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Blogs,  Factsheets

Factsheet: Why employers should pay fairly

Explore four compelling reasons why employers should pay a fair wage, and the benefits of doing so - from employee wellbeing to long-term productivity.

What are the benefits of paying apprentices fairly?

Workwhile has been making the case for fairer wages for apprentices since we were established. Throughout the cost-of-living crisis, over and over again we’ve heard that low-paid work simply isn’t working – and we’re on a mission to change that, making work worthwhile – which is why we re-branded to Workwhile.

Earning a salary that is enough to live on is a core part of what makes work fulfilling. Yet apprentices are at risk of being trapped in a low-wage cycle.

For the first time, in 2020 the Apprenticeship Minimum Wage rose above £4.00 per hour – and now it stands at £5.28 per hour. Yet according to recently polling, the public believe the Apprenticeship Minimum Wage is on average £7.99. And even then, at £8 per hour only 31 per cent of the public would consider an apprenticeship.

Even at £10 per hour – which is lower than the National Living Wage at £10.42 for over-21s – 71 per cent hold the view that an apprenticeship is not a viable route, meaning 3 in 10 wouldn’t pursue an apprenticeship for that salary.

In this blog, we’ll explore why employers should pay apprentices a fair wage and what the benefits are of doing so?

First, a fair wage improves employee wellbeing and low pay does the opposite.

Recent polling Workwhile commissioned from Opinium highlighted that employees are increasingly struggling with the demands of modern working, with 57 per cent telling us their mental health routinely suffers as a result.

Low pay isn’t the only reason that an apprenticeship might adversely affect wellbeing, but it does reflect the value employers place on apprentices. Though 78 per cent feel as valued as their colleagues, 22 per cent of apprentices – more than 1 in 5 – told the Institute for Apprenticeships and Technical Education that this wasn’t the case.

And the impacts of ill-health are significant, affecting the economy by reducing productivity, affecting employers through a rise in absenteeism and fall in long-term workforce retention, and affecting individuals by undermining their physical and mental health and impairing their ability to make good decisions.

Second, low pay encourages short-term behaviours – and undermines the long-term productivity of employers.

Apprentices leave their apprenticeships for reasons similar that non-apprentices leave their jobs. The primary reasons include the training they’re receiving not being up to scratch, the lack of support they’re receiving from their line-manager or the salary their being paid, which isn’t enough to meet their basic needs. It may be a combination of those.

In the context of the cost-of-living crisis, training providers report that apprentices are leaving their courses without completing them because – though they recognise the positive value of an apprenticeship on their career in the long-term – in the short-term the apprenticeship hasn’t paid enough. Anecdotally, providers are reporting that apprentices are off-rolling in order to earn an extra 50p per hour.

Third, training providers and anchor institutions are increasingly unwilling to work with employers that pay their apprentices low rates.

Training providers are increasingly aware that under-paying apprentices leads to poor retention rates and they are taking action prevent employers enrolling on their courses if they aren’t committed to upskilling apprenticeships for the right reasons. As such, we’re seeing fewer and fewer training providers that are willing to work with employers that are paying the lowest rates.

And anchor institutions are increasingly requiring their supply chains to pay London Living Wage – or National Living Wage if outside of London – as part of their social value and procurement practices. In some cases, where employers are not able to meet these salary requirements, organisations are unwilling to work with them.

In London, this is particularly true across a rising number of public and third sector organisations. For example, the Royal Docks in the London Borough of Newham has become a ‘Living Wage Place’ while more broadly the Mayor of London’s Good Work Standard is advocating higher rates of pay. Outside of London, similar initiatives such as Greater Manchester’s Good Employment Charter priorities are prioritising a ‘Living Wage City Region’.

Fourth, fair pay makes economic sense.

St Martin’s Group – an employer-led membership organisation that exists to advocate for good-quality apprenticeships – estimates that the benefit of an apprentice to an employer is up to £49,500 per year. That benefit can only be realised if apprentices remain with their employers rather than move on.

Elsewhere, the Chartered Institute for Managers estimates the return on investment from an apprentice is three times higher than the cost of training them – generating £700 million for the economy each year.

Ultimately, an apprentice is good for business. Paying them a fair wage – as is the case for any employee – is necessary to retain them and to enable them to develop their full potential.

For more information on the importance of fair pay for apprentices, you can listen to the event we hosted here.

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