An international comparison of apprentice pay

economics-of-education||106education||0labour-market-economics||106
Sector:Economics of Education | Education | Labour market economics
Client:Low Pay Commission
Published: 13 March, 2014
Document type:Report 
Tagged: analysis of economic developments modelling quantitative analysis EC/EEA other international UK

London Economics were commissioned by the Low Pay Commission to undertake an investigation of the level of apprenticeship pay across fourteen countries. Covering a range of countries with different educational and apprenticeship systems, the main focus of the analysis relates to the assessment of apprentice pay (adjusted for price differences across countries) as a proportion of both any national minimum wage (where it exists) and as a proportion of the ‘fully qualified rate’.

Across all apprentices, the analysis suggests that the level of apprentice pay (either as a proportion of the relevant minimum wage or fully qualified rate) is higher in the United Kingdom than in those countries operating an established (Dual) apprenticeship system (for example Austria, Germany, Switzerland). Apprentice pay in the United Kingdom is also significantly higher than in France and Belgium. UK apprentice pay is at generally comparable levels with apprentices in Denmark and Sweden (although there are more structured pay increments as training progresses in these countries), but substantially less than in Ireland.

Even considering apprentice pay amongst younger apprentices only, the levels of UK apprentice pay is still marginally higher than in those Northern/Central European countries operating the Dual Apprenticeship system. For young apprentices, compared to apprentice pay standing at 32% of the fully qualified rate in UK, the ‘corresponding’ estimate in Switzerland is approximately 10-20%, while apprentices in Germany, France and Belgium earn approximately 20-30% of the fully qualified rate over the course of their training. In contrast, apprentices in Denmark, Sweden, Austria and the Netherlands earn 30-60% of the fully qualified rate over the course of their apprenticeship.

The characteristics of apprenticeships (and apprentices) in the United Kingdom are fundamentally different from apprenticeships offered in a number of other countries. Firstly, both the duration and the quality of the training provided in the United Kingdom is lower than that provided in many of the other countries – especially those countries offering long- established and highly popular 3-4 year Dual apprenticeship training. In many senses, the level of compensation for apprentices in these Dual apprenticeships countries is understandably low, given

  • the quality of the training
  • the strong and stable returns to post apprenticeship completion, and
    • the commitment of these countries to vocational training more generally and its integration with work-based training, evidenced by relatively low unemployment rates amongst young people.

The full report is available here, while a shorter executive summary is available here