An increase in the national minimum wage for apprentices sounds like good news and is a step in the right direction, but for many people struggling to live on these appallingly low rates, it’s little more than a sop.
Employers can currently pay apprentices aged under 19 or those in the first year of their apprenticeship just £3.90 per hour. In April it will increase by 6.4 per cent to £4.15, giving apprentices working a 40-hour week an annual salary of just £8,632.
The apprentice minimum wage is exploitative and too low to cover basic living costs. The Apprentice Voice report, published in October 2019, found that a third of apprentices surveyed spend more than a fifth of their monthly salary on travel, typically £795.72 per year. The average rent for a house in the UK is £967 per month, making it impossible for an apprentice not living at home to meet basic outgoings.
The apprentice minimum wage was introduced to encourage employers to take on apprentices, the low rate reflecting that apprentices are still in training. However, the fact that apprentices are "learning on the job" doesn’t negate the fact that they are still doing the work and contributing to an organisation’s balance sheet.
The value of apprentices
At the heart of this dichotomy is the value that employers, industry, the education sector and the government place on apprenticeships. While our counterparts in other parts of Europe view their apprentices as an investment in their business and future economy, in the UK, the notion of an apprenticeship as a second-best option to going to university seems to prevail.
Yet the evidence doesn’t support this view. Businesses employing apprentices report average increases in productivity of £214 per week, equivalent to more than £11,000 a year.
According to the CBI, more than 80 per cent of UK companies believe skill gaps are harming the country’s competitiveness. The majority of organisations in the UK (91 per cent) say they have struggled to recruit workers with the right skills, costing the UK economy £6.3 billion per year. If employers are not prepared to invest in new talent, where do they think these skilled workers are going to come from?
Probably not from the swelling ranks of graduates. Employers increasingly report that young people fresh from university often don’t have the critical workplace skills and experience they need. A partner at a leading accountancy firm in the City said: "Graduates arrive thinking they know everything. I’d much rather take on an enthusiastic apprentice with some spark and ambition. I can teach them what they need to know and make sure they’re acquiring the skills our business needs."
Bringing in new talent and investing in existing staff unlocks potential, creates higher-level skills, better performance and increased agility. Employees who train in-house tend to be highly motivated and committed to their company. Instead of complaining about skill shortages and the impact on their bottom line, business needs to get smart and recognise the value apprentices deliver day after day in the workplace. The talent is out there – it needs to be harnessed and nurtured. If UK plc wants the skilled workforce it needs to thrive, it has to pay for it. Fairly. The Apprentice Voice is calling for the apprentice minimum wage to be scrapped and instead give apprentices the same universal minimum wage as their co-workers.
The return on investment is your apprentice: a skilled, committed employee who is adding value to, and futureproofing, your business.
It’s time we valued apprentices. #ValueYourApprentice
Dexter Hutchings is a founder member of The Apprentice Voice