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October 10, 2014

Mixed reactions to apprentice pay rise proposal

Mixed reactions to apprentice pay rise proposalBusiness secretary Vince Cable has unveiled plans to boost pay for thousands of apprentices. It would create a single national minimum wage for 16- and 17-year-olds in work and apprentices in their first year.

The proposal will be presented to the Low Pay Commission (LPC) and, if adopted, wages would rise from £2.73 to £3.79 an hour on current rates. Around 31,000 apprentices in the first year of their programme would benefit from a pay rise of more than £1 an hour.

Vince Cable said: “Apprenticeships are helping to create a stronger economy and opportunities for young people. I want the minimum pay for apprentices boosted by £1 an hour.”

However, business groups have raised concerns about the proposal. Katja Hall, deputy director general of the CBI, said: “Companies already pay their share into training, so raising the cost of taking these young people on would be unwise and put off many smaller firms from getting involved.”

John Allan, national chairman of the Federation of Small Businesses (FSB), said: “We support increases to the apprentice minimum wage rate and a narrowing of the gap with the youth rate. But this should happen gradually, not in one fell swoop. At a time when the government is calling for more employers to take on apprentices, it is also increasing the cost of doing so.”

However, some commentators believe a higher rate of pay will have a positive impact on productivity.

Susannah Clements, deputy chief executive of the Chartered Institute of Personnel and Development (CIPD), said: “There is a business case for paying all apprentices above [the] current base minimum, as our research suggests that apprentices who are better paid are more likely to remain with the firm that has invested in their training.”

Property entrepreneur Will Davies, who runs Aspect, said: “We have found that operating anywhere near the minimum wage leaves people demotivated. Increasing minimum wage is fine, but the labour force have to deliver by improving their work ethic and productivity.”

The LPC will make its recommendations, alongside the 2015 national minimum wage rates, in spring 2015. Government will then decide on any changes, based on its recommendations.

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