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Are complex minimum wage rates for the young impacting low pay?

by on November 24, 2014

The Office for National Statistics have recently released the provisional results of the 2014 Annual Survey of Hours and Earnings.

The key points highlighted on their website show that:

  • “In April 2014 median gross weekly earnings for full-time employees were £518, up 0.1% from £517 in 2013. This is the smallest annual growth since 1997, the first year for which ASHE data are available. Growth has been slower since the economic downturn, with the annual increase averaging around 1.4% per year between 2009 and 2014.
  • Adjusted for inflation, weekly earnings decreased by 1.6% compared to 2013. The largest decrease was between 2010 and 2011, but inflation-adjusted earnings have continued to decrease every year since 2008, to levels last seen in the early 2000s.”

The IB times summarising the results also stated that “The ONS also revealed that there were 236,000 jobs with pay less than the National Minimum Wage (NMW) held by employees aged 16 and over in April 2014”.

This is where the picture gets complicated because there are a number of bands for the NMW that are related to age and also for those in apprenticeships.  A full explanation of the different bands is explained on the government websites but essentially the breakdown of current rates is:

  • aged 21 and over: £6.50
  • 18-20: £5.13
  • under 18 (but over minimum school leaving age) £3.79
  • apprentice aged 16 to 18 and those aged 19 or over who are in their first year £2.73

A useful overview of the implications is provided in this blog post by the work foundation who (quoted in the IB times article above) highlight that one of the problems of the complicated age related minimum wage system is that employers may simply not be adjusting pay rates quickly enough as young workers pass relevant birthdays.

The National Minimum Wage of younger workers has always been a topic of much debate regarding whether there should be a differentiation and if so what it should be, however the issue that younger workers are falling further behind in wage terms is likely to raise further concerns.

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