Cable defends apprentices pay rise

The rate for 18 to 20-year-olds will rise by 5p to £5.03, and by 4p to £3.72 for 16 and 17-year-olds.

Ministers said they had rejected a recommendation from the Low Pay Commission that the rate for apprentices should be frozen, announcing a 3p increase to £2.68 an hour.

Business Secretary Vince Cable said: “The independent Low Pay Commission plays a crucial role in advising the Government when setting the national minimum wage every year. It balances wages of low paid workers against employment prospects if the rate was set too high.

“We are accepting its recommendations for the adult and youth rate increases, which I am confident strikes this balance. However, there is worrying evidence that a significant number of employers are not paying apprentices the relevant minimum wage rate.

“Apprenticeships are at the heart of our goal to support a stronger economy, and so it is important to continue to make them attractive to young people. Therefore, I am not taking forward the LPC’s recommendation to freeze the apprenticeship rate due to non-compliance, but instead am raising it in line with the youth rates. We are working on a series of tough new measures to ensure we tackle non-compliance issues across the board.”

Tim Thomas of the manufacturers’ organisation the EEF, commented: “Today’s announcement strikes a delicate balance between the need for an element of pay progression and the limitations employers face in accommodating pay rises.

“The modest increase in the apprenticeship rate is unlikely to negatively affect apprenticeship recruitment and of much greater importance is the raising of apprenticeships standards, better information and advice to students and ensuring that apprenticeships are truly employer-led and employer-driven.”

TUC general secretary Frances O’Grady said: “Boosting the incomes of the low paid goes straight into the economy and wage-led growth must be part of the recovery so we would have liked to have seen minimum wage rates go up further today, even if the Government has rightly rejected calls for a freeze.

“But we are pleased that Ministers have increased the apprenticeship rate. This sends a positive signal about the importance of apprentices.

“We will continue to press ministers for more action to ensure the minimum wage is properly enforced – particularly for apprentices where there is considerable evidence that many miss out. It is time to get tough with wage-cheat employers who break this law. We will continue to urge the many employers who can afford it to implement a full living wage for their staff.”

Katja Hall, the CBI’s chief policy director, said: “Pay restraint has been crucial in creating jobs in this tough economic climate.

“The LPC has struck a careful balance in setting the rates given sluggish growth, particularly in recommending a cautious approach to youth pay. The LPC will need to monitor the impact of raising the adult rate very carefully. Given average earnings this year are already lower than expected, we must make sure the minimum wage doesn’t limit jobs in key sectors, by outstripping pay across the rest of the workforce.”

Dr Adam Marshall, director of policy at the British Chambers of Commerce, said he was “disappointed that the Government has chosen to raise the adult national minimum wage rate by 1.9 per cent, an increase that is over 50 per cent higher than current average pay growth” which would “add significantly to business costs”.