A rise in the minimum wage - but will it come at a cost to business?

Minimum wage for apprenticeships increase may bridge the gap but must not deter employers

Posted by Paul Cherpeau

Chief Executive

Thu 19th, Mar

Yesterday's budget (or party political broadcast for the Conservative Party) confirmed the government’s announcement on Tuesday that not only would the national minimum wage be increasing, but the Apprenticeship minimum wage would also increase by a rate far above that recommended by the independent Pay Commission.

Despite the obvious clamour for votes, I don’t think there will be too many people upset about the announcement of an increase in the minimum wage although clearly the 3% rise must be just the start of a long term plan to ensure work pays for the citizens of our country.

The increase in the apprenticeship minimum wage is a classic double-edged sword.

Apprenticeships are becoming increasingly popular in the current climate of high university tuition fees, yet there remains an underlying stigmatism for many young people that an apprenticeship is the ‘diet coke’ of going to university, getting a degree and having a damn good time whilst there. The pay discrepancy for apprentices entering the workplace at 16 potentially perpetuates this stigmatism so the increase is to be applauded if (and it’s a big ‘if’) this stigma is further eroded.

Yet recruitment into any organisation at any level is arguably the single biggest risk to a business. Get the wrong person and a substantial investment in time, resource and reputation can be wasted. Committing to employing, training and developing a young person, particularly at 16 or 17 years of age, is a big commitment for a smaller business that is partially mitigated by incentives, such as the low starting wage. A greater focus on encouraging firms to invest in training and supporting young people as they begin their careers is how we will improve the skills of young people and prepare them for fulfilling and well-paid careers. The substantial increase in the apprentice minimum wage could act as a disincentive for employers considering taking on an apprentice for the first time.

That being said, it’s a positive step that the value of apprentices is being recognised. It is my hope that the change in the apprenticeship minimum wage from October will create a culture of quality over quantity, with those employers who are serious about providing a genuine opportunity for young people being rewarded over those who are looking simply for cheap labour. It may also create a culture of competitiveness for these quality apprenticeships, addressing issues of doing an apprenticeship ‘for the sake of it’ and ensuring that the financial reward makes it an attractive proposition. 

At the Chamber, we employ ten apprentices in the workplace and have implemented a wage progression plan that ensures our apprentices receive more than the basic minimum and will ultimately progress onto the living wage. We feel this is an important commitment that we are working towards that provides our apprentices with an end goal that we believe will motivate and inspire them to work hard, perform well and make a positive contribution to our organisation.

Let us hope that the new apprenticeship minimum wage can have a similarly positive effect.

Interested in taking on an apprenticeship? Contact the recruitment team at Liverpool Chamber Training

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