Minimum wage rises leave 21 to 24 year olds £450 a year out of pocket
The government has accepted the Low Pay Commission’s recommendations and will increase all national minimum wage rates from 1st April 2017. The government’s national living wage (introduced in April of this year) will go up by 4.2%, a 30p increase, to £7.50 an hour.
That’s good, but there’s a fly in the ointment for younger workers.
The government’s national living wage only applies to workers aged 25 and older. The Chancellor also announced in the Autumn Statement that the government will increase other minimum wage rates from 1st April 2017, and it’s clear that most young people are getting left further behind:
|Current rate (£/hr)||Rate from 1st Apr 17 (£/hr)||% effective annual increase|
|NLW (25+)||£7.20 (from Apr 16)||£7.50||4.2%|
|21-24 year olds||£6.95 (from Oct 16)||£7.05||3.2%|
|18-20 year olds||£5.55 (from Oct 16)||£5.60||3.1%|
|16-17 year olds||£4.00 (from Oct 16)||£4.05||2.8%|
|Apprentices||£3.40 (from Oct 16)||£3.50||4.5%|
Although there is a significant difference in hourly pay between workers aged 25 and older and those aged 21-24, there isn’t that much of a difference between the needs and living costs of these two groups.
A 24 year old and a 25 year old are very similar, economically speaking. Both are equally as likely to have to pay rent (although the scrapping of letting agents’ fees in the Autumn Statement will go some way to help with extortionate housing costs that disproportionately punish younger people). Both are equally as likely to have similar jobs and working patterns, to pay the same bills, to have dependent children and to live all across the UK.
But the small increase to the 21-24 year old national minimum wage rate means that a 24 year old working full time will now be £450 a year worse off than a 25 year old.
We’ve previously argued that the decision not to extend the national living wage rate to 21-24 year olds is disgraceful. We said it again last month – the unemployment rate of this age group is falling and they work just as hard as older workers, yet it seems this government still believes that they are entitled to less.
So two cheers for this raise. It’ll help older low paid workers, but doesn’t do as much for the large number of younger workers out there, reliant on low pay.
And of course, the government’s national living wage is no relation to the real Living Wage, which is independently calculated, and currently advises that the minimum hourly wage a UK worker can live on is £8.45 an hour – or £9.75 in you’re in London – whether you’re 24 or 25.