National Living Wage: Under-25s

Kirsty Blackman Excerpts

Thursday 3rd May 2018 Commons Chamber

[David Linden]

My hon. Friend has made a powerful and valid point, which I shall come to later.

I hope very much that when the Minister comes to the Dispatch Box, he will not trot out the usual lines, which fall apart when subjected to any scrutiny. Let me deal with one or two of them now. For example, Ministers tell us that younger workers have less experience and should therefore receive less pay. Unfortunately, younger workers do not get a discount on their shopping, fuel or rent when it comes to paying their bills. One area in which young people do qualify for help is housing benefit, but only after a recent screeching U-turn from the Government on their abhorrent policy of excluding 18 to 21 year-olds.

The discriminatory exclusion of under-25s from the national living wage takes no account of how people actually live. For example, by the time I was 25—which was actually not that long ago—I had already been married for three years. I owned a house, and I was a father. I urge Ministers to look at the actual data rather than rehashing old arguments, and to consider the economic case for including under-25s in the national living wage.

[Kirsty Blackman (Aberdeen North) (SNP)]

The point that my hon. Friend is making about experience is very important. When I was 18 I started work in a pub on the same day as someone who was 25. Neither of us had worked in a pub before, so we had exactly the same level of experience, but the 25-year-old was eligible for the 25–year-old’s minimum wage, while I was paid the 18-year-old’s minimum wage. Does my hon. Friend agree that that was just unfair?

[David Linden]

Absolutely. That is what drives the Scottish National party’s fair work agenda. It is about fairness, and about lifting people out of poverty. I thank my hon. Friend for her powerful intervention.

[David Linden]

My hon. Friend is absolutely right. What he has said takes us back to the central point that a fair day’s work should result in a fair day’s pay.

If the Minister looks at the data, he will see that 2.5 million young people do not live with their parents. That is 2.5 million young people paying for shopping, rent and utilities. Statistics from the Office for National Statistics show that approximately 20% of mothers are under the age of 25. The discriminatory exclusion from the national living wage means that they must get by on poverty pay.

The current national minimum wage—and we should bear in mind that that legislation was passed in the last century—is not only a clear example of direct age discrimination, but an example of discrimination based on class. It flies in the face of the very concept of social mobility. How can a 22 year-old first-year apprentice on a miserable £3.70 an hour be socially mobile? That is what the law currently allows, as is stated on the UK Government’s website. That is what an employer who is thinking about employing an apprentice is encouraged to do.

A recent report by KPMG showed that one in five people are struggling to escape from low pay. For example, one in four women earns less than the real living wage. Put simply, that means skipping meals, living in debt and using payday loans just to get by. The fact is that there is a solid evidence base out there that makes the case for equal pay for under-25s.

[Kirsty Blackman]

Does my hon. Friend agree that there could be a positive impact on productivity? If people are having to work extra jobs and cannot afford to eat, they will be less productive, but if they were paid a living wage, they would do better work for their employers as a result.

[David Linden]

My hon. Friend makes a powerful point. If an employer pays someone under 25 the real living wage, that sends a message of real encouragement to the employee; there is clearly a productivity point here.

I commend and thank the Young Women’s Trust, which produced an excellent report last year entitled “Paid Less, Worth Less?” I have placed a copy of the report in the Library of the House this afternoon, and its testimonies make pretty stark reading. I will share just one today. It comes from Katie, a 19-year-old from Newcastle:

“I was a customer service apprentice in a small shop—only me, another apprentice and my manager worked there.

I had to do a lot—serve customers on the till, clean the store, display the products, update the online store, pack and post online orders and more.

I was paid £2.73 per hour, which went up to £3.30. I got paid on a Friday at the end of the month. The next week I was skint.

I remember one day I had 40p for dinner, so I got one doughnut from M&S.

My manager noticed and offered to buy me a McDonalds.

I felt so stupid.

A quarter of my monthly income was spent on bus fare getting to and from work. It was a struggle.”

It is sometimes easier for us in this House to focus on statistics rather than people, but Katie’s story succinctly and eloquently outlines the pay inequality that still exists in the UK in 2018.

Katie is not the only one. Only last week, following an oral question from me in this House, the Chancellor wrote to inform me that there are approximately 22,000 apprentices in the UK being paid just £3.70 an hour. Surely no self-respecting Minister thinks £3.70 is a decent hourly rate; I do not think any of us would be happy to turn up here and get paid just £3.70 an hour.

There are also particular sectors in the employment market where deliberate wage depression is a major issue and could have a major impact on the sustainability of business, particularly when free movement of people is restricted post Brexit. These sectors include retail and hospitality, which are often largely staffed by young people.

I would hope that the Minister would distance himself from the comments made by the Secretary of State for Digital, Culture, Media & Sport who back in January 2016 said younger workers would not get a pay rise because they are “not as productive” as older workers. It would take a particularly brave Minister to repeat that, especially on an election day.

