The governance arrangements in apprenticeship are mirrored in the its financing, which is based on a co-financing model between the company and the state and/or the region. The state and/or the region public pays for the costs of part time schools including buildings, salaries of teachers and the equipment at the schools. The company covers the expenses for the in-company training. Thise co-funding models ensure a demand driven development and ownership by stakeholders of the apprenticeship system.
The key incentive for the companies is that engagement in apprenticeship is a recruitment channel for future skilled workers, which is a growing challenge due to aging and changing educational choice among youth in many countries. Over time apprentices contribute to the income of the company as apprenticeship is based on learning through productive work. The net-profit margin varies however between companies and sectors. In addition there may be other forms of incentives particularly to stimulate that SMEs take on board apprentices, or to open up apprenticeship for challenged youth. These incentives may be in the form of tax deductions or grant schemes.
The company bears the costs of the remuneration of the apprentice and the costs of the in-company training. The level of remuneration of the apprentice will often be laid down in the collective agreements. If not, it will be specified in the contract between the training company and the apprentice.