Last month the Chancellor set out the government’s plan to turn around over a decade’s worth of sluggish economic growth. Education and employment were cited as two priorities, which included a promise to create a “high-skill economy” and address the barriers that are preventing 6.6 million Brits from joining the workforce.
Much debate has centred around the recent rise in economic inactivity, specifically how to encourage over-50s who have left the workforce to return. To fully address the UK’s longstanding productivity challenges, we need a strategy that equally meets the needs of new entrants to the workforce, and those already in work who want to improve their skills and retrain.
The London Progression Collaboration, a not-for-profit initiative that I run, exists to do precisely this. We support low-paid Londoners to secure better-quality, higher-paying work and help London’s businesses develop the skills they need to grow. One of the ways we do this is through creating apprenticeships.
We’re advocates for meaningful employment that is fairly rewarded, and we only partner with employers who are committed to that vision. Yet plenty of employers come through our doors who do not meet that criterion, and it’s usually because they’re paying the apprenticeship minimum wage: currently £4.81 per hour, irrespective of age. That’s less than half the £9.85 per hour that the Office for National Statistics estimated constituted low-pay last year.
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We know that low pay is a barrier to people taking up apprenticeships. Last year’s Youth Voice Census reported that low pay was the biggest factor in stopping young people applying for opportunities. And with apprenticeships delivering the greatest impact for the most disadvantaged people, it’s a lost opportunity to transform lives every time someone drops out due to low pay. With nearly half of all apprentices dropping out before they complete their apprenticeship, it’s clear that thousands can no longer afford to learn and earn.
Our experience is that low pay creates poor outcomes for employers as well. Poor retention makes it more difficult to address the skills crisis in construction, social care, hospitality and early years, which is harmful to productivity.
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The majority of employers pay a fairer wage, and many apprentices are more senior professionals unaffected by these rates. But many employers pay the minimum, and less than a fiver an hour does not stretch far. That has long been the case, but it’s even more acute in the context of the cost-of-living crisis. Worse, the Low Pay Commission estimates that many employers are “non-compliant”, meaning they are illegally paying apprentices less than £4.81 per hour.
So why does the government persist in setting such a low pay threshold for people who want to progress in work? In part, it reflects lazy assumptions – that all entry-level apprentices are young people, and that all of them can live in a parental home with family support and no dependants, and therefore can afford to be paid less.
Many apprentices are young people, but that’s a gross oversimplification. According to the latest data, nearly half of apprentices – 47 per cent – are aged 25 or over when they start their apprenticeship, developing careers as software developers, architects and ambulance crew.
Of course, no trainee architect would consider £4.81 per hour. So the majority of apprentices earning the apprenticeship minimum wage are the youngest, meaning that the practice is also highly exploitative and risks excluding the most disadvantaged young people who don’t have parental support behind them. Because apprentices can legally be paid a lower wage than other employees their age, some employers see apprenticeships simply as an opportunity to reduce their overheads.
That is why we are calling on the government to scrap the apprenticeship minimum wage. Polling we commissioned from Opinium for National Apprenticeship Week (6-12 February) demonstrates that the public are overwhelmingly behind this change.
Sixty-one per cent of people shared the view that the apprenticeship minimum wage was too low. Over three quarters (78 per cent) said they would not be able to live on it and two-thirds (66 per cent) thought it should be replaced by the national minimum wage, meaning apprentices would be entitled to the same rate of pay as others their age.
Although this change would most benefit young people at the beginning of their careers, over-65s were the strongest advocates of scrapping the apprenticeship minimum wage, with 71 per cent in favour. And there was significant cross-party support, too.
But despite the mood of the public, reform of apprenticeships rarely extends to this. This week employers will be celebrating the contribution of their apprentices, but it’s time to act. If the government is committed to reforming our patchwork skills landscape, scrapping the apprenticeship minimum wage would be a good place to start.
[See also: Posh but poor? The return of the squeezed middle]