Youngsters get raw deal in minimum wage increase

From October 1st 2012, minimum wage for over-21's will increase by around 1.8%, this in itself is only around half of CPI inflation which stood at about 3.6% (http://www.dailymail.co.uk/money/markets/article-2117183/Minimum-wage-frozen-youngsters-adults-11p-rise-6-19-hour.html?ITO=1490). Adults will see their pay rise by 11p to £6.19 an hour from October 1st, the Government has announced.

The minimum wage for under-21's however, will stay frozen at the current rates. Rates for younger workers will remain at £4.98 for 18 to 20-year-olds and £3.68 for 16 to 17-year-olds. Apprentices will get a 5p increase in their minimum wage to £2.65 an hour.

Business Secretary Vince Cable says that 'In these tough times freezing the youth rates has been a very hard decision - but raising the youth rates would have been of little value to young people if it meant it was harder for them to get a job in the long run.' In reality, raising the pay of under-21's will most probably be of little value given that a high percentage of unemployed fall in this age bracket. At a time when the youth of today is struggling to find employment, they now feel the double pinch of static pay.

Can we really argue that raising the minimum wage by 1.8% will discourage employers from recruiting, particularly where current employees have had a similar cost of living increase already? Surely if an employer can afford to pay £6.19 per hour for an applicant aged over 21, then they could afford to pay over £4.98 for an under 21 yr old? Fundamentally employers are unable to discriminate based on age during the recruitment process, therefore when they create a vacancy it is based on paying a salary of £6.19 given the event that an older applicant is successful.  

TUC general secretary Brendan Barber said 'Many of the businesses that are calling for the minimum wage to be frozen are also complaining about the lack of consumer spending. Low-paid workers, like hairdressers, shop workers and care assistants, tend to spend 100 per cent of any salary increase in their local economy, so a well-judged rise in the minimum wage would have a beneficial effect across the UK.' It is also often younger workers that have higher disposable income with a lower tendancy to have large commitments such as a mortgage or families.

A personal grudge of mine, is that low interest rates - whilst benefiting those with a mortgage - are crippling those trying to save. As a potential first time buyer, I have been penalised by low interest rates in my quest to gather together a deposit. A deposit which now needs to be much higher than five years ago. My sympathy therefore goes to the under-21-year-olds who face little hope of getting their first foot on the housing ladder, even before being denied an 8p increase to their hourly wage.

In this day and age, should there even be a salary discrepancy between the ages at all? Given the various equality and discrimination legislation, surely it is hypocritical to have a sliding scale based on age?

Friday
23 March, 2012

By Laura Machin

Laura Machin

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