4 days ago
- Business
- The Herald Scotland
I'm sick of this discriminatory minimum wage policy exploiting Gen Z
The Herald reported earlier this week that more than half of young people are racking up thousands of pounds in debt thanks to low youth wage rates. The Scottish Trades Union Congress (STUC) surveyed 198 young workers between May and June this year, and only 46% said they could always afford the basics in life, like food, transport and bills.
Sir Keir Starmer promised to abolish youth wage rates during last year's general election campaign, and last July his Labour government committed to removing 'discriminatory age bands for adults'. But here we are, more than a year later, and young adults are still being paid a fraction of what they should be. Those aged 18-20 earn less than 82% of the national minimum wage. Sixteen and 17-year-olds earn less than 62% of the national minimum wage. Currently, the minimum wage for workers over 21 is £12.21, it is £10 for workers aged 18-20 and £7.55 for workers aged 16 and 17.
Paying young people a poverty wage was the brilliant idea of Peter 'Prince of Darkness' Mandelson under Tony Blair's Labour government. The Low Pay Commission ('Low Pay Commission' sounds to me like a body created to keep wages low, but I digress) was set up to decide what the minimum wage should be in the late 1990s because until that point, there was no National Minimum Wage.
Based on no conclusive research or evidence, the government argued that lower pay for young people would protect their jobs and tackle youth unemployment. Their hypothesis was that if businesses had to pay people under the age of 25 the real minimum wage, it would deter them from hiring the youth. Really, it was just a way to keep good on the promise to deliver a minimum wage for the people without alienating businesses. A loophole that allowed employers to continue to benefit from cheap labour. A 2015 report from the London School of Economics found that increasing the minimum wage for young people in the UK actually had little to no impact on employment.
The entire premise that young people deserve less money for the same jobs is inherently flawed. The last time I checked, rent, utilities, broadband, transport, council tax, food, and all the other basic necessities were more or less the same price whether you are aged 20 or 30. So what logic allows a government to condemn a large swathe of the population to poverty? It requires a politician to look at the country and only see middle-class faces looking back. That young people deserve to be paid less hinges on the fiction that they live at home or have parental support and don't really need a full wage or don't have the financial responsibilities of an adult, even though they are one.
This profile certainly was not true of me at aged 20. Ironically, I was supporting myself on £60 a week, less than a 27-year-old colleague living at home with their parents. Not everyone under 21 is in education or living at home. There are plenty of parents under the age of 21 who have their own families to support.
Older Millennials, or Generation Y, were the first to feel the sting of the youth minimum wage. Today, you can just add it to the list of setbacks facing Millennials and Gen Z, the most financially disadvantaged generations in recent history. Since the 2008 financial crisis, wage growth has stagnated. People who work in minimum wage jobs are typically also battling with zero-hour contracts. In 1985, the average UK house prices were about 3.7 times the average salary – these days, it is around 6.1 times the average salary, according to Nationwide Building Society figures from 2024. To add insult to injury, a pint costs around four times as much these days compared to 1990.
The entire concept that young people should be paid less than older people, just because of their age, is entirely absurd. There is a counterargument that suggests if we take ageism out of the minimum wage and abolish discriminatory age bands, it will send businesses that rely on this exploitative practice into a tailspin. But just because we have done something as a country for more than 25 years, it does not make it right or efficient.
A far better policy is to have a blanket minimum wage that is kept in line with inflation. Apprentice or student exemptions for those training on the job would help keep it fairer for businesses. And to help with the transition, perhaps consider lowering VAT on hospitality, an industry that employs a huge number of young people. You could reduce business rates for small independent retailers to help them fund staff wages. Or, my favourite, you could introduce a wealth tax to help tackle the country's repugnant inequality.
People should be paid the same to do the same work, regardless of the year they were born.
Marissa MacWhirter is a columnist and feature writer at The Herald, and the editor of The Glasgow Wrap. The newsletter is curated between 5-7am each morning, bringing the best of local news to your inbox each morning without ads, clickbait, or hyperbole. Oh, and it's free. She can be found on X @marissaamayy1
