Labour Leader Jeremy Corbyn speaks to delegates at the Unison Conference on June 23, 2017 in Brighton, England. A plan by Jeremy Corbyn to pay 16-year-olds a “living wage” of £10 an hour could prevent young people from getting onto the jobs ladder and lead to companies employing fewer workers, business groups have warned.
The British Chambers of Commerce said that hiking the wage paid to teenagers could price them out of the workplace. The Adam Smith Institute, a free market think-tank, warned that the move could lead to businesses opting for older workers rather than younger, riskier hires, adding that it could also drive up the costs of groceries as supermarkets face higher wage bills.
The warnings came after Mr Corbyn told a union conference that Labour’s manifesto policy to introduce a £10 an hour living wage paid to adults “should apply to all workers signalling a rise of almost 150 per cent for 16 and 17-year-olds.
The minimum wage starts at the school leaving age of 16. But currently under-18s only have to be paid £4.05 an hour, compared to the £7.50 living wage that is applied to those aged 25 and over.
Labour pledged in its election manifesto to raise the minimum wage for all workers aged 18 and over to bring it into line with the living wage, which is based on the amount an individual needs to cover the basic costs of living. It is expected to be at least £10 per hour by 2020.
Speaking on Friday at a Unison conference in Brighton, Mr Corbyn was asked by one delegate whether 16-year-olds should also be paid the wage.
In response, Mr Corbyn said: You’re absolutely right.
Yes, the £10 an hour living wage, real living wage, is correct and also should apply to all workers, because I don’t think young people eat less than old people – that’s my experience anyway.
On Friday night Adam Marshall, director general of the British Chambers of Commerce, said: “We should be creating jobs and growth opportunities for young people. A proposal like this could price them out of the workplace – and lead to companies employing fewer people overall.
Minimum wage rates need to be set according to the state of the economy and what the market can bear, based on clear evidence, not an arbitrary numerical target.
Sam Bowman, executive director of the Adam Smith Institute, said: When you raise the minimum wage too much, businesses don’t take on as many workers and they’ll prefer older, more experienced ones to younger, riskier hires.
That means that youngsters can’t get their foot on the ladder and hurts their earning power for their whole lives.
It also means we’ll be paying more for groceries and other things that people on low wages rely on, because supermarkets will have higher wage bills.
The Confederation of British Industry (CBI) insisted that businesses wanted to raise the standard of living for workers, but added that decisions over increases to minimum wages should continue to be based on advice by the independent Low Pay Commission, taking into account a range of economic factors.
A CBI spokesman said: Companies are committed to raising prosperity and living standards across every corner of the UK – but for wage increases to be sustainable they must go hand-in-hand with productivity growth.
The CBI backs a rising minimum wage. But that path requires careful, independent monitoring and the Low Pay Commission must continue to ensure it reflects wider economic performance.
Workers aged 16 and 17 are subject to a much lower minimum rate to reflect their inexperience and the fact that they usually have few formal qualifications. Many traditionally work in shops and fast food outlets.
Like 16 and 17-year olds, 18 to 20-year olds also do not have to be paid the current living wage, instead receiving a minimum of £5.60 an hour, while for 21 to 24-year-olds the rate is £7.05. Apprentices only have to be paid £3.50 an hour.