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Raising Minimum Wage for 18-21 Year Olds Should be Positive For Employers and Economy

28 July 2008

Today the Employers Forum on Age (EFA), the UK's leading authority on age equality in the workplace, commented on the Government's agreement to raise the minimum wage for 21 year olds.

Catharine Pusey, Director of the EFA, comments: "We welcome the news that the Government is discussing lowering the minimum wage development rate from 22 to 21. We have long believed that the age bandings in the minimum wage constitute a form of age discrimination that puts younger workers at an unfair advantage. We campaign on this issue and are pleased the Government is acting to reduce this inequality.

"Under current UK law a 21 year old could be doing exactly the same job as a 22 year old, but legally the employer can pay the 21 year old less, simply because they are younger. There is a social consensus that it is wrong to pay a woman less than a man or to pay a black person less than a white so why then do we think it is right to pay someone less, simply because they are younger?"

Higher wages would bring more candidates to the workforce giving the employer a greater number from which to choose the most productive workers. In addition, the increased rate of pay could increase the overall productivity of each worker. Equalizing the minimum wage would bring a rise in costs to the employer, but this would, in many instances, be off-set through the subsequent increase in labour supply.

Pusey continues, "We believe that a rise in the development rate in line with the national rate would encourage more young people into the workplace - young people who may currently be drawing on state benefits. In fact our research estimates that the multiplier effect in the economy, where a rise in spending leads to a rise in national income, would benefit economic activity by approx £227 million a year."

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