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Minimum wage laws ‘encourage employers to favour younger workers’

9 Jul 2018 By Hayley Kirton

But legislation to lower national living wage age limit stalls after MPs run out of time

Current minimum wage laws could be inadvertently encouraging employers to engage in age discrimination by influencing them to seek out younger candidates to take advantage of lower pay rates, parliament has been told. 

The government has previously argued lower wage brackets are necessary for under-25s to gain employment, skills and experience. But speaking about her private member’s bill on Friday, Holly Lynch, Labour MP for Halifax, said this logic was flawed because employers could only benefit from the lower pay bands if they directed their recruitment efforts towards younger workers, effectively engaging in age discrimination. 

“Any ​employer interviewing for a role is legally required to choose the best candidate for the position, regardless of age,” she said. “Any monetary incentive can only be acted on if the employer discriminates against older applicants. It is simply not going to work.”

If passed, Lynch’s bill would extend the national living wage (NLW) to those aged 18 to 24. At the moment, it is only payable to those aged 25 or older, and those aged under 25 receive the applicable national minimum wage for their age group.

As of this April, the NLW is £7.83 per hour, and the government has pledged to raise this to £9 by 2020. However, those aged 18 to 20 are entitled to just £5.90 – or 25 per cent less than the current NLW rate – per hour, while those between 21 and 24 are entitled to receive £7.38. Previous House of Commons Library research has revealed an 18-year-old working full time on the minimum wage will earn £3,774 less per year than a 25-year-old co-worker on NLW. 

Lynch revealed young constituents had written to her to express their dismay that they 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”. 

However, the bill stalled in its progress to becoming law on Friday after MPs ran out of time to continue their debate. Their discussions are scheduled to continue on 23 November. 

Paddy Lillis, general secretary of Usdaw, the shop workers’ trade union, said it was “extremely disappointing” time had run out before politicians had a chance to vote on the bill.

“Usdaw believes that young workers should be encouraged to enter and progress in the world of work, but this will not be achieved by using them as cheap labour,” Lillis added. “Youth rates of pay are not acceptable and can cause real hardship for young workers and their families. It is time the government changed the law.”

Voicing her support for lowering the NLW age limit, Young Women’s Trust chief executive Dr Carole Easton said: “We all need a basic amount of money to get by, no matter how old we are. The bus to work costs the same, whether you’re 24 or 26. Gas and electricity costs the same. Rent doesn’t cost any less in your early 20s.”

The NLW was first introduced in April 2016. Shortly before its introduction, then paymaster general and cabinet office minister Matthew Hancock came under fire when he told a fringe event at the Conservative Party Conference that the government had made “an active choice not to cover the under-25s”. 

He added: “Anybody who has employed people knows that younger people, especially in their first jobs, are not as productive, on average.”

Late last week, the government revealed its most recent name-and-shame list of employers which paid their staff less than the legally required minimum. This most recent version of the list featured 239 employers, which had underpaid 22,400 workers £1.44m in total between them. 

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