4 min read.Updated: 16 May 2019, 03:36 PM ISTManish Sabharwal,Sumit Kumar
Apprenticeship schemes spell higher returns than most capital expenditure plans. They could help firms raise productivity
Employers can’t manufacture their own employees because of three holes in the bucket: learning risks (employer pays for training but kid doesn’t get hired), productivity risks (employer pays for training, kid gets hired, but is not productive), and attrition risks (employer pays for training, kid gets hired, is productive, but resigns before the employer recovers the investment). The inability of employers to manufacture their own employees is supported by the work of late Nobel laureate Gary Becker on human capital, but he hardly suggested giving up on training investments the way many employers are doing. We’d like to make the case that carefully designed apprentice programmes could provide a return on investment higher than the hurdle rates of 12-15% used by most employers to evaluate capital expenditure proposals.