KfW Research: One in four SMEs offering training hired fewer apprentices in the coronavirus year 2020

• Companies hit hardest by the crisis were more likely to cut back training
• No signs that the training market will recover in 2021
• Catching up quickly is important for the educational prospects of young people and businesses

The coronavirus crisis has really put a dampener on SMEs’ training activities and, thus, on opportunities for young people in Germany to start their working life. A special survey conducted as part of the representative KfW SME Panel revealed that one in four small and medium-sized enterprises offering training (26%) hired fewer new apprentices than planned last year because of the crisis. The crisis had no impact on the number of new apprentices for 71% of SMEs, and only 3% expanded their training activities.

The training activities of enterprises depend on how deeply they have been affected by the consequences of the crisis. At the time of the survey in late January 2021, two thirds (67%) of companies offering training were directly affected by the crisis, for example in the form of turnover losses or liquidity bottlenecks. Of these enterprises, 32% hired fewer apprentices in 2020 than they had planned. The SMEs offering training that even feared for their survival (21%) reduced the number of new apprentices even more drastically in response to the crisis, with half of them (51%) cutting back on training. However, many SMEs providing training that were not directly affected by the crisis also hired fewer apprentices. Their share is much smaller – 15% – but also significant.

Reduced training in the SME sector is the main driver of the figures recently reported by the Federal Statistical Office for all of Germany. Traditionally, small and medium-sized enterprises provide the bulk of occupational training in Germany and employ around 90% of all apprentices. The number of all new training contracts (i.e. training in SMEs, large enterprises and the public sector) fell by 9.4% to 465,200 in 2020 on the previous year, much more steeply than the long-term trend. Dwindling numbers of school students and a growing preference for degree courses had led to annual drops of around 1% before the crisis. There are no signs of training activities in the SME sector returning to pre-crisis levels in the short term. The special survey by KfW Research dampens hopes of a quick recovery of the training market in 2021. Twenty-six per cent of SMEs providing training expect to continue hiring fewer apprentices than they would without the coronavirus crisis in both the first and the second half of 2021.

“By signing a training contract, a company takes long-term responsibility for a young person’s important first training programme. Many SMEs are still grappling with the consequences of the crisis and suffering from what remains an uncertain situation, which is why they remain reluctant to hire apprentices”, said Dr Fritzi Köhler-Geib, Chief Economist of KfW. “But it is important both for the future of the school leavers who have been stopped in their tracks by the crisis and for the competitiveness of SMEs to quickly build the training relationships that were put on hold.” A good sign is that increasingly more companies have been looking to the future with greater optimism for the past three months now. “In April the KfW-ifo SME Barometer rose for the third consecutive month, and hope for an economic recovery in the second half of the year is growing. That is also good for the educational prospects of tens of thousands of potential apprentices.”

The current analysis can be retrieved at
www.kfw.de/kompakt

The database:
The current analysis by KfW Research is based on a supplementary survey performed as part of the KfW SME Panel, the only representative survey of Germany’s small and medium-sized enterprises (SMEs).All enterprises that had already participated in an earlier wave of the KfW SME Panel and had provided a valid email address were surveyed online by GfK SE on behalf of KfW Research between 12 and 22 January 2021. Responses from a total of 2,800 enterprises were evaluated in the current survey. As the supplementary survey was linked to the main database of the KfW SME Panel, the survey results are representative of the 3.8 million small and medium-sized enterprises in Germany.