There is a debate over whether the United Kingdom should scrap the age-based tiered minimum wage structure. Does it benefit the country’s business or is it merely age-based discrimination?
National Minimum Wage Vs National Living Wage
The National Minimum Wage (NMW) is the lowest pay rate employers must offer by Law. It varies based on a worker’s age and whether they are an apprentice, meaning younger workers typically earn less than older ones.
The National Living Wage (NLW) applies to most workers aged 21 and over, and is the highest of the legal minimum wage rates. Notably, the age threshold for the NLW has decreased in recent years, from age 25 before 2021 to age 21 today.
So, what are the rates? According to the government website, they are:
- £7.55 for Apprentices
- £7.55 for any worker under 18
- £10 for workers 18-20
- £12.21 for workers aged 21 and above
What are the arguments for the current system?
1. Inexperience
One of the main arguments in favour of age-based wages is that younger workers usually have less experience. Only recently entering the workforce, they often require more training and may initially perform at a lower level compared to older, more experienced colleagues. A lower wage is seen as a reflection of this inexperience.
2. Protecting Young Workers
If employers were required to pay the same wage regardless of age, would they choose a less experienced young worker over a seasoned one? It’s unlikely. Businesses tend to weigh cost against productivity. If younger workers are perceived as less efficient, they may be overlooked in favour of older candidates. A lower wage rate may actually help young people access the competitive job market.
3. Lower Living Costs for Younger Workers
It’s also argued that younger people generally have fewer financial responsibilities. They are less likely to have mortgages, children, or be primary earners in a household. Many may still live at home with their parents, reducing their cost of living. In this view, a lower wage is seen as more appropriate.
4. Support for Small Businesses
Small businesses, particularly in sectors like hospitality, employ many young workers. Age-based wages can ease the financial pressure on these businesses, enabling them to hire more staff and remain competitive. Without such flexibility, some smaller employers may struggle to afford staffing costs.
What are the arguments against?
1. Equal Pay for Equal Work
One of the most compelling arguments against age-based pay is the principle of fairness: if two workers are doing the same job, they should receive the same pay, regardless of age. Whether a worker is 20, 25 or 50, equal work should mean equal compensation. Is this a form of age-based discrimination?
2. Living Costs Affect Everyone
Unlike the NMW, the cost-of-living crisis does not discriminate by age. Rising rents, shopping costs, and bills impact all workers. A young person will not be offered cheaper rent simply because they earn less. Many young people live independently, not with their parents, and often struggle on a lower wage.
3. Impact on Morale
Being paid less than colleagues for the same work can feel unfair and demoralising. This disparity may reduce motivation and lead to dissatisfaction in the workplace, especially when younger workers are putting in the same effort and work the same hours.
4. Risk of Exploitation
There is concern that some employers take advantage of the age-based system by hiring younger workers specifically because they are cheaper to employ. This can result in businesses benefiting from the same output at a lower cost, while younger workers are underpaid for their contributions.
5. It’s Outdated
The UK’s age-based minimum wage system is increasingly seen as outdated. Many of our neighbours, such as France and Germany, maintain a single national minimum wage. Critics argue that the UK should follow suit. The trade union Unite has been vocal over the debate, “We believe that the UK should move towards a position where workers are not discriminated against on the basis of age, but are paid the rate for the job.”
Is there a middle-ground?
The arguments on both sides are clear but is there some middle ground? One path could be to adopt a training-based pay structure, regardless of age, which allows lower pay only for apprenticeships with qualifications attached to them.
So, what do you think? Are the current rates fair or is this age-based discrimination? Would you adopt the middle ground, keep the system how it is, or completely drop the age-based rates?
Photo by William Warby on Unsplash
