Businesses welcome ‘manageable’ 6.4% apprentice minimum wage increase

The prime minister’s inflation-busting apprentice minimum wage increase is “manageable” and will not impede businesses from taking on new apprentices, employer representative organisations have said.

From 1 April, the apprentice minimum wage will shoot up by 6.4 per cent from £3.90 to £4.15.

Boris Johnson revealed the increase two days ago alongside his announcement that the National Living Wage would be rising from £8.21 to £8.72.

He said this is the “biggest ever cash boost” to the minimum pay levels, and added that “hard work should always pay, but for too long, people haven’t seen the pay rises they deserve”.

The Federation of Small Businesses said the increase, which is four times the rate of inflation, should be welcomed with caution.

“The government must always consider the impact these changes could have on firms who are struggling to make ends meet,” the organisation’s national chair, Mike Cherry, said.

“We must ensure that apprenticeships work, both for the apprentice and the employer. Our own research has found that some employers who had previously employed apprentices on shorter programmes did not budget for increasing the wages for apprenticeships lasting longer than a year.

“It’s vital that everyone is paid fairly, and small firms, who are the backbone of the economy, are ably supported by government so these changes are manageable and don’t impede businesses from taking on new apprentices in the long term.”

Matthew Percival, the director of people and skills policy at the Confederation of British Industry, agreed that there is an “important balancing act” to setting the apprentice minimum wage as large increases can make it less affordable for some firms to continue their apprenticeship programmes.

However, he added that most apprentices are already paid “well above this rate” and the CBI’s most recent survey showed that 63 per cent of employers plan to increase the size of their apprenticeship programmes, so April’s increase is “unlikely to have a large impact on apprentice recruitment in 2020”.

The government said the new rates for minimum wages were recommended by the Low Pay Commission, after they consulted stakeholders such as unions, businesses and academics.

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