Minimum wage rate draws fire from teenagers

Young employees will receive a higher hourly minimum wage, ministers announced this month. But under-21s still get less than adult workers: exploitation or a fair reflection of experience?

How much is your time and effort worth? Is it more or less than someone of an older generation – or will the value of what one person can contribute vary according to experience as much as dedication, skills and natural aptitude for the task at hand?

Among fortunate, high-earning teenagers, there is a lot of variation. Vince Cable, the Lib Dem business secretary, got into hot water last week after accidentally agreeing with a businessman who criticised the vast wealth of One Direction band members, whose talent, hairstyles and general charisma made them around £5 million last year.

But ordinary young employees don’t tend to compare themselves with music industry megastars, unless they have ambitions in that area. They may, though, have an adverse reaction to discovering that employers are allowed to pay them less than their colleagues.

Ever since a national minimum wage was introduced, workers under 21 have been entitled to lower basic rates of pay than their older colleagues. And this month, after two years of no increase, ministers announced that young people would be entitled to an extra 5p per hour from the beginning of October.

This makes the hourly youth minimum wage £5.03 for the 18-20 age group, with the rate for those on official apprenticeships rising by 3p to £2.68. For 16 and 17-year-olds the minimum wage will now be £3.72 after an increase of 4p.

Last year the minimum wage for young people was frozen although the adult rate was increased, bringing howls of protest from youth groups. And the reasons given by the Low Pay Commission at that time reveal broader worries: the temporary freeze ‘may help to increase the relative attractiveness of young people to employers’, said the Commission’s chairman. Youth unemployment is currently running at 21.1%, far higher than the overall 7.9%. And some MPs suggest the youth minimum wage discourages too many bosses from hiring during the current recession.

Up, down or in between?

Originally, the different rate was justified as a way of offsetting the higher training costs that employers have to meet when they have younger workers on the team. But with nearly one million young people registered unemployed, this doesn’t seem to be working.

‘We must take great care not to price young people out of a job’ warns the CBI, the group which speaks for big businesses.

So should simple justice prevail, with young people paid the same as older colleagues? Should the youth rate be abandoned altogether to encourage more job offers? Or is the current compromise, which seems to please almost no one, the safest course of action in uncertain times?

You Decide

  1. Should the same minimum wage level apply to workers in all age groups?
  2. What can younger and older workers learn from each other?

Activities

  1. Write a letter to your local MP giving your views on the youth minimum wage.
  2. Maths exercise: calculate the monthly and annual earnings on minimum wage of an adult, young employee in both age brackets, and an apprentice.

Some People Say...

“You have to learn before you can earn.”

What do you think?

Q & A

Can anyone really live on a wage at this level?
Good question. Poverty campaigners argue that the minimum wage should be replaced by a so-called ‘living wage’, a higher rate which would definitely help meet the cost of living. But critics say business growth would be put at risk by this ‘unaffordable’ idea.
You mean bosses couldn’t afford it?
Well, so they say. Plenty argue they can’t afford this year’s increase to the minimum wage. The adult rate is up 1.9% when average earnings have risen only 1%. A few lone voices call for abolition, but most politicians say the minimum wage, with or without a youth rate, is here to stay.

Word Watch

Vince Cable
The second most important Liberal Democrat politician in the Coalition Government after party leader and deputy prime minister Nick Clegg. Cable is responsible for industrial strategy, universities and science.
One Direction
The five members of 1D featured in this year’s Sunday Times Rich List under 30s category.
National minimum wage
In 1999 Tony Blair’s Labour Government introduced a national minimum wage for the first time. A separate rate for apprentices was introduced in 2010.
Low Pay Commission
This panel of experts has the job of advising ministers where to set the minimum wage. Last year the government accepted its recommendation to freeze the youth rate, but this year its calls to freeze apprenticeship pay levels were rejected.

Subjects

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