An impact analysis of the introduction of National Minimum Wage Apprentice Rate

Felix Behling, Stefan Speckesser

Research output: Book/ReportCommissioned report

Abstract

The National Minimum Wage Apprentice Rate (NMWAR) replaced the ‘recommended minimum level’ for LSC-funded apprenticeships in England, which had been raised from £80 to £95 per week in 2009 for non-programme led apprentices. Comparable regulation of the levels of apprentice pay did not exist in the other countries of the UK, although scheme contractual arrangements required that employed apprentices had to be waged (with the exception of Level 2 apprentices in Wales, who could have been unwaged).

This study had been commissioned by the Low Pay Commission in order to support the preparation of its 2013 report and aims to estimate the impact of the introduction of the NMWAR on wage levels of apprentices pay using individual level data. Our objective was to understand whether the NMWAR had an impact on pay levels and what conclusions could be drawn from this to guide the further development of the rate.
Our report consists of two main parts:
1) A descriptive analysis of the development of apprentice pay between 2007 and 2011 and the bite of the NMWAR (the rate relative to median earnings and other points on the earnings distribution), in particular for specific groups of apprentices and sectors.
2) An econometric analysis of the quantitative impact of the introduction of the NMWAR on levels of gross hourly apprentice wages considering the counterfactual of non-introduction, which we estimate a) based on people learning towards similar qualifications, who are not participating in apprenticeships and b) using data for apprentices below and above the NMWAR and by further comparing these groups over time (2007 to 2011).
Original languageEnglish
Number of pages109
Publication statusPublished - 2013

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