National Minimum Wage

Views on Impact
Chapter 3: Young People, Interns and Apprentices
3.79 In its evidence the Government acknowledged that it was too early to assess the impact of
the Apprentice Rate, but it was mindful of the vulnerable position of apprentices, particularly
young apprentices, in the economy given current labour market conditions. The other UK
administrations were also generally cautious about the Apprentice Rate, concerned that it
should not have any adverse impact on provision, although the Scottish Government
expressed reservations that the level remained low. None provided any evidence of a
negative impact to date and they awaited data from the BIS Apprentice Pay Survey to help
inform their assessment.
3.80 Among employer groups there was also recognition that evidence to date is limited, but they
were also concerned about the level of the bite and the impact of any future rises in the
wage. The CBI said that while the limited evidence available suggested the Apprentice Rate
had minimal impact, caution should still be applied to setting apprentice rates. It had
calculated that the bite of the £2.60 rate from October 2011 averaged 59 per cent across all
sectors against average first year apprentice pay rates, which it said was 7.5 per cent higher
than the bite for the adult rate of the National Minimum Wage and 2 per cent higher than the
bite for the introductory £2.50 Apprentice Rate. The Unquoted Companies Group was
disappointed at the 4 per cent increase for apprentices from October 2011. It was concerned
about the impact of this on employer provision of training. However, the Apprenticeship
Ambassadors Network said it was content with the present arrangements and that there was
little reason to interfere with an arrangement which appeared to be working satisfactorily.
3.81 Trade unions and groups representing young workers had a different perspective on the
impact of the Apprentice Rate. The TUC provided evidence of the bite of the Apprentice Rate
and NMW level of pay against starter and more senior apprentice rates in a number of craft
apprenticeships. It noted, for example, that in the British Furniture Trade Joint Industrial
Council Agreement, the fully qualified rate was 45 pence more than the adult rate of the
NMW, yet the starting rate for 16 year olds was 85 pence higher than the Apprentice Rate.
The TUC said that the increase in apprenticeship starts in 2010/11 provided some good
evidence that the Apprentice Rate had not had an adverse effect. Unite did not believe it
would be accurate to attribute the dramatic rise in the number of apprenticeships to the
Apprentice Rate, but it could have had a positive effect. Platform 51 and the NUS had
concerns that the Apprentice Rate had been set too low, preventing some groups from taking
up training opportunities and having little impact on the apprentice gender pay gap.
3.82 The Hair and Beauty Industry Authority, the training body for the hair and beauty sector, said
the interim findings from its survey across the industry indicated that the number of
businesses offering apprenticeships had fallen compared with a year earlier. Just under a
third employed the same number of apprentices as a year ago but nearly a half employed
fewer or none at all now; on the other hand 20 per cent employed more than previously or
had started to employ them in the last twelve months. NHF said that the minimum wage in
some salons had led to a narrowing of differentials between juniors and stylists, so salons
would look to recruit a stylist, who would bring experience, rather than someone cheaper
who required more training to get up to speed. NHF highlighted what it regarded as the
added complexity and burden of having four rates of the NMW now, which it thought made
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