The 'outrageous' minimum wage differences hitting youngest workers

On Summer Scholes’s 16th birthday, two days after her mum died, the first thing on her mind was getting a job to keep a roof over her head.

Pic: iStock

It was 2021, and alongside her studies in Margate, Summer said she worked for £4.62 an hour (the minimum wage for under-18s at the time) just so she and her aunt could pay rent and put food in the fridge.

By the time she was 18, last September, she was spending the summer working 50 hours a week in hospitality for £375, while her colleagues aged 21 were legally entitled to at least £134 more for the same job.

There are three different adult minimum wages in the UK, determined by age. On Monday, the government will reduce this to two, but inequality between those aged 18-20 and those aged 21 and over will remain.

“I strongly disagree with it. As someone who is 19, I see the work that I do and the work that my friends do, and I believe that we work just as hard, if not harder, than some of the people who are older than us,” Summer told Sky News.

Gordon Brown, chancellor when the minimum wage was introduced, holds the budget box in 1997. Pic: PA

She said she had felt undervalued, adding: “I think it should be based on someone’s work ethic and their ability to do a job.

“I was unable to save for any of my future studies, which is why I’m now at college for an extra couple of years.”

Sky News understands from sources at the Department for Business and Trade that the government believes the pay disparity will encourage businesses to keep younger employees and avoid them being exposed to prolonged unemployment.

But GMB Union officer Ross Holden said the cost of living crisis did not discriminate based on age and the government was denying young workers the “equal earnings they should be entitled to”.

“It’s an outrage that those under 21 working average hours on the minimum wage could be left up to £159 a week out of pocket than older colleagues doing the same job. There is no excuse for wage rates based on age – ending them is long overdue.”

Last year, about 34% of employees aged 18-20 were paid between £7.49, the hourly minimum wage for their age bracket, and £10.18, the minimum for the next age bracket, according to the Low Pay Commission, which advises the government on setting wage rates.

UK at ‘extreme end’ of pay disparity

The UK is not alone in having age-based minimum wage legislation, but it is “on the relatively extreme end of penalising the over-18-year-olds”, Ken Mayhew, economist and Oxford University professor, said.

In France, under-17s with fewer than six months’ experience can be paid 80% of the minimum wage, he said. In the Netherlands, the minimum tapers upwards to age 21, while in the US, there is a small variation for those aged below 20 in their first 90 days of employment.

Professor Mayhew said employers could justify lower wages during a training period – when young workers are less productive – “but I think for national legislation to assume that’s true for all 18 to 20-year-olds is dodgy, quite frankly”.

Some employer groups have previously said they wouldn’t hire less experienced adults if they had to pay them an equal wage, Professor Mayhew said.

But, he added, those groups also argued employees of all ages would be priced out of jobs when the minimum wage was first introduced in 1998 – yet “the employment effects have been minor to non-existent”.

Small businesses saw their wage bills increase by 14% at the end of last year, according to the Sage small business tracker.

The British Chamber of Commerce and the Federation of Small Businesses declined to comment on the upcoming minimum wage changes.

The Association of Convenience Stores did not respond to a request for comment.

The British Retail Consortium said: “The retail industry recognises the value of its employees and that’s why the overwhelming majority of our members continue to pay above the minimum wage rate regardless of age.”

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Real living wage?

The Union of Shop, Distributive and Allied Workers called the government’s policy “deeply disappointing”, saying all adults should be paid at least £12 an hour.

Businesses that pay all their employees £12 – rising to £13.15 in London – are accredited by the Living Wage Foundation (LWF) as paying the so-called real living wage.

Head of communications John Hood said: “An 18-year-old, a lot of the time, they’re not a dependent. They’re paying for their housing, they’re paying rent, they’re paying transport bills, council tax – all the same costs that a 21-year-old is paying.”

He said the difference between the minimum wage and the real living wage was “the difference between being able to live with dignity, with security, with stability, to be able to plan for your future”.

Summer recently joined those on the real living wage after being hired by Newington Fish Bar, in Margate.

“It makes me feel a lot more equal and more valued,” she said, “like my work is being appreciated”.

A government spokesperson said: “There have been different rates for younger age groups since the introduction of the minimum wage in 1998, but this government is giving young people a pay rise to put more money in their pockets.

“From 1 April, we will increase the National Minimum Wage for 18 to 20-year-olds by over 14%, giving someone in full-time employment a gross annual pay rise of over £2,000.”