A new report published by the UK’s National Institute of Economic and Social Research (NIESR) suggests employers are reluctant to enforce National Minimum Wage Youth Rates amidst concerns around unfairness.
Based on new research undertaken with employers and employer bodies in retail, hospitality, cleaning and childcare, the report found few employers reporting significant differences in productivity and behaviour between younger and older workers. The main reason employers made use of the youth rates and paid younger people less than older workers in the same job was to reduce costs.
Among the companies who took part in the research the Youth Rates were used in varying ways, often partially (for example, during an initial period of training or induction) rather than in full. Use of the Youth Rates, however, varied by sector, often due to specific pressures. This included childcare, where the youth rates were used extensively to offset downward pressures on pay resulting from Government policies.
The NIESR report is published alongside the Low Pay Commission’s report on Youth Rates, which advises the Government to gradually lower the age of eligibility to the National Living Wage from 25 to 21. The NIESR report also includes a detailed review of the policies around training, education and support to work for young people.
Nathan Hudson-Sharp, Senior Social Researcher at the National Institute of Economic and Social Research (NIESR), said: “Our new report shows that employers in low-paying sectors are often reluctant to make use of the National Minimum Wage Youth Rates because of concerns around unfairness. What is clear however is that the Youth Rates are often considered crucial in keeping costs down, particularly for smaller businesses. This is certainly the case in childcare, where the Government’s 30-hours funded free childcare offer is
putting significant pressure on providers.”
He went on to say: “In light of the LPC’s recommendation to lowering gradually the age of eligibility to the National Living Wage from 25 to 21, we seem to be heading towards more equal pay across age groups. The government however should proceed with caution to ensure young people are protected and not displaced in the job market.”