Fair pay for young workers: ending discriminatory age bands in the minimum wage

The heightened cost of living affects everyone. Young workers, like many others, struggle to afford the basics; whether that’s travel to work, food and energy, or a home to rent. That is why we need a genuine living wage. But young workers risk being left behind because of lower minimum wages. While the headline minimum wage rate is £11.44, the current wage floor for 18–20-year-olds is £8.60 and the rate for 16-17 year olds and apprentices is just £6.40.

It’s simply unfair that young workers can be paid less for doing the same job as those older than them. TUC analysis[1] finds that more than 700,000 18–20 year olds could be missing out on £2,400 a year on average because they are not covered by the main minimum wage. That is why we support the Labour Party’s commitment to remove discriminatory age bands, and the Low Pay Commission (LPC) recommendation that the 18-20 youth band should be abolished. It is time to bring an end to outdated youth rates so that all workers earn a fair wage.

The outgoing Conservative government presided over 14 years where the minimum wage gap widened significantly between 18-20 year olds and older workers. The gap grew in both relative and cash terms. This means young workers have seen their wage floor fall further and further behind that of older workers. When the minimum wage was introduced in 1999, 18-20 year olds were paid 83 per cent of the main rate and this was maintained until 2010, but by 2024 it has fallen behind to just 75 per cent.[2] The LPC recently set out its view that there is scope to reduce this gap.

The youth rates are not just low by historical standards, they are also low on the LPC’s international comparisons.[3] In the UK the wage floor for 18-20 year olds is 75 per cent of the adult rate. In Australia, Belgium and Ireland, this is 83, 85 and 90 per cent respectively. In Germany, New Zealand and France, 18-20 year olds have the same minimum wage as those older than them. For 16-17 year olds in the UK the minimum wage is 56 per cent of the main rate. Whereas in Ireland and Belgium it is 70 per cent and in New Zealand and France it’s 80 and 85 respectively.

Although the gaps are large, most employers don’t use the youth rates in practice. Trade unions report that this is particularly true for retail, which has a high proportion of young workers. This is also borne out in LPC analysis[4] which finds that 62 per cent of 18-20 year olds are paid at or above the adult rate. A further 30 per cent are paid somewhere between the youth rate and the adult rate, while only 8 per cent are within 5 pence of the youth rate. For 16-17 year olds, just 10 per cent are within 5 pence of the youth rate. Not only is this low, but usage of the youth rates has fallen in recent years with coverage now below pre-pandemic levels. This suggests there is plenty of scope to raise the youth rates significantly. This would help level the playing field for good employers that choose to pay young workers in line with other workers. 

Throughout the history of the minimum wage, we have had to endure the same doomsday arguments repeatedly.[5] Sceptics warn of job losses that never materialise. But the evidence shows that the minimum wage works.[6] In recent years the minimum wage has increased significantly without a negative impact on jobs. Youth rates have also gradually been abolished. In 2020 the adult rate boundary moved from 25+ to 23+ and this year it moved to 21+. This has been achieved without a negative impact on employment for young workers.

A big part of the success of the minimum wage has been the role of the Low Pay Commission (LPC) and its model of social partnership. It brings together representatives from employers, trade unions and academia to make minimum wage recommendations based on evidence. The LPC recently recommended that the gaps should be narrowed between the youth rates and the adult rate. It also recommended that the age boundary of the adult rate should be lowered to 18+ over coming years. The government should accept these recommendations, made in partnership between worker and employer representatives, and move quickly to implement its commitment to removing discriminatory age bands.