UK apprentice wage will see 20% rise

Apprentices’ hourly wages will rise by £0.57 in the UK to £3.30, far exceeding the recommended revision from the Low Pay Commission.

The Commission had previously proposed a 2.6% increase to £2.80 an hour, far less than the 20% increase that is now set to come into place from October this year.

The government’s more generous proposal comes after optimistic public finance forecasts in December’s Autumn Statement. However, the Confederation of British Industry (CBI) has expressed disappointment at their decision, seeing it as a "worrying" voter-sweetener ahead of the General Election in May.

The Commission suggested a "cautious" wage rise, warning that "large increases in the level of the apprentice rate could pose risks to provision."

Daniel S. Hamermesh discusses the wider implications of raising labor costs in more detail. Although this wage increase would greatly benefit apprentices, and may even boost the popularity of these training schemes, Hamermesh warns that such measures can lead to reductions in working hours, and even redundancies.

He summarizes: "Laws that raise labor costs can either increase total employment or increase hours per worker, but they cannot do both."

Read more here.

Related articles:
Do labor costs affect companies’ demand for labor? by Daniel S. Hamermesh
Employment effects of minimum wages, by Pierre Cahuc