Holly Lynch MP started campaigning for this change almost 3 years ago and it has been today announced as official party policy.

Labour’s minimum wage proposal

Currently, the law allows younger people to be paid a low rate than older people. Different pay bands exist for 16-17 year olds (currently £4.35ph), 18-20 year olds, and 21-24 year olds. The national living wage (currently £8.21ph) is payable only to those aged 25 or over.

As well as removing the pay bands, Labour would increase the level of the national living wage to £10ph. It calls this level of pay “the real living wage”.

To help small employers afford to pay the increased rates, targeted support would be given to small and medium sized employers.

Criticism

Some believe that such a large increase in the lowest rates could lead to increased youth unemployment.

Overnight, it would become twice as expensive to hire a 16 or 17 year old.

Len Shackleton of the Institute of Economic Affairs accused the Labour Party of trying to outbid the Conservatives. Last week Chancellor Phil Hammond announced that the Government would be looking to introduce the world’s highest national minimum wage at 66% of median earnings.

Comment

After a proposal to abolish the national minimum wage for young people, we discussed the impact of the national minimum wage on younger workers back in 2012.

Our research found that, at the time, many employers already paid younger staff at a rate in excess of the full minimum wage. Abolishing it completely (or, on the flip side, abolishing the age bands) would be of limited impact.