Apprentice minimum wage will lead to fewer apprenticeships

Government plans to introduce a national minimum wage for apprentices could damage attempts to encourage organisations to offer more apprenticeships, employer groups have warned.

Last week business minister Pat McFadden announced he had asked the Low Pay Commission to consider the possibility of introducing a minimum wage for apprentices.

Under existing rules, apprentices under 18 are exempt from the national minimum wage as are those aged 19 or older who are in the first year of their apprenticeship. However, Learning and Skills Council apprentices are guaranteed a weekly pay rate of £80, increasing to £95 in August.

Charles Cotton, reward adviser at the Chartered Institute for Personnel and Development, told Personnel Today setting a minimum wage that was higher than the levels already offered would damage government targets to increase the number of apprenticeships.

He said: “There is the issue at the moment about us being in the recession and how much organisations can afford. If the wage level goes up, organisations may cut back on the number of apprentices they have. Many employers couldn’t afford an increase in the current environment.”

He added that although the quantity of apprentices might decrease the quality could increase as employers fight to ensure they are getting the best value for their money.

Neil Carberry, head of employment policy at the CBI, said the government was in danger of pricing employers out of the apprentice market they are trying to promote.

He said: “[The government] needs to be careful not to create a situation where the government targets on apprenticeship delivery are damaged as they have become too expensive for companies to deliver on.

“Whatever balance is reached it needs to make sure apprenticeships remain worthwhile for companies.”

Carberry said he would prefer to see responsibility for apprentice pay stay with the Learning and Skills Council because it has a better understanding of the skills apprentices offer and the training costs involved for employers.

Annabel Berdy, head of employment at the British Retail Consortium, echoed the comments of the CIPD and CBI saying: “Given the tough economic climate many businesses would prefer not to lose the flexibility [over apprenticeship pay]. And, with pressures on training budgets, the wage change may work against the government’s plan to increase the number of apprenticeships.”

The employer bodies refused to be drawn on the level they would like to see the Low Pay Commission set for apprentices, if the government proposal is endorsed, but the Federation of Small Businesses said the level should be the same as that for a 16-17 year old already in employment – currently £3.53 per hour.

The Federation said setting this level could help to improve completion rates for apprenticeships.

Meanwhile Leatham Green, assistant director for personnel and training at East Sussex County Council, which takes up to 30 apprentices each year, welcomed the announcement as an important means of ensuring employers don’t exploit apprentices.

He said: “Apprentices could be viewed by some employers as an opportunity to pay people as little as possible and it’s about putting the true value on to the work they do so people aren’t exploited. Apprenticeships shouldn’t be an opportunity to do things on the cheap.”

He added setting a minimum wage would allow employers to attract a better calibre of apprentice as more people would find the schemes financially feasible.

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