inclusion and productivity.	Not specified.
Labour Market Strategy	Provided a framework for a strong labour market that drives inclusive, sustainable economic growth, characterised by growing, competitive businesses, high employment, a skilled population capable of meeting the needs of employers, and where fair work is central to improving the lives of individuals and their families.	To focus government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth.
Inclusive Growth and Fair Work Framework	Aims to achieve economic growth that is inclusive and combines increased prosperity with greater equality, creates opportunities for all, and distributes the benefits of increased prosperity fairly. This led Strategic Labour Market and Fair Work Frameworks.	Promoting fair work and good-quality jobs, promoting equality and tackling inequality, and closing the attainment gap.
Young Person’s Guarantee	GBP 70 million investment in youth employment, including the opportunity of a job, apprenticeship, further or higher education, training programme or volunteering.	Increasing youth employment by creating up to 18 000 training, job and apprenticeship opportunities for young people.	Skills agencies
Developing Scotland’s Young Workforce (2014-21)	Scotland's youth employment strategy, which supports apprenticeships.	Meeting the target of reducing 2014 levels of and youth unemployment by 40% by 2021	Education Scotland, Convention of Scottish Local Authorities (COSLA), SDS
Skills 4.0 (2018)	Skills model for the future.	Meta-skill was identified: self-management, social intelligence and innovation. Skills 2035 Vision was developed as a roadmap for a skills and learning ecosystem.	SDS, Centre for Work-based Learning, Education Scotland
Skills Investment Plans	Tailored to sector and region, providing information on skills for skill investment, planning and alignment, including apprenticeships.	Informing skills challenges and opportunities, including labour market situation, trends in skills and qualification supply and employers’ perspectives.	Skills Development Scotland
ESSB Strategic Plan; Enterprise and Skills Review (ESR)	The Scottish Government asked SFC and SDS to embed FA/GA into SFC’s tertiary education funding approach, in a move away from the current SDS commissioning model for colleges and universities. Implement skills alignment model and a one system approach for learners and employers. Set the context for skills work.	Closer alignment of Scotland’s Enterprise and Skills Agencies.	The Enterprise and Skills Strategic Board (ESSB) was established to oversee the work of the agencies, including, SDS and SFC. Its Strategic Plan outlines a series of actions.
Apprenticeship Long-Term Outcome Framework (2016) and Education and Skills Impact Framework (ESIF, since 2019) (See Chapter 3 for more detail)	ALTO aimed to underpin the future developments in the system by information which is robust and accurate. It has been since extended to involve long-term outcomes of not only MA, but also HE and FE, leading to the development of the ESIF.	ESIF is to provide estimates of the economic and social impact of investment in post-school education and skills at SCQF level 4, for individuals, employers and the public purse.	SDS, SFC, ESSB, Office for National Statistics
Strategy for Apprenticeship Standards and Frameworks	Sets out a plan to ensure that the standards and frameworks underpinning apprenticeships are responsive to future changes.	Create standards and frameworks which underpin the delivery of an apprenticeship family fit for the demands of Industry 4.0, ensuring their future relevance through deeper and wider engagement with employers and learners, and to design a flexible, responsive apprenticeship system.	SDS, Scottish Apprenticeship Advisory Board
Climate Emergency Skills Action Plan 2020 and Net- Zero target	Supports the Climate Change Plan 2018-32. Guide apprenticeship focus and provision.	Set out a clear direction and priorities for the changes needed in the skills system.	SDS and SFC
Equality policies including gender pay action plan, disability	2015 Apprenticeship Equality Action Plan outlined Scotland’s priorities for improving diversity and equality of opportunity in Scottish Apprenticeships.	Increase the employment rate for young disabled people to the population average. Reduce the gender disparity in MA frameworks. Increase the number of MA starts from black and minority ethnic communities to equal the population share. Increase positive destinations year-on-year for care leavers.	SDS
Source: SDS (2019[75]), Background report prepared by SDS for the OECD review (unpublished). Scottish Government (2021[76]), Enterprise and Skills Strategic Board, https://www.gov.scot/groups/enterprise-and-skills-strategic-board. Scottish Government (2016[72]), Scotland's Labour Market Strategy, https://www.gov.scot/publications/scotlands-labour-market-strategy. Scottish Government (2020[77]), Growing the economy, https://www.gov.scot/policies/economic-growth/inclusive-growth. SDS (2021[78]), Apprenticeship Equality Action Plan Final Report 2015-2021, https://www.skillsdevelopmentscotland.co.uk/media/48622/equality-action-plan-5-year-final-report-december-2021.pdf.

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Note

← 1. A survey, commissioned by the Open University, of 1 000 senior business leaders in 2020, of which 200 are in Scotland. It was designed to be 50:50 split between SMEs (10-250 employees) and large enterprises (250+ employees).

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