Should young workers be paid the National Living Wage?
May 14, 2018
18 year olds can drink, smoke and drive legally. Also classed as young workers, they can even die for their country on the battlefield. But when it comes to work, they don’t have the same right to the National Living Wage (NLW) as other adults.
We discuss the background to this issue and debate the pros and cons of bringing young workers’ pay in line with the NLW.
What’s the Deal for The Younger Generation of Workers?
The national minimum wage has been in place since 1999 with the aim of guaranteeing a threshold below which no person should be paid (except apprentices who are paid far less).
Many people felt that this legislation did not go far enough and campaigned for a National Living Wage (NLW). This new level of pay was intended to provide people with sufficient income to ensure a decent quality of life.
From 1st April 2016, the government made the NLW mandatory for workers aged 25 and above. This represented a 50p per hour increase on the National Minimum Wage (NMW) which was £6.70 per hour at the time for workers aged 21 to 24.
This handy table shows the current levels of pay for workers of different ages.
This is an interesting state of affairs because equal pay for work of equal value and age discrimination are established in English law.
You cannot pay and man and woman differently for the doing work of the same value. You cannot discriminate against people because of their age.
Yet the government’s NMW and NLW policy clearly does both these things. Employers would be perfectly within their rights to pay a 24 year old the NLW when they’re doing the same job as a 30 year old who could be earning much more.
With the struggles young people face in terms of high rent, the difficulty of saving for a deposit on a house and the impossibility of securing a mortgage in a buoyant housing market, low pay is a pressing question.
The Debate – Should We Pay Younger People the NLW?
If we said that all men could only be paid the NMW there would be uproar. That’s because we recognise that when two people do work of equal value, they should be paid broadly the same.
However, can it really be said that a young person brings the same level of knowledge and experience as someone much older? Probably not in more complex roles.
Yet in lower skilled jobs that can be picked up quickly and easily there’s certainly an argument against this. Surely a young, less experienced person can deliver the same level of customer satisfaction as someone older in a retail role for example?
It has to be recognised that the NLW is not the pay that an employer must pay: it’s the pay they must not go below. This means that businesses are free to pay all workers more than the NLW to making it possible to achieve pay parity.
In fact, a number of larger firms have said they are unlikely to differentiate pay by age for workers aged 21-24. This is partly on legal grounds and partly because they want to ensure good employment relations. And it’s also because they are uncomfortable with treating people in their early 20s differently from those in their mid-20s.
Cost to Business
Of course one reason not to drop the age for the NLW is the cost to businesses.
An extra £910 per year plus benefits and tax could be enough to push some businesses under. And it might make it less likely that firms would employ youngsters when they could get someone with more experience for the same wage.
Hile business considerations are one side of the coin, quality of life is the other. People in lower paid roles tend to have little if any savings should something go wrong. £910 a year to these people is a significant proportion of their salary.
The cost to Education and Society
It can also be argued that making young people too comfortable in paid work could lead to lower rates of further and higher education.
The NMW and NLW have been put in place to address exploitation at work without encouraging young people to enter the labour market who may otherwise stay in college or go to university.
However, this argument only applies to those aged 18 to 21, whereas there are lower rates of pay for people aged 21 to 24. Whether this is the right way to encourage young people to go to university is questionable.
Increasing minimum pay levels might be difficult but it is certainly possible as the introduction of the NLW shows. Whether pay rates are ever made more equitable remains to be seen but you can be sure that, if they are, businesses will be expected to bear the additional costs.