Underpayment of apprentices spoiling the reputation of some VET

Written by Jonathan Owen on 3 January 2017 in News
News

New statistics show widespread underpayment of UK apprentices

Almost one in five apprentices in the UK are being underpaid - with some working for little more than £1 an hour, Training Journal can reveal.

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The shocking extent of underpayment, branded “appalling” by campaigners, is based on new statistics released by the Low Pay Commission (LPC).

In its latest report on the National Minimum Wage, released last month, the LPC warns that 18 per cent of apprentices are “receiving less than the rate to which they are entitled.”

The figure is taken from the Government’s Apprenticeship Pay Survey of more than 9,000 people across England, Scotland, and Wales over the summer and is an increase from the 16 per cent underpaid in 2014.

With approximately 990,662 apprentices in the UK in 2015/16, this means at least 178,319 are paid less than the legal minimum.

“The main area of concern is that data suggest very high, and possibly worsening, levels of non-compliance,” according to the LPC, which advises the Government on the minimum wages workers should be paid.

The highest rates of underpayment are among 16-18 year olds and those aged at least 25 and on the second year of an apprenticeship, at 30 and 32 per cent respectively.

Although some apprentices, such as those on management programmes, can earn more than £10 an hour, many earn far less.

Hairdressing has the highest proportion of apprentices who are underpaid, at 49 per cent, followed by childcare, at 28 per cent.

Around one in four apprentices working in construction and electrical work are not paid what they should be.

And at least one in seven of those in hospitality and catering; retail, business; engineering and manufacturing; and health, social care, and sport, are underpaid.

Of those apprentices paid less than the minimum apprentice rate, 61 per cent get less than £3 an hour – significantly less than the £3.40 rate set by the Government – estimates the LPC. In two per cent of cases, apprentices are paid between £1.01 and £1.10 an hour.

The LPC report cites research of employers and apprentices in childcare and hairdressing, sectors with high underpayment levels, suggesting that workers had “limited knowledge” of their pay and the minimum wage and assumed employers “would pay them the right amount.”

It adds: “The research also suggested that not all employers in these sectors were completely aware of the correct pay rates for apprentices and that mistakes may not represent unscrupulous attempts to pay the wrong wages.”

The Government and HMRC should “redouble enforcement efforts for apprentice pay as well as monitoring quality in minimum wage apprenticeships,” according to the LPC report.

Responding to the findings, Labour MP Gordon Marsden, the shadow skills and apprenticeships minister, told TJ: “These figures quoted by the Commission are concerning and disturbing. Apart from the innate hardship and unfairness to the individuals concerned, there is a danger this will put off young people and their parents from going down the apprenticeship route and risk tarnishing the apprenticeship brand, to the detriment of all those who are being good employers.”

Dealing with the issue of underpayment should be a “key priority” for the new Institute for Apprenticeships, and the HMRC should “coordinate with them on that priority and apply adequate enforcement resources,” he said.

Shakira Martin, NUS vice president for further education, said: “It’s appalling how many apprentices are being underpaid, especially considering how low the apprentice minimum wage already is.”

She added: “It’s time companies stopped treating apprentices as cheap labour and the government recognised apprentice wages are barely enough to live on.”

Mark Dawe, chief executive, Association of Employment and Learning Providers, commented: “There should no tolerance of employers paying apprentices less than the legal minimum wage.”

And Kirstie Donnelly, managing director, City & Guilds, said: “Whilst there is a lot being done to combat low paid apprentices, it’s not enough…for an apprentice to find value in their work – they need to be paid and treated fairly and appropriately – and not viewed as cheap labour.”

A Government spokesperson said: “In the most recent Autumn Statement, an extra £4.3m was announced for HMRC’s minimum wage enforcement budget, meaning we will be spending more than £24m ensuring employers pay all their workers properly. This will involve targeting employers who are at risk of failing to pay their staff the correct minimum wage.”  

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