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National Living Wage could lead to apprentices being used as cheap labour, awarding body warns

The launch of the living wage today should benefit millions – but there are question marks over side effects, says head of the City & Guilds Group

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The introduction of the new National Living Wage today could contribute to apprenticeships being used as an opportunity for cheap labour, the chief executive of business organisation City & Guilds Group has warned.

Chris Jones, chief executive of the City & Guilds Group, said that while there was potentially much to gain from Britain getting a pay rise, the impact on the economy was still unclear. Businesses were having to deal with a range of issues, including the new living wage and the upcoming apprenticeship levy.

“The businesses that will navigate these changes most effectively are those that shape their responses as part of a holistic talent and recruitment strategy,” he said.

“Under-25s being excluded from the new living wage, combined with the introduction of the new apprenticeship levy, makes me concerned that apprenticeships could be seen as an opportunity for cheap labour, instead of as a way to develop the vital skills businesses need to be productive. That would be short-sighted and harm our long-term economic prospects.”

'A national pay rise'

Chancellor George Osborne announced the National Living Wage of £7.20 per hour for anyone aged 25 or over in his summer Budget speech last July. It will rise to over £9 per hour by 2020, but will not apply to anyone in the first year of an apprenticeship.

The apprenticeship levy will be introduced in April next year, and will apply to all large businesses with annual pay bills of more than £3million. It will mean they pay towards to the cost of apprenticeships regardles of whether they use them.

In his Budget speech last summer, Mr Osborne said the living wage would mean a direct pay rise for 2.5 million people. “Those currently on the minimum wage will see their pay rise by over a third this Parliament, a cash increase for a full-time worker of over £5,000,” he said.


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