Labour will scrap the “youth rate” minimum wage and ensure staff of all ages are paid at least £10 an hour, if it gains power.
It plans to abolish the £4.35 minimum rate that 16 to 17-year-olds are entitled to, which is roughly half the £8.21 minimum for workers aged 25 and over, and increase the national minimum wage and national living wage rates to £10 an hour – which it calls the “real living wage”.
The party claimed average real pay for 16-17 year olds is “still below its 2006 level” and said that young workers are more likely to be in insecure roles or on zero-hours contracts than their older colleagues.
Labour leader Jeremy Corbyn, who made the pledge at the party’s youth event in Birmingham this weekend, said increasing the minimum rate to £10 per hour would mean the average 16 to 17-year-old will be more than £2,500 better off.
“Equal pay for equal work is hardly a controversial idea, so why are we discriminating against young people?” he said. “You don’t get a discount at the shops for being under 18. But if the person serving you on the other side of the counter is young, they could be on half the wage of their colleagues.
“It’s time to end this discrimination. Young people’s work should be properly valued, not exploited by employers to cut their wage bill. If they’re doing the job, pay them the wage – the real living wage.”
National minimum wage rates (2019-20)
Age 25 and over: £8.21
Age 21 to 24: £7.70
Age 18 to 20: £6.15
Age 16 to 17: £4.35
Apprentice rate: £3.90
The increase would be funded by a reduction in the amount the Treasury pays in in-work benefits. Targeted support would be given to SMEs to help them pay the increased rate.
However, many commentators believe doubling the wage for 16 to 17-year-olds are entitled to would lead to increased youth unemployment.
Paul Johnson, director of the Institute for Fiscal Studies, told the BBC Radio 4 Today programme: “Clearly the risk, given the choice between doubling the wages you’re currently paying 16 and 17-year-olds or not employing them at all … is you will have fewer 16 and 17-year-olds in work”.
Professor Len Shackleton, a research fellow at the Institute of Economic Affairs, accused the Labour party of entering into a “bidding war” with the Conservatives. Last week, the Chancellor said it would look to introduce the world’s highest minimum wage, at 66% of median earnings.
“You don’t get a discount at the shops for being under 18. But if the person serving you on the other side of the counter is young, they could be on half the wage of their colleagues” – Jeremy Corbyn
“Such a rate hike could raise youth unemployment to levels comparable with those in continental Europe,” Prof Shackleton said of Labour’s proposal.
“The possible dangers of a political bidding war over minimum wages have been highlighted time and time again. Now it looks like we have it and the consequences for employment are likely to be grim.”
Last month the TUC calculated that the average 21-24 year old, earning the £7.70 an hour minimum wage for this age group, receives £800 less a year than those aged 25 and over.