Finally, the Minister might be worried about how businesses would react to under-25s being included in the national living wage. However, let me assure him that there is clear polling evidence from YouGov, on a sample of some 4,000 HR managers; they think that young people should be paid the same as older people for work. Some 79%—that is four in five—of employers think there should be equal pay regardless of age, as do 77% of small and medium-sized organisations. Some 80% of employers also said that young people make a bigger, or the same, contribution as older workers, and that on the whole younger workers came with a fresh perspective and injected some energy.

Most employers when asked said they would not cut back on hiring young people if the national living wage was extended to under-25s. Indeed, the New Policy Institute found in a report commissioned by Unison on the topic that, historically, raising wages for people under the age of 21 in the UK has not harmed their employment outcomes. So the evidence is clear and so is my message to the Government today.

[David Linden]

My hon. Friend is right: giving under-25s that spending power would boost the economy and could help kick-start the economy.

[Kirsty Blackman]

As an employer, I have taken on a number of young people on internships, and I have paid the real living wage, not the Government’s pretend living wage, regardless of their age. I found that they made a very valuable contribution to my office and a real positive difference. Has my hon. Friend got experience of doing similar?

[David Linden]

I am grateful to my hon. Friend for leading me down that particular path, which I had not quite thought of. She will be aware, as will my hon. Friend the Member for Glasgow South West (Chris Stephens), that I am going through the process of recruiting for the first ever John Wheatley intern—a young person will come to work in my office. I believe passionately that if we are to get more people into politics, we need to open up that process; it cannot just be the same people taking on political interns. When I started the process of advertising for that internship, I was conscious of the need to advertise it at the real national living wage. Last week, I set up seven or eight interviews, and I am sorry to have to tell the House that I got a phone call this afternoon to inform me that one of the young guys I was due to interview had sadly passed away. I want to take this opportunity to pay tribute to Scott, who is no longer with us.

The evidence is clear for equalising the national minimum wage to include the under-25s, and my message to the Government is also clear: if we want to build a country that works for everyone, we need to end this discriminatory pay inequality. The Government need to pay a real national living wage, and they need to pay it to the under-25s too.

--- Later in debate ---

[Andrew Griffiths]

The Government have always listened to the expert advice. In particular, we listen to the Low Pay Commission, which is made up of employers, academics and experts in the field and trade union representatives and is specifically devoted to protecting the rights of workers, including young workers. It is the commission that says that this policy is right and that sets the lower rates after considering all the facts.

[Kirsty Blackman]

The Minister has laid the stats before us, saying that the unemployment rate is 3% for over-25s and over 10% for under-25s. Does he not agree that that shows that the system he is presiding over is broken, and that something needs to be done to fix it?

[Andrew Griffiths]

No, I think it shows two things. It shows that the hon. Lady does not understand the labour market, and it shows the difficulties that young people have in demonstrating that they have the necessary skills, in gaining the necessary experience and in convincing employers to take a risk in taking them on and giving them an opportunity.

The hon. Member for Glasgow South West talked about our record in relation to unemployment. I will just remind the House that we are seeing record levels of employment in this country, and that unemployment rates are lower than we have seen for 40 years, so I will take no lessons from him.

--- Later in debate ---

[Andrew Griffiths]

I have given way plenty enough; we will move on.

The Government have increased the national minimum wage for young people to record levels. As I am sure the hon. Member for Glasgow East is aware, last month the Government gave the lowest-paid workers an above-inflation pay rise, as the national living wage and all the national minimum wage rates increased in real terms. The national living wage increased by 33p, to £7.83, meaning that a full-time worker on the national living wage will see their annual earnings rise by more than £600. Following increases to the personal allowance threshold and the minimum wage, a full-time worker earning the national living wage will be taking home over £3,800 a year more after tax. That is something this Government have delivered and are incredibly proud of.

[Kirsty Blackman]

Will the Minister give way?

[Andrew Griffiths]

I think I have given way enough.

The national living wage will rise further to reach 60% of median earnings in 2020, subject to sustained economic growth. We have awarded younger workers in receipt of the national minimum wage the biggest hourly pay rise in more than a decade. In particular, 20 to 24-year-olds saw a 33p increase in their hourly rate to £7.38, meaning a full-time worker in that age group will see their earnings rise by £600 a year, like those aged 25 and over in receipt of the national living wage. Those aged 18 to 20 saw an annual increase of 5.4% to £5.90, and those aged 16 and 17 are now entitled to a minimum of £4.20 an hour, an annual increase of 3.7%. Finally, apprentices aged under 19, or those aged 19 and over in the first year of their apprenticeship, saw an increase of 5.7%, the largest annual increase of all the hourly rates. In total, we believe that more than 2 million workers, 400,000 of whom are young workers under 25, have directly benefited from the latest increases in the national minimum wage.