This Friday MPs will have the opportunity to reverse one of the government’s worst decisions relating to young people. My Private Member’s Bill seeks to address the policy introduced in 2016 whereby under-25s on minimum wage jobs can be paid less per hour than their older colleagues; even those performing the same role.
It would ensure that the government’s “National Living Wage” (currently £7.83 per hour for those over 25) applies to all workers over the age of 18 (who currently receive a minimum of £5.90 per hour). It’s a simple change which would have a big impact on many young people’s lives, helping tackle the generational divide opening up in our country.
The impact of the current policy is keenly felt by young people in my constituency, many of whom have written to me in support of the bill. Katie, for example, was paid just £5.25 per hour when she started working at a major high street retailer at 18.
She told me that young people in her workplace were often expected to do the most difficult tasks and in some cases look after entire departments; yet they still received less than the wage of their older colleagues. She is now 22, with five years’ retail experience, and is still paid less than others. She says she feels unappreciated, has put off the possibility of buying a house, and is frustrated that she can’t provide financial support to her parents.
Research by the House of Commons Library shows how Katie’s experience is shared by thousands across the country. They’ve calculated that an 18 year old working full time on the minimum wage will earn £3,774 a year less than an equivalent colleague aged 25 or over. This gap is expected to widen as the rate for over-25s rises towards £9 an hour in 2022.
With a wage disparity of this magnitude, the government would be expected to have solid rationale for their approach. However my repeated challenges to them to explain this policy have resulted in inadequate justifications and further confusion.
Ministers often claim that other countries also discriminate by age. Yet in the entire developed world, only Greece has taken a similar approach of choosing 25 as the threshold. France pays the full rate from aged 18 onwards, as does Germany, and even in the more deregulated US there is no age bracket apart from the option to pay workers under the age of 20 a lower rate for their first few months of employment.
The government also continues to insist that any rise in the wages of young people risks “pricing them out of employment”. Yet there are serious flaws with keeping wages low to supposedly help the young, not least that employers that actively seek to recruit under-25s in order to cut wage costs risk falling foul of age discrimination legislation.
Any employer interviewing for a role is legally required to choose the best candidate for the position regardless of age. Any monetary incentive can only be acted on if the employer discriminates against older applicants. It’s simply not going to work.
The weakest explanation came soon after the introduction of the threshold at 25, as cabinet minister Matthew Hancock claimed young people were not productive enough to warrant the increased minimum wage. This prompted understandable anger from young people and embarrassment for the government when they later conceded that they have no evidence that under-25s are less productive than older workers.
It is my belief that ministers designed this policy with a flawed understanding of young people’s lives; a misconception that they don’t face the same financial challenges as older people.
Yet numerous studies have shown that this generation are typically spending over a third of their post-tax income on rent, which compares to the 5-10 per cent of income spent by their grandparents in the 1960s and 1970s. They get no discounts on utility bills, fuel or food and many are turning to lenders to keep afloat. A recent survey by the Young Women’s Trust, for example, found that a quarter of young people in England and Wales have to borrow to make ends meet. For these people a decent wage is desperately needed.
My Private Member’s Bill will help restore the dignity of young workers and assist people like my constituent Katie get a much deserved pay rise. It’s backed by unions, charities, young people’s representatives and the most recent polling on the issue showed 66 per cent of the public backed equal wages for under 25s.
As one of Parliament’s youngest MPs, I’m proud to be campaigning for young workers. No matter what the result of votes on Friday this campaign will continue until we have finally restored fairness back to the minimum wage.
Holly Lynch is a Labour MP.