AELP Consultation on National Minimum Wage

6th October 2014

The Association of Employment and Learning Providers (AELP), which represents the interests of a range of organisations delivering vocational learning and employment and employability support within the United Kingdom, have released their findings after a consultation on the National Living Wage.

The National Living Wage, one of George Osborne’s key employment and skills measures announced in the Summer Budget, will see the minimum wage (for those 25 and above) rise from £6.70 to £7.20 per hour in April 2016, increasing to £9 per hour by 2020. The Apprenticeship minimum wage will also increased by 57p, up to £3.30 per hour.

The AELP stated the key principles which underlay their consultation and response:

There are too many categories of minimum wages which makes the system difficult to understand or justify. This is also the cause of many employers paying the wrong rates of pay.
We believe all working people should be fairly rewarded but the minimum wage must be set at a rate that does not impact on the employment prospects of any people but especially young people.
There is a justification for apprentices to be paid a lower rate than their co workers because of the commitment the employer makes to supporting the apprentices but this should only be in the region of around 20%. This should not apply to anyone over the age of 25.
When an increase in the minimum wage is justified then this increase should be managed in stages so that the impact of the change can be monitored.
We should encourage all employers to pay a fair rate which in many cases is well above the minimum levels.

In light of these considerations, the AELP consultation developed the following recommendations for the Government to adopt in order to make the National Living Wage a successful and inclusive policy development for all:

Minimum (Living) Wage set at 60% of the average wage rate.
This should apply to all workers over 25 including all apprentices. Apprentices at that age are normally already at work albeit undertaking a new role or a substantive training programme. Employers will be getting the productivity gains and benefits so they should be able to afford this pay rate without affecting employment.
The NLW for 18 to 24 year olds should be set at 15% below the general NLW to represent the additional training and support provided by employers to less experienced workers. This wage gap should be closed progressively for workers over 18 by 2020.
The NLW for 16 -18 year olds should be set at 25% below the general NLW and this gap should be progressively closed to 15% by 2020.
We should consider if apprentices over the age of 25 should be paid the NLW by 2020. The current gap between the payment for the first year of the Apprenticeship should be closed over that period.
Apprentices aged 18 – 24 in their first year should be paid at the same rate as other 18 – 24 year old workers by 2020. If so, the gap should be closed progressively between now and then.
7. Apprentices aged 16 – 18 should have a NLW at 20% below the payment for non Apprenticeship employees. This gap should be closed by 2020.