Real Living Wage for younger workers – good news or the end of Apprenticeships for 16 to 18 year olds? | People Plus

Real Living Wage for younger workers – good news or the end of Apprenticeships for 16 to 18 year olds?

Jeremy Corbyn’s recent announcement about extending Labour’s Real Living Wage of £10 per hour to all under-18s re-opens a long-standing debate about what is best for younger apprentices. Would they really benefit from this eye-catching policy proposal if Labour formed the next Government? Or would it put at risk Apprenticeship opportunities for the under-18s?

When I was preparing my book on Apprenticeships in 2016, the TUC contributed an excellent article on apprentice wages. Paying young people below the adult minimum wage does not sit well with many people and I was often asked to defend “slave labour” accusations by the media. This distracted commentators and crucially parents from the many benefits of Apprenticeships for young people.

The TUC were committed to “ensuring that young people have access to high quality learning and skills opportunities that lead to secure, sustainable, fairly paid employment”. I think responsible employers would find it difficult to disagree with this.

The rate for the job, important though this is, is only part of the overall package, alongside the quality of training and what happens afterwards.

Ensuring an Apprenticeship has given the young person the best start to their working life is arguably much more important, provided of course they are not being exploited which is why there are minimum wages to provide statutory protection.

I am reminded of successive reports pointing out that the Government should be more interested in the number of people successfully completing an Apprenticeship than those starting one. In this case, politicians might be more interested in the job and wages apprentices get at the end of their Apprenticeship rather than what they get at the start or during training.

There are a number of reasons why 16 to 18 year olds receive a lower rate for the job and especially if they are in their first year of an Apprenticeship. They are simply less productive, still developing their skills for the chosen occupation and learning the job. They contribute less for their employer who typically invests a good deal of their own time (or their company’s) in teaching the job. This usually means that the employer is less productive themselves during this time. Apprentices are also released from productive work for 20% of their time for off-the-job learning.

Government policy has been to see an Apprenticeship as a three-way investment: the employer, the Government (through funding) and the individual who is accepting a lower wage in return for the training that they receive. I don’t think this concept has taken hold in the public consciousness even if it is sound theoretically.

I rarely encountered apprentices complaining about exploitation or their rate of pay. This may be because friends who have stayed on in school and college are not receiving any wages. They are more likely to compare themselves favourably with other students than unfavourably with older employees.

I suspect that where there is resentment about the wage differential with older workers, it is where there is little training taking place and young workers feel they are quickly performing as effectively as their older counterparts. This will not be the case where quality Apprenticeships are in place. So arguably quality rather than wage rates should be the focus for policy makers.

So what might be the effect of extending the Real Living wage to 16-18 year olds?

My experience of working with employers across many sectors is that employers simply find more mature and experienced young people more attractive to employ as apprentices. Financial incentives are necessary to encourage employers to recruit 16-18 year olds rather than older workers.

That is not to deny of course that there are many 16 year olds who are more than ready to work and have just what employers want. It is just that the two extra years life experience and skills of 18 year olds generally make employers keener to employ them, especially in customer-facing roles or where they would have access to business-critical information, or to financial or security systems.

The deliberations of the Low Pay Commission, set up to take such issues out of politics and advising on the Minimum Wage for 20 years, have tried to balance the interests of individuals and those of employers. Its recommendations for  minimum rates over many years suggest that £10 per hour would pose a real risk to future youth employment opportunities.

However, a future Labour Government might put other mitigating actions in place now that the policy proposal is out in the open and will be scrutinised. I hope an impact study, extending to the impact on Apprenticeships, would be published and prompt wider thinking. For example, providing wage subsidies to those 16-18 year olds who already need extra help such as care leavers.

For me, the most important issues are the quality of the training received by a young person and their terms and conditions on completion of their training when they are fully productive. Money in the pockets of young people is important for many reasons and of course they should never be exploited. But skills and confidence that lead to sustainable employment are the best way of achieving the social mobility that is at the heart of all party aspirations.

There is also a real danger in taking one policy announcement in isolation. Moving to £10 per hour incentivises Apprenticeships for 16-18 year olds and removes any sense of injustice that may exist. However, the policy needs to be looked at in the round to ensure there are not unintended consequences, with the worst of these being the end of Apprenticeship opportunities for those 16 and 17 year olds who currently find them key to social mobility. The TUC also highlighted ensuring the impact on family benefits is fully thought through.

There are policy advisers who have long been sceptical about young people leaving school or college before 18. But I have met very many young people who cannot wait to leave formal education and then thrive in a workplace environment with a quality Apprenticeship. Some of these may find T Levels a possible alternative route for them but that has yet to be tested.

£10 an hour has the attraction of simplicity and will play well in certain political narratives. However, if it is to benefit young people, it will need refinement and setting in a wider strategy for youth employment and Apprenticeships. It will also need a proper, rigorous impact study.

David Way, PeoplePlus Apprenticeship Ambassador and Editor of ‘A Race to the Top – Achieving Three Million More Apprenticeships by 2020.’

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