Sheila Attwood, in our final article of National Apprenticeship Week discusses the upcoming changes and their implications for employers.
Apprenticeships are gaining popularity among young adults as well as those who want to switch careers during their career. More and more people want to earn money during their studies rather than be saddled with debts at the end. This is why apprenticeships have increased in popularity in recent years.
The national minimum wage for apprentices is set to rise to PS7.55 an hour by April 2025, which represents a 18% increase on the previous rate. This will apply to those under 19 years old and to those 19 or older in their first year of training.
This is a fantastic opportunity for companies to attract new talent, create a diverse workforce, and build a pool highly-skilled workers for the future.
The apprenticeship revolution is about to begin
Apprenticeship wages have always been low. Even after qualification, salaries were still lower than those of their counterparts with university degrees. Many young people found it difficult to justify and choose this path of education. With rising tuition fees and student debt at record highs, a university education is less attractive to young people.
Apprenticeships are now a viable alternative to higher education, as the minimum wage for apprentices is increasing. They offer the opportunity to earn qualifications that are equivalent to master’s degrees without the high cost of higher education. The increased wages make apprenticeships more affordable and accessible. Apprenticeships will appeal to a wider demographic and allow businesses to tap into a larger talent pool.
The switch to a skills and growth levy
Businesses will soon be able to choose how much money they want to spend on training and development. The government wants to change the current apprenticeship levy into a “growth and skills tax” to encourage employers and employees to invest in training and developing skills.
All UK employers who have a gross pay bill of more than PS3 million are required to contribute 0.5%. However, the strict structure of current apprenticeship levies has been criticized for restricting employers’ ability allocate funds where they are most needed. The new levy would allow companies to spend more money on upskilling their employees, according to the needs of the business.
This would allow companies to take a more targeted and focused approach towards employee development. Employers will be able to create apprenticeship programmes that are tailored to their industry, ensuring a constant supply of skilled workers.
What does this mean for employers?
Businesses can access young professionals eager to develop their industry-specific knowledge and skills by investing in apprenticeships. Apprentices are taught the business they will be working in from the very beginning, while also studying. This is different than graduates who need hands-on experience to bridge the gap between their academic knowledge and practical abilities.
Workforce that is more inclusive and competitive
A larger pool of applicants is available for companies who can select the best talent and motivate them to start contributing from day one. Due to historically low wages, many young people, particularly those with lower incomes, were unable to consider an apprenticeship.
The rising wage rates for apprenticeships open the door to more people. The financial security of choosing an apprenticeship over other routes means that businesses can benefit from a workforce with a variety of perspectives, backgrounds and skills.
The government’s plan to replace the current apprenticeship levy with the “growth and Skills levy” is in line. Apprenticeship programmes will be a valuable resource for employers.
Bottom line
Pay increases are an investment in the future. Pay increases can help businesses attract top talent, retain employees, and develop a workforce which is motivated, skilled, and prepared for the current labour market. The organisations that make apprenticeships a key part of their strategy for employment will benefit the most in the long run.
Employers must see this as a chance, not an obstacle, that will lead to growth, innovation and success in the years ahead.
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