A new compulsory national living wage for all workers over the age of 25 will not apply to apprentices, TES can reveal.
The announcement by chancellor George Osborne in his Budget earlier this month came as a surprise to many. The minimum rate of pay – which will be introduced next April and will apply to all full- and part-time workers aged 25 and above – will start at £7.20 an hour, rising to £9 an hour by 2020.
However, TES has learned that the living wage will not apply to apprentices, whose current minimum wage is just £2.73 an hour. This applies to all apprentices aged 16-18 and to those aged 19 and over who are in the first year of their training programme. After 12 months, adult apprentices are entitled to the national minimum wage for their age group. This currently stands at £5.13 for 18- to 20-year-olds and £6.50 for those aged 21 and over. Sector leaders have voiced concerns about the widening of the gap between minimum pay levels for apprentices and their colleagues.
A spokesman for the Department for Business, Innovation and Skills told TES: “Living wage proposals won’t cover apprenticeships. The apprenticeship minimum wage is reviewed regularly based on the advice of the Low Pay Commission. It is already set to rise by 20 per cent in October this year and future increases will be considered on the commission’s advice.”
Although the apprenticeship minimum wage will rise to £3.30 an hour later this year, the disparity between the two rates is causing concern.
Stewart Segal, chief executive of the Association of Employment and Learning Providers, said: “It could work both ways. It could be an encouragement for employers to recruit apprentices, but they have got to make that a realistic wage. On the other hand, it would be a concern if apprenticeships were seen to be cheap labour.
“We have said there’s room to increase the apprenticeship minimum wage and there might be room to move towards parity with the young person’s rate [£3.87 an hour from October].”
David Hughes, chief executive of adult education body Niace, said that the disparity itself was not the problem, but the scale of the gap was a concern.
“The key issue is making sure employers properly value apprenticeships and give a fair experience,” he said. “Pay is an important part of the programme being attractive to people but not the only part; quality has to be included.
“Part of that is accepting a slightly lower wage in anticipation of promotion, a secure job and a career. I call it a discount. What would be the right level of pay that allows people to be paid fairly but reflects the apprenticeship discount? In my opinion, £2.73 is far from the right level.”
Mr Hughes said he hoped discussions between the government and employers on another Budget announcement – the apprenticeship levy being imposed on large firms – would include discussions on apprenticeship pay.
Alison Fuller, professor of vocational education and work at the UCL Institute of Education, told TES that the living wage proposals should be inclusive of apprentices. “My personal view is that the minimum should apply to apprentices as it does to everyone else, because they are doing a job,” she said.
Professor Fuller led a study, published last month, which concludes that apprenticeships are being “misused” by businesses for training existing adult employees.
The report, Does apprenticeship work for adults?, calls for a “radical rethink” of the way the government uses the term “apprenticeship” to avoid it becoming devalued.
Professor Fuller told TES: “The government will argue that in order to offset training costs, apprentices should be paid less. It all depends on the deal the apprentice is getting. If they can see that they are forgoing wages in the short term for gains in the long term, there’s less worry for them.
“But if they can’t necessarily see how the apprenticeship is going to help them develop a strong platform for progression and they feel that they are just doing a job from Day 1, I can see tensions creeping in.”
The most recent apprenticeship pay survey, published last December, revealed that 14 per cent of apprentices were paid below the appropriate minimum wage. It found that non-compliance among businesses employing level 2 and level 3 apprentices was higher than average in hairdressing (42 per cent) and children’s care (26 per cent).
Niace described the figures as “shocking”. Mr Hughes said: “It brings into question the true motivation of employers and makes you question whether they are really investing in individuals or just want low-paid staff.”