Minimum wage for younger workers worth less than a decade ago

The national minimum wage for workers aged 16-20 is worth less in real terms than it was in 2008, TUC analysis has revealed, as the new minimum wage rates kick in today (Saturday).

16-17 year olds working a 40 hour week on the minimum wage are £300 worse off a year in real terms since 2008. 18-20 year olds are £250 worse off a year.

In the same period, rates for those over 20 have exceeded inflation, resulting in real gains in their incomes.

Today the minimum wage for over 25s will increase by 4.2%, while the rates for younger workers will increase by only 0.9% to 1.4%.

TUC General Secretary Frances O’Grady said:

“Young workers are getting a raw deal, especially those stuck on the minimum wage. As prices rise, their pay simply hasn’t kept up.

“More and more people rely on the minimum wage, but the pay rates aren’t increasing fast enough. The government’s target of £9 by 2020 now seems a fantasy. The minimum wage needs a serious boost in the coming years, especially for younger workers.

“I’d also encourage more employers to adopt the real Living Wage standard. Not only will it be good for their workers, but to help attract and retain talent.”
 

ENDS

Notes to Editors:

*16 year olds above school leaving age

**Apprentices aged 16-18 and older apprentices in the first year of their apprenticeships. Other apprentices are entitled to the appropriate aged based rate.

Fall in the real value of the minimum wage rates for younger workers since October 2008

-  The national minimum wage is actively enforced by HM Revenue and Customs. Contact the ACAS helpline: www.gov.uk/pay-and-work-rights ; Phone 0300 123 1100 .

- The real Living Wage is a voluntary standard that is accredited by the Living Wage Foundation. The current rates are £9.75 per hour in London and £8.45 in the rest of the UK. The government refers to the minimum wage rate for over 25s as “the national living wage”. This name has been the source of some confusion.

- The latest ONS inflation figures show CPI 2.3% higher than the year before. Inflation is expected to average 2.4% for the whole of 2017 (Office of Budget Responsibility forecast, March 2017).

- The government’s target for their “national living wage” for over 25s was announced as £9 per hour by 2020. The small print revealed that the actual target was 60% of median employee earnings. The Low Pay Commission’s latest median estimate indicates that the “national living wage” is currently expected to reach £8.61 by 2020 (LPC report autumn 2016, p173, table 5.6. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/575634/10583-LPC-National_Living_Wage_WEB.pdf

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