Monday, October 3, 2011

Minimum Wage

Last night, Emily Hewson retweeted a link on Twitter to an article from the Telegraph entitled ‘Minimum wage harming job opportunities for young’ (which can be found here). The article states that the Low Pay Commission, an independent body established to advise the Government about the National Minimum Wage, believes that the Minimum Wage for young people should be lowered as it firms find employing young people too expensive.

This article baffled me no end, for two main reasons. Firstly, I have trouble understanding the logic here. As of a few days ago (when the National Minimum Wage rose), the Minimum Wage is £6.08 for 21+, £4.98 for 18-20s and £3.68 for 16 and 17 year olds. So it is cheaper to employ young people, isn’t it? Say a firm needs a low-level, grunt employee, how is the Minimum Wage making it too expensive to employ a young person over someone over 21? It is almost 40% cheaper to employ a young person. Ok, I can understand that there is the potential cost of taking on an ‘inexperienced’ young person and training them up. But, in a long term view, isn’t training people an investment in which everyone can benefit? And fresh blood can often bring new and innovative idea to a business.

Secondly, there is a discrimination issue. In 2006, The Employment Equality (Age) Regulations were brought in to force. These made it illegal for a business to discriminate against embloyees or potential employees due to their age (with some exceptions). This was updated in the Equality Act 2010. You probably remember that the focus of these when they came in was to do with how or when a business could force an older person to take retirement. But little was said about the lower end of the scale. I have always wondered how the three different Minimum Wages fit with age discrimination. If two people are doing the same job, the same hours, at the same capability, are paid the minimum wage, how is it fair that one could be being paid 40% more. If this was the case for people of different race or gender, there would be uproar! (I know there is a difference in pay between men and women, but as far as I know, it doesn’t occur for people doing the same job for the same company.) So why is it ok when it comes to young people?

This discrimination is already getting worse. The recent increase in the National Minimum Wage saw the 21+ wage increase by 2.5%, whereas the younger rates only increased 1% (in real terms this is a cut for both, as inflation was 4%, but that’s a different story). Should people doing the same job not be paid the same, no matter who they are? The Methodist Church is committed to pay all their employees the Living Wage, not the Minimum Wage, no matter what age they are. This should be the model for society, not the exception.

I’m not sure how to finish this blog, I don’t have the answers, or a way forward. I just hope that the suggestion of lowering youth Minimum Wage are ignored, should they come in the Low Pay Commission’s report that is due next year.

[EDIT] Since I wrote this, Emily has set up a directgov e-petition against cutting the Minimum wage. Please have a look and sign it but clicking here. Thank you

1 comment:

  1. I agree with what you write - the idea popular with some in the government is to stretch the lower l8-20 rate to end at 25 years of age. It would require a change in the equality Act and may infringe European legislation that allows age discrimination up to the age of 21 but not after.

    This is also a call for someone else to pay for the work they need for their companies. As minimum wage (even at it's highest rate) isn't enough to live on - and workers usually have to be alive - someone else has to find the extra cash for these workers to live on. The money will come either from parents or the government. Esentially the firms wish to be subsidised by Government in the form of housing benefit and tax credits, to their low paid workers.

    There are much better ways of subsidising industry rather than undevaluing the young. It is also fairly disgusting that instead of setting a decent minimum wage the Government prefers to subsidise low-paying employers.

    If the subsidy was given direct and the company directors had to jump through the means test hoops, rather than their low paid employees,I am confident the term "scrounger" used much less often!