Living Wage

Holly Lynch Excerpts

Thursday 3rd November 2016 Commons Chamber

[Holly Lynch (Halifax) (Lab)]

I too start by thanking my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) for the leadership and tenacity she has shown on this issue and for securing this debate with the support of the Backbench Business Committee.

Although I have been surprised at and saddened by at the variety of ways workers in receipt of the living wage have had other terms, conditions and benefits revoked or reduced, I will focus today on those who are potentially not even receiving the living wage at all—workers under the age of 25. In June, I secured a Westminster Hall debate on age discrimination and the national living wage. The Government have failed to respond to some of the points raised by myself and others in that debate, so I welcome the opportunity to discuss the issue again.

The decision to deny the Government’s so-called living wage to under-25s means that from 1 April this year, many workers under the age of 25 will have discovered that their pay packet is substantially less than that of their older colleagues. As things currently stand, those between the ages of 21 and 24 are paid 50p less per hour than the living wage. The margin is greater again for those between 18 and 21, who are paid £1.90 less an hour; those under the age of 18 are paid just £3.87 an hour, which is £3.33 less per hour than the new living wage.

I am sure that the Minister will accept that many young workers, who were already demoralised at being left behind, felt that salt had been rubbed in their wounds by the comments of the then Minister for the Cabinet Office and Paymaster General, the right hon. Member for West Suffolk (Matt Hancock)—now the Minister for Digital and Culture—at last year’s Conservative party conference. Outlining the rationale for the decision to pay under-25s less, he said:

“Anybody who has employed people knows that younger people, especially in their first jobs, are not as productive, on average.”

As someone who was doing three part-time jobs at the age of 17 while studying for my A-levels, I can sympathise with those workers under 25 who find that sweeping generalisation grossly unfair.

We hear that young people are not as productive, so how are the Government measuring productivity? I asked in a written question for their figures on the productivity of young workers. I was told that they had absolutely no evidence to support the claim. In his answer, the then Minister for Skills, the hon. Member for Grantham and Stamford (Nick Boles), told me that

“there are no official statistics estimating the productivity of workers by their age.”

So we know that the Government cannot give evidence to support the reasoning of the right hon. Member for West Suffolk. I accept that those embarking on a new role often require training and support from their employers and perhaps therefore initially represent a reduced return on investment for an employer, but that could be said of any employee, of any age, taking on a new role or returning to the workplace. Up and down the country there are countless examples of young people who give it their all and are a huge asset to their firms, yet now face the demoralising prospect of unequal pay.

Recently, it feels as though the Government have moved on from the productivity argument and are instead arguing that the ability to pay under-25s less will incentivise firms to hire young workers. Indeed, when I asked the former Leader of the House for a debate on this issue at business questions, he replied:

“I…think it is important to do everything that we can to incentivise employers to take on young people.”—[Official Report, 28 April 2016; Vol. 608, c. 1564.]

We all want to see youth unemployment addressed, yet organisations, including the Federation of Small Businesses, have pointed out that the Government’s approach could see employers wandering into legally precarious territory. An employer that actively seeks to recruit under-25s to cut wage costs will almost certainly fall foul of age discrimination legislation. The Equality Act 2010 prohibits discrimination on a number of grounds; section 5 of the Act recognises age as one of those characteristics. It is direct discrimination if, because of a protected characteristic, one person is treated less favourably than another. The House of Commons Library has confirmed that to recruit workers on the basis of their age would constitute direct age discrimination.

In evidence to the Low Pay Commission, the Federation of Small Businesses said that

“our survey data suggests that some businesses may focus their recruitment on the under 25s. However by doing this they run the risk of potentially breaching age discrimination legislation, which should lead many employers to re-evaluate this stance.”

Will the Minister clarify the Government’s intention on the threshold for 25-year-olds as a financial incentive, and respond to the advice of the FSB? If, as a result of the Equality Act, the threshold for under-25s is not permitted to serve any purpose in boosting youth employment rates, why have a lower rate at all?

Having campaigned on the issue, I joined my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) earlier this week to meet a number of young workers who were brought together by the GMB trade union—I thank them for their work on the campaign. Those young workers told their stories, including a testimony from a 20-year-old retail worker called Rebecca, who said:

“Earning less than older workers stops me from socialising with friends, studying part time to get a better job and I can’t afford to have driving lessons or even think about owning a car. I’m frustrated at the fact that I am expected to live on so little, whereas if I was older I would automatically be paid more.”

I hope the Minister reflects on Rebecca’s story and many others, and rewards under-25s for their hard work by extending the living wage.