The government’s independent advisory pay body is considering scrapping the apprentice minimum wage rate.
The Low Pay Commission this week announced that it will “say more on this” issue once it has “considered new evidence” from a Department for Education survey and the body’s own commissioned research.
It admitted there was “widespread support” for the change which mean apprentices would be entitled the relevant hourly minimum wage depending on their age.
The commitment came after chancellor Jeremy Hunt’s autumn statement raised the minimum hourly pay rate for apprentices from £5.28 to £6.40. The 21 per cent increase will take effect from April 1, 2024.
Hunt also uplifted the national living wage by 10 per cent, from £10.42 to £11.44 an hour. This will apply to 21-year-olds for the first time, who will see an increase from £10.18 this year to £11.44 next year. National minimum wage rates for 18 to 20-year-olds will also bump up by £1.11 to £8.60 per hour.
In a summary of its pay recommendations, the commission said that “many stakeholders continue to tell us that the apprentice rate is too low”. The incoming apprentice minimum wage is more than £5 lower than the national living wage, and some £2 below the national minimum wage for 18-20 year olds.
Both employer and worker representatives told the commission the rate “discourages young people from choosing apprenticeships”.
The summary recognised there was “widespread support for removing the apprentice rate”, so it will “say more on this in forthcoming advice, once we have considered new evidence from DfE’s apprenticeship evaluation survey and our own commissioned research”.
But for now, the commission recommended keeping the apprentice rate aligned with the 16- to 17-year-old minimum rate.
The “large” 21 per cent increase it recommended “will go some way to reducing the gap with the NLW while maintaining a reduced rate for those employers who need it”, the commission added.
Apprentice representatives said the rise was welcome, but pointed out it is still “barely half” what the Living Wage Foundation says is needed to “even survive”.
“Whilst we welcome this first step towards a fairer, more equal share for apprentices, we see it as just that. A first step,” said a spokesperson for the National Society of Apprentices.
“We think the apprentice minimum wage has had its day. At its introduction, it was there to make sure we got paid ‘something’. The apprenticeship system was in tatters after decades of neglect.
“Now, however, the apprentice minimum wage pushes apprentices into poverty and debt.”
The problem with lower pay rates for apprentices is mainly for small businesses.
Many larger firms (and public sector organisations) have their own policies on what they pay people and most seem to pay apprentices the same rates as staff of a similar age.
What this means in practice is that a young person will sign up with Sainsbury rather than the local newsagent paying the apprenticeship rate and with the college delivering an apprenticeship, rather than one of the small employers they work with.
The best / most talented young people will go for the higher paid apprentice jobs with the bigger employers while the less able are left to go to the small employers that pay the lower apprenticeship rates. This does nothing for “levelling up” and leaves the disadvantaged individuals / areas still disadvantaged.
The only way to avoid this is to insist that all employers pay the same rates. This will mean there will be fewer small business employers taking on apprentices as only the more efficient and profitable ones will be able to pay. This is a good thing in the long run.
The real truth is we should not be subsidising small employers if we want a thriving economy.
Many young people, from 17 or 18 can get over £11 an hour working for a supermarket, and often do whilst at college. It’s hard to give this up for half the wage to move in to an apprenticeship, especially as many of the low paid apprenticeship often don’t offer the promise of a wage more than the supermarket once completed!
Also from 18 most young people want to contribute to family finances in some way (and increasingly parents need this contribution Child benefit and tax credits stop) The apprenticeship wage makes this difficult
Thre is also a big issue with how young apprentices living in towns/ rural areas get to the appenticeships they want to do.
If you can’t afford a car or the train fare it’s impossible And the commute is often unrealistic anyway The apprenticeships available more locally are often quite limited. Child care dental nurse hairdresser etc And the potentially higher earning trade opportunities seem go to someone known to the employers A nephew or a mates kid.Often Its who you know.
If you live in a city there are lots of opportunities If you live in a small town the supermarket may well be one of the better options!!!
If this happens, this will demolish our sector in hair and beauty and apprenticeships will be a thing of the past. We deal with SME’s and i KNOW, this will have a huge impact on them taking on an apprentice and all the responsibility that comes with it. Employers will opt for taking someone on qualified and pay them NMW, rather than have the additional costs to training an apprentice and all that comes with it.