We must scrap the unliveable Apprenticeship Minimum Wage
The National Minimum Wage has benefitted millions of Brits. When it was introduced in 1999 it was met with scepticism in some quarters, fearing that employers would cover their costs by scaling back on investment.
That never came to fruition and last year the National Minimum Wage rose to £9.50 per hour. In April it’ll rise again to over £10 per hour.
The National Minimum Wage has been a success story. According to the Resolution Foundation, since its introduction there has been a growth in the “wage floor” of 164 per cent, while the median wage has increased by 100 per cent.
Low wages are likely to prevent swathes of young people from ever pursuing an apprenticeship in the first place
But its application isn’t universal. It has a serious blind spot: apprentices. The Apprenticeship Minimum Wage, which wasn’t introduced until a decade after the National Minimum Wage, was set at just £2.68 per hour in 2010. As it stands, an apprentice is entitled to a meagre £4.81 per hour. That’s roughly half of the National Minimum Wage and one of the reasons why apprentices are not completing their apprenticeships. And unlike the National Minimum Wage, which increases as employees get older and gain experience, the Apprenticeship Minimum Wage is the same rate regardless of age.
For those reasons the odds are stacked against apprentices and it’s difficult to avoid the conclusion that those who want to earn and learn risk being penalised for doing so. In a cost of living crisis, who can survive on less than a fiver?
According to polling we commissioned from Opinium for National Apprenticeship Week, the answer is not many. Seventy-eight per cent told us that the Apprenticeship Minimum Wage is “unliveable”.
That’s why at the London Progression Collaboration, we’re calling on the Prime Minister to scrap the Apprenticeship Minimum Wage and replace it with the National Minimum Wage – which two-thirds (66 per cent) of the public support.
Though replacing it would help young people at the beginning of their careers the most, in what might reflect nostalgia for a time when vocational education was the primary destination for school leavers, support for scrapping the Apprenticeship Minimum Wage is most popular amongst over-65s, with 71 per cent in favour.
And there is a degree of cross-party support too, though it is far from universal. Seven in 10 Labour voters (71 per cent) believe the Apprenticeship Minimum Wage is too low, compared with fewer than five in 10 Conservatives (48 per cent).
It’s right that there is a broad, if incomplete, consensus on the matter. With almost half of all apprentices dropping out before they complete their apprenticeships, poor retention is an Achilles heel for the government and for a Chancellor who set out an ambition to turn Britain into a “high skills economy” a fortnight ago.
Though it is difficult to measure, low wages are likely to prevent swathes of young people from ever pursuing an apprenticeship in the first place.
Replacing the Apprenticeship Minimum Wage with the National Minimum Wage is also a modest proposal. Far from increasing inflation or undermining commercial investment, the spill-over effects are growth-enhancing. They include higher levels of retention, productivity and business continuity – saving firms time and money returning to the recruitment market. The majority of employers pay a fair wage and already reaping these rewards.
Legislation now needs to play catch-up in order to lift thousands of apprentices out of the poverty packet they’re currently entitled to and enable them to continue their apprenticeships with purpose.
Doing so would begin to address the current, flawed logic. An Apprenticeship Minimum Wage that leaves apprentices poorer than others their age and disincentives them to upskill is not consistent with tackling the acute skills shortages twenty-first Britain faces.
Addressing this inequality would send a signal that the government is serious about reforming the apprenticeship and skills landscape.
Jack Shaw is senior research fellow at IPPR North and senior account manager for London Progression Collaboration.
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