· 2 min read · Features

Tackling low pay mustn't limit opportunities for our future workforce

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Under-25s will not receive the national living wage, so could employers hire more young workers to keep payroll costs down? We cannot let apprenticeships be damned with the faint praise of being the ‘cheaper’ option, as opposed to a worthwhile way of developing skills.

Who would have guessed that in the first fully Conservative budget for two decades, George Osborne would introduce a compulsory national living wage for over-25s? 

Although some say he’s put a Conservative stamp on what was originally a Labour policy, it’s hard to disagree with the suggestion that if the economy is on the up the lowest paid should benefit. Businesses may grumble – they did when the minimum wage was first introduced – but most will absorb it. 

You don’t suddenly become a better employee on turning 25, but excluding the under-25s makes sense when youth unemployment stands at nearly 16%. More must be done to encourage employers to invest in the next generation and help them onto the career ladder.

So while I’d love to see pay rise across the board, perhaps this will incentivise employers to take on someone with ample ambition but less experience. Perhaps it will encourage businesses to support schemes for developing tomorrow’s workforce, such as work placements. Besides, there’s nothing stopping bosses paying their fresh-faced employees the higher rate – which a number of them do. 

But what worries me is that there may be unscrupulous organisations seeking a way to keep their payroll costs low. Some will just opt for a suspiciously youthful workforce, but what about those that view apprenticeships as a loophole? Although a lot of employers pay more, the current minimum wage for apprentices of all ages is £2.73 an hour, in recognition of the training and additional support apprentices need. 

With this in mind, what’s to stop some employers taking on apprentices as ‘cheap labour’? If funding is readily available, businesses could use money meant for apprenticeships to rebadge their existing training. Encouragingly, skills minister Nick Boles recently pledged to crackdown on fake, poor-quality apprenticeships. But with the government fixated on reaching its goal would it turn a blind eye to companies gaming the system? 

The bottom line is that those organisations looking for a get-out-of-jail-free card are unlikely to invest in high-quality training. This risks damaging the credibility of apprenticeships in the long term, just when they are getting the recognition they deserve. 

So what can we do to make sure apprenticeships maintain their good name? Firstly, quality must remain paramount. The government is addressing some of the funding gaps via the proposed employer levy, while employers are taking more ownership of apprenticeship standards through the Trailblazers scheme.

Secondly, we need to encourage employers to develop apprentices into permanent roles once their training is complete. Of course, they may want to go elsewhere, but apprenticeships need to be aligned to vacancies so employers recognise them as an investment in their workforce.  

There is much to gain from Britain getting a pay rise – and I’m delighted by efforts to expand access to apprenticeships and address Britain’s skills deficit. But we need safeguards so apprenticeships maintain the credibility they deserve, and continue to offer a valuable route into a career. I urge employers not to view apprenticeships as cheap labour, but as a way to develop the vital skills businesses need. Acting on low pay mustn’t limit opportunities for our future workforce.

Chris Jones is chief executive of the City & Guilds Group