There is a relationship between the odds of a business surviving and if they took on an apprentice. It was found that of the businesses that survived 15 years, 75% of them either currently had an apprentice or had previously employed one. It was found that some businesses have an aversion to taking on an apprentice. If those businesses took on an apprentice, they may have a better chance of not going out of businesses within their first 15 years of operation.
There are several reasons why a business should take on an apprentice, with benefits both for the business and the industry. This report is a follow on from Employer training engagement with ITOs. In that report, the engagement of businesses with apprentices was explored based on business size, while in this report the focus is more on business maturity. It is useful to understand the likelihood of a business taking on an apprentice based on their maturity to assess if there is the capacity for more businesses to take on apprentices. This report also demonstrates the survival rates of businesses that took on an apprentice against those who did not.
The chart below tracks businesses from their birth year based on whether they are still in business or not. Of those that are still in business, they are classified by if they have employees, and if so, do they have an apprentice or have previously had one. In the birth year, most businesses are sole traders. It can be observed that after 10 years, 71% of businesses go out of business. After 15 years only 22% of businesses survive. Just over 9% of businesses will take on an apprentice in their first year, which increases slightly to 13% in the second year as more businesses take on an apprentice.
If the chart is narrowed down to include businesses that have employees only, therefore excluding sole traders and out of business, most businesses that are still in business have an apprentice or have had one in the past. Of the businesses with employees, a business that was born in 2003 was three times as likely to still be in business after 15 years if they have had an apprentice within their lifetime. The construction sector saw a higher proportion of businesses survive that had had an apprentice at some point than the manufacturing sector. Overall, manufacturing had a higher survival rate of businesses after 15 years.
This Sankey flow chart demonstrates the transition of businesses between being a sole trader, an employer without an apprentice, an employer with an apprentice and out of business. Maturity demonstrates how many years the business has been in operation.
This chart takes the information from the above Sankey flow chart and works out the percentage of those who are not currently employing an apprentice that will take one on in the following year. Across all businesses in the trades sector there seems to be little correlation with maturity and propensity to pick up an apprentice in the following year, with about 10% of businesses with employees picking up an apprentice in the following year and 2% of sole traders. The electrical industry on the other hand seems to show a downward trend over time for employers, but an upward trend for sole traders.
Access to the anonymised data used in this study was provided by Statistics New Zealand in accordance with security and confidentiality provisions of the Statistics Act 1975, and secrecy provisions of the Tax Administration Act 1994. The findings are not Official Statistics. The results in this paper are the work of the authors, not Statistics NZ, and have been confidentialised to protect individuals, households, businesses, and other organisations from identification. Read our full disclaimer here.