National Minimum Wage

Chapter 3: Young People, Interns and Apprentices
between the ages of 16 and 19, suggesting that marginal changes in the youth rates of the
NMW were unlikely to have a direct impact on the main activities young people choose to
undertake.
3.88 Work experience, including internships, remains an important entry route for many young
people into the labour market. However, we continued to receive evidence that a substantial
proportion were unpaid, with implications for social mobility and labour market access for
many young people unable to afford these opportunities. We consider the legal requirements
to pay the NMW in these circumstances in Chapter 4.
3.89 The total number of apprenticeship starts in the UK continued to rise in 2010/11. The largest
increase was among older apprentices, aged 25 and over, although the number of starts
increased across all age groups. The Apprentice Rate was introduced at a relatively cautious
level and the findings from our commissioned research were that the overall impact to date
appeared minimal. However, there was evidence that some employers, and particular groups
of apprentices and sectors, may have been more affected by the Apprentice Rate.
3.90 The BIS Apprentice Pay Survey showed it was more likely to affect the pay of the youngest
apprentices (16 and 17 year olds), apprentices in the lower-paying sectors (such as
hairdressing) and those who did not work for their employer before starting. Research also
suggested that a substantial minority of employers of apprentices were unaware of the
introduction of the Apprentice Rate, and a substantial proportion of apprentices were paid
below their NMW entitlements, in respect of the age rates as well as the Apprentice Rate.
This indicated some degree of employer ignorance of, or intentional non-compliance with, the
Apprentice Rate and NMW rules for apprentice pay. We believe that action is needed to
improve official guidance and raise awareness of the Apprentice Rate, and we set out our
recommendations in Chapter 4. As we noted above, employer ignorance of the Apprentice
Rate and non-compliance may be factors in explaining the apparently small impact to date.
We will commission additional research on the Apprentice Rate for our next report in order to
increase our understanding of its impact.
3.91 We aim to ensure that the minimum wage rates do not provide an incentive for young people
to leave education or training while preventing exploitation for those in work, or undertaking
an apprenticeship or internship. We present our recommendations for the youth and
apprentice rates for October 2012 in Chapter 5, alongside stakeholder views and other
evidence that influenced our decisions. We next turn to the issue of compliance and
operation of the National Minimum Wage.
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