The continued case for increasing apprentice pay

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 There are a few things I’m known to blog about because I’m just pretty passionate about it:
  1. The apprenticeship levy – whether it’s our 6 red lines or call for a delay

  2. Careers advice and guidance – the good, the bad and the more often than not the ugly

  3. Women in STEM – where are they all?

  4. Promoting apprenticeships – anything and everything that gets people thinking about apprenticeships.

This blog is around number 4 and the focus is on increasing pay. Shall we begin?

Some stats:

£3.30 per hour
The current minimum wage for apprentices who are under 19 or in the first year of their apprenticeship. Whenever I cite this to manufacturers shockwaves go flying through the room.
£3.40 per hour
That’s the apprentice rate coming into force in October this year. A 3% increase and because we’re starting from a pretty low rate represents only 10p extra per hour (And just to note that the Youth Development Rate and the Adult Rate both increased by more than 3%!)
2014
The year we recommended that the apprentice rate is scrapped and replaced with the age-specific rates. Reducing the current complex structure of apprentice pay for employers and giving apprentices a well-deserved pay increase.
2016

The year we again repeat our calls to the Low Pay Commission (and indeed the government) to increase apprentice pay in our submission which we will be publishing next Friday.

£6.50

The average pay for engineering apprentices according to the BIS apprentice pay survey 2014. With our own Workforce Pay Benchmarking suggesting 1st year apprentices can enjoy around £12k basic pay and then moving up to around £18k by their final year - with many employers keen to tell me when they pay even more!

Making my case for increasing apprentice pay

Aligning apprentice pay to age-specific rates would reduce complexity and give apprentices a pay boost

 Keep_it_Simple

In 2014 we recommended that the Apprentice Rate was scrapped and replaced with age-specific rates. This would give apprentices, particularly those under 19 and in the first year of their apprenticeship a decent boost. This is still the easiest way forward. And if you don’t believe me check out our 2014 and we’re sure you’ll agree.

Pay can be used as a levy to drive quality

 quality2

 The Government’s target to create 3million apprenticeships is ambitious but as an industry we’ll do our upmost to play our part. What is fundamental however is that quality is not sacrificed for quantity. The introduction of the apprenticeship levy (which we still hope will be delayed to get it right first time) is likely to lead to a few employers thinking creatively about how they can get their levy money back in the quickest, cost-effective fashion.

In its crudest form this could be offering a lower level apprenticeship for a year and a day, recruiting a 16 year old (or actually any age as the apprentice rate applies to anyone in their first year) on £3.30, NICs abolished if they are under 25 and then letting them go at the end (no right to unfair dismissal either).

Now I don’t want to live in this world and I hope that it won’t happen. But it could happen so government should use tools at its disposal to prevent this behaviour. Increasing apprentice pay could prove a simple and effective tool to do this.

Increasing pay could increase equality and quantity at the same time

inclusivity 

Manufacturers struggle to recruit, and this often includes apprenticeships. While the top employers might find 10 apprentices chasing every 1 apprenticeship, in our sector and particularly among SMEs, applicants do not come in great waves. Increasing the pool of potential talent for apprenticeships is vital.

As I mentioned at the start of this blog, one my favourite blog topics is getting more women in STEM. When it comes to apprenticeships only around 4% of engineering apprenticeships go to females. The figures are even more worrying when we look at BME which standards at around 3.2%.  

Manufacturing employers know that the image of the sector is one in a long list of barriers and therefore are engaging with schools and colleges to tackle this, but we’re still a long way off.

But as the TUC research on under-representation in apprenticeships (which I was lucky enough to be involved in) found was that there are many other barriers to greater inclusivity in apprenticeships. And while the focus of that particular piece of work was on gender and ethnicity, look at the figures for the number of apprenticeships going to disadvantaged learners or learners with a disability – in the full year 2014/15 just 8.8% of all starts last year.

Now there is a clear message for employers here that more needs to be done to address this, but there are levers that government could pull also. Pay being one.

An increase to pay could incentivise those that can’t afford to undertake an apprenticeship because they may have to take a pay cut for example to do so. Now they might not have to if they entered into our industry (as we’re pretty generous) but let’s park that for a second and just look at the apprenticeship offering more widely. If an employer is paying that very basic rate of £3.30 per hour – can everyone really afford it?

If we could make the apprenticeship offering more attractive by taking forward our recommendations to pay age specific rates then we could see greater inclusivity and a greater number of people applying for the vacancies many employers are currently trying to fill.

 

So there you have it a social case and a business case for increasing apprentice pay. What do you think new Government, shall we give it a go?

 

 

 

 

Author

Head of Education & Skills Policy

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