Are apprentices being paid enough?

With some people calling for a living wage for apprentices, we take a look at apprenticeship pay and whether it is enough for young people to support themselves on.

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Three quarters of young people polled this year have said that low pay would put them off taking up an apprenticeship.

The national minimum wage for apprentices will rise again in April, from £3.70 to £3.90 per hour, the chancellor announced in October’s budget statement. The 20p extra is a 5.4% rise and follows last year’s increase from £3.50 – after Philip Hammond was advised to do so by the independent Low Pay Commission – and the increase is bigger by proportion than all the other minimum wage groups.

However, it still might not be enough for many young people who might otherwise be attracted to apprenticeship programmes, especially when the minimum wage for standard jobs at the same age range is so much higher. For 18- to 20-year-olds, the increase is from £5.90 per hour to £6.15 – far more than that of their apprentice peers.

There are plenty of people who want to change this though. In October, the Green Party’s deputy leader in England and Wales, Amelia Womack, highlighted the issue when she called for a living wage boost for apprentices.

She told the Green Party conference: “If we want to build a working environment that is fair for everyone, we have to make things fair from your very first job onwards.

“A fair workplace has to be fair for apprentices as well. So today we are also pledging our official support for a living wage for apprentices. The current minimum wage for apprentices is £3.70 per hour.

“Three quarters of young people polled this year have said that low pay would put them off taking up an apprenticeship.

“It is no wonder that we have a skills shortage in this country. It is time that the political class woke up to the value of investing in training and apprenticeships, to the hardships facing young people today and to the realities of pay inequality in Britain.”

Catherine McGuinness – Policy Chairman at the City of London Corporation – agreed with the Green Party deputy leader, releasing a statement saying: “The government’s aim of addressing skills issues through apprenticeships is welcome. However, the apprenticeship minimum wage £3.50 per hour is simply not sufficient to live.

“Nearly half of apprentices are over 25 and low pay excludes older people with families and young people not living with their parents. And while larger firms often have the capacity to offer quality apprenticeship programmes, smaller firms can lack the resources, knowledge and expertise required.

“Our work with SMEs has revealed a real desire for smaller firms to work together to access training and share knowledge and employ apprentices, but often they cannot secure the training they require. The government should support these employers to collaborate and incentivise bigger firms to open-up their apprenticeship training to smaller firms.”

AllAboutResearch – the research hub now publishing research for AllAboutSchoolLeavers – has found data to support this view – especially in more expensive parts of the country, like London.

Last year, our survey looked at the question of parental support as part of its annual school leaver research. 67% of parents said they would like to support their children moving to another part of the country for work, but that it would depend on the scale of cost. 

Over half (54%) of parents who said they wanted to help their children financially, said they would give between £50-£200 per month. The average UK rent at the time was £908 per month (£1,524 in London)*, meaning that for Level 2 and 3 apprentices on an average weekly wage of £261.75**, it was barely manageable to rent outside of London and impossible to rent in London as an apprentice.

For Level 4 and 5 apprentices on an average weekly wage of £405**, renting outside of London was comfortable, but renting in the capital was barely manageable.

This meant that young people whose parents did not live in London – or whose parents could not contribute to living costs – would be excluded from most apprenticeship opportunities in the capital. This is a concern for young people wanting to make the most of apprenticeships in London, but also for apprentice employers in the capital – they could be missing out on bright school leavers who just happen to live elsewhere.

This year’s research has just been published, providing even more insight into the attitudes and circumstances of real-life young people and their parents, and it’s bound to further suggest that if we want all school leavers to be able to do apprenticeships – not just those with wealthy parents – then the minimum wage for apprentices needs to be reconsidered.

“Three quarters of young people polled this year have said that low pay would put them off taking up an apprenticeship. It is no wonder that we have a skills shortage in this country. It is time that the political class woke up to the value of investing in training and apprenticeships, to the hardships facing young people today and to the realities of pay inequality in Britain.”

The difficulties for young people in the UK today is the topic of much discussion: many (apprentices, university students, standard employees) feel unable to save for things like mortgages in the same way that their parents did at their age: the spike in house prices makes a mortgage simply out of reach for many, especially when paired with a rise in the cost of living.

Last year, the Resolution Foundation think tank proposed a ‘citizen’s inheritance’ to help redistribute wealth to young, to address this. Under this idea, every person in Britain would receive £10,000 when they turned 25 to help fix the “broken” intergenerational contract between millennials and baby boomers, the influential think tank proposed following a two-year study.

