Apprentices set for 7p rise in minimum wage as Low Pay Commission says rise in line with 16 and 17-year-old ‘normal’ workers is ‘too expensive’ for businesses

Apprentices look set for a 7p rise in their national minimum wage of £2.73 an-hour while proposals to shift them up onto a par with 16 and 17-year-olds have been rejected as too expensive for businesses by the Low Pay Commission (LPC).

The call to increase the minimum wage by 2.6 per cent to £2.80 came with an LPC rejection of Business Secretary Vince Cable’s proposal to give apprentices a pay rise of more than £1.

He suggested the apprentice minimum wage be brought into line with the non-apprenticeship minimum for 16 and 17-year-olds, currently at £3.79 per hour.

The LPC said such a move could affect 200,000 apprentices with the cost to employers hitting at least £160m each year, possibly “much more”.

But the LPC agreed with Mr Cable that higher-level apprentices should earn the ‘normal’ worker national minimum wage, which is set to rise from £6.50 to £6.70, from October.

In its report to Dr Cable (pictured), the LPC said: “You asked us to consider this option as part of a broader review to see whether the structure of the apprentice rate could be simplified in order to improve compliance, and also to consider whether the apprentice rate should continue to be applied to higher levels of apprenticeship.

“We recommend that the apprentice rate should not apply to higher apprenticeships. But in terms of other possible structural changes, we believe there would be significant risks in a merger with the 16 to 17-year-old rate.

“It would mean an unprecedentedly large increase in the value of the rate, of between 39 and 88 per cent.

“It would affect over 90,000 and possibly as many as 200,000 apprentices — up to a quarter of all apprentices — with significant impact in low-paying sectors that provide many apprenticeships and are of particular value to low-skilled 16 to 17-year-olds.

“The cost to employers would be at least £160m each year and could be much more. That would be around half the total cost of the recommended increase in the adult rate, and at a time when there are other funding pressures on employers in England from possible mandatory cash contributions to training. We discuss these and other concerns in our main report.

“As you requested, we have considered phased introduction, but it would not remedy these issues.”

A BIS spokesperson said: “The government will now consider the LPC’s recommendations and respond next month. Once the government has responded, the regulations to change the rates will be debated in Parliament before the new rates are introduced on October 1.”

 



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2 Comments

  1. This is the problem when you introduce an ill thought out policy. The ridiculous and in my mind cruel apprentice low pay level will now always be kept low, for fear of making other apprentices already in a role unattractive and expensive.

    Surely if the clams by NAS etc are correct and all the benefits young people and their training brings the employer will gladly pay the extra! We have all seen the claims, “Apprentices bring new skills to your business, Apprentices improve productivity, other staff members benefit from their enthusiasm” These and many other bold claims are made. Well, lets see the value!

    I am a huge supporter of apprenticeships, I have long campaigned for the exploitative pay rate to be scrapped. I believe that if young people are prepared for work, ready to work and are in the right position they will perform well and deserve to be treated no different to any other employees in terms of remuneration and credibility.

    Most employers that pay the lower rate (that I have spoken to), only pay it because they were told that is what the rate is. Remove the confusion, stop insulting young people and lets make pay equality meaningful right at the start of working life.

    I almost introduced the thought of reversing the scenario, pay the youngsters not on an apprenticeship the insult, but I guess that would open up a new can of worms!

  2. Instead of looking at what paying ‘the going rate’ will cost business, ask business if after say 12 months apprenticeship, the employee isn’t worth ‘the going rate,’ and if not why not. If that’s the case, business is already getting productive labour on the cheap, but we already knew that. Not a good idea to tell a 16-17 old that they can have an increase of 7p ………!