Currently, only those aged over 25 are entitled to the higher pay floor, named the National Living Wage, of £8.21 per hour. This pay band falls significantly below the real Living Wage – calculated according to the income required to cover basic living costs – of £10 per hour.
Javid’s proposal, based on recommendations from the Low Pay Commission, is to extend this rate initially to people aged 23 by 2021, and then to people aged 21 in five years’ time.
The policy introduces several problems for young workers, especially of those from lower socio-economic backgrounds.
1: It’s not a living wage
The National Living Wage is not, in fact, a living wage. It is simply a higher band of the National Minimum Wage. Currently, people receiving the National Living Wage are often still forced to rely on state benefits in order to cover basic costs like rent.
Today, 30% of workers skip meals because they cannot afford food, 19% have gone without heating when it was cold, 10% have missed rent and mortgage payments, and 20% have been forced to pawn or sell their possessions to make ends meet.
In order to alleviate in-work poverty, which has now reached record-high levels, pay must at the very least cover the basic cost of living, as calculated by the Living Wage Foundation.
2: It doesn’t help those who need it the most
Those young workers relying solely on the National Minimum Wage are often those who have decided to go into work at the ages of 16, 17 or 18 rather than attend university. These workers may be doing exactly the same job as their older peers but can be paid markedly less. Currently, 16 and 17-year-olds can be legally paid just £4.35 per hour, or £3.90 per hour if they take on an apprenticeship in order to improve their skills or learn a trade.
Workers aged over 18 are not much better off, earning just £6.15 per hour until they reach the age of 21, then just £7.70 until they are 25.
It may be easy for Westminster politicians – significantly more likely to come from middle class backgrounds – to imagine that young workers are simply making pocket money while they study. But that’s not the case for millions of young people. In 2016, around 18% – that’s nearly one in five – births were to mothers aged under 25. Young workers pay rent, bills and have families to feed. There are no “youth rates” when it comes to their outgoings.
The real Living Wage must be applied to all people in employment.
3: The burden of risk falls on the worker
The Low Pay Commission explains that its policy on youth rates is driven by the need to ensure young workers can obtain and maintain employment. More experienced workers may be recruited in place of younger ones if they are paid the same rate, it explains.
But this puts the onus on young workers to absorb the cost of something they cannot help – being young. Government is eager to minimise the risk to employers, but not to the workers.
Through a process of sectoral collective bargaining, representatives of workers and employers should meet to discuss how young workers can be successfully supported into work and upskilled for their chosen field. Working together, these representatives – all experts in their industry – can discuss and negotiate risks to ensure it is not young people who take all the burden.
4: An hourly wage rise can’t help those who can’t get the hours
The employment rate is up, we’re told, but for what kind of work? Precarious and insecure work is rocketing, with around one in ten people living without guaranteed hours.
New research from the TUC shows that this trend disproportionately affects women, one in ten of which – that’s 1.4 million – earn less than £118 per week, also known as the lower earnings threshold. Being below this level means they are not eligible for statutory sick pay.
More than one in five insecure workers of both genders were also earning below the threshold because they could not get the hours they needed.
Zero-hours contracts must be banned and all people in employment should be provided with contracts that offer guaranteed minimum hours of work, with compensation if shifts are cancelled at short notice, and a premium rate for working overtime.