The payment, described as a “citizen’s inheritance”, is intended to redistribute wealth at a time when young people need it most to find housing, return to education or start a business.

It would also, according to the think tank, help to reduce resentment towards baby boomers (born 1946-65), who have typically done better out of the housing market and pensions than any generation that’s come after them.

The idea came out of the Resolution Foundation’s intergenerational commission, which has been working on the issue for two years and has now published its final report.

The panel was chaired by David Willetts, the former Conservative universities minister, and included the TUC secretary general, Frances O’Grady, and the CBI director general, Carolyn Fairbairn.

Fairbairn represents British businesses, and she has said the unspoken deal in which the young look after the old and the old help the young have a better life than the generation before has broken down in recent years.

“Younger generations are bearing more risks and holding fewer assets than their predecessors,” the report says. “We need to redress that imbalance if we are to maintain the promise of an asset-owning democracy.”

The findings could be good news for millennials (born 1981-2000), many of whom believe they have been unfairly branded as bad at saving, reckless people would rather spend what little money they have on artisan coffee and smashed avocado on toast than save for a deposit on a house. Research found that in 2001 people aged 25-34 actually consumed the same as 55-64 year olds, and now they consume 15% less. The next generation of people – school leavers – might share this fate if nothing changes.

The £10,000 lump sum – or ‘citizen’s inheritance’ – would be funded by a change to inheritance tax, the authors said. Inheritance is taxed at 40% above a threshold of £1 million for many. It is proposed that this would be replaced with a new 20% tax on all gifts or inheritances throughout one’s life up to £500,000, and then at 30% above that.

Last year Forbes found that despite being the largest generation in the workforce today, average millennial salaries are disproportionately low compared to the national average—and are 20% lower than baby boomers’ salaries when they were the same age.

Representing another issue, millennial unemployment and underemployment is more than double the national average.  All those low or non-existent salaries are bringing the average for this generation down.

Of course, there are many separate root causes for the rise of millennial unemployment complicating the issue. One of the biggest complications is that the average millennial is saddled with huge student loan debt, forcing recent graduates to move back home to save money, potentially missing out on other opportunities. To pay this debt off effectively, many millennials are holding out for strong opportunities—but those opportunities don’t always come.

The next generation of workers may not have this debt, if they follow non-university career paths with options like apprenticeships.

The highest paid apprenticeships

For those who want to take the apprenticeship option, here are some ideas that will be kind on your bank account as well as your career.  

Ratemyapprenticeship have put together a list of the highest paid apprenticeships so you can figure out what programmes to apply for, if salary is your number one priority. The list is based on thousands of reviews of apprenticeship schemes. 

The salaries for Intermediate, Advanced and Higher Apprenticeships have been combined to give an average salary for each industry

1. Accountancy – average salary of £17,988

2. Government / Not for Profit – average salary of £17,472

3. ​​​​​Banking / Finance – average salary of £20,218

4. Energy / Utilities – average salary of £15,995

5. Insurance, Asset and Investment Management – average salary of £19,034

6. IT & Consultancy – average salary of £18,331

7. Engineering – average salary of £17,440

8. Business – average salary of £17,563

9. Construction, Real Estate and Property – average salary of £16,703

10. Retail / FMCG – average salary of £15,441

11. Science & Pharmaceuticals – average salary of £15,437

12. Recruitment – average salary of £10,660

13. Law / Solicitors – average salary of £16,405

Apprentice salaries in different locations

From the same research, here is a useful list of average apprenticeship salaries in the different regions of the UK, so you can figure out where might be best to focus your apprenticeship search.

1. Central & Greater London – average salary of £19,160

2.  West Midlands – average salary of £18,082

3​. Northern Ireland – average salary of £16,697

4.North East – average salary of £15,125

5. North West – average salary of £17,018

6. Yorkshire & Humberside – average salary of £17,203

7.Scotland – average salary of £17,276

8. Wales – average salary of £17,118

9. South East – average salary of £17,528

10. East of England – average salary of £16,752

11. South West – average salary of £17,194

12. East Midlands – average salary of £16,239

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* Figures published in HomeLet Rental Index 2017

** Based on an average wage of £6.98 per hour for Level 2 and 3 apprentices and £10.80 for Level 4 and 5 apprentices and a 37.5 hour working week. Average wages were published in the Apprenticeship Pay Survey 2016

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