THE government’s new national minimum wage (NMW) rates risk leaving young people even further behind, the TUC warned yesterday.
The new rates only apply to workers over 25, and the TUC is calling for that rate to be extended to all workers aged 21 and above. Rates for workers under 21 should grow at least as fast as adult ones. The TUC – which was presenting evidence to the Low Pay Commission yesterday – also cautioned that the proposed rise in the NMW will not be enough to combat in-work poverty.
A new £7.20 rate for those aged 25 and above will be introduced in April 2016. The current minimum rates are: £6.70, adult aged 21 or above; £5.30, aged 18-20; £3.87, aged 16-17 (16 year olds above statutory school leaving age only).’
£3.30 is the rate for apprentices aged under 19, or over 19 but still in the first twelve months of their apprenticeship. All other apprentices must be paid the relevant age-based rate. TUC General Secretary, Frances O’Grady, said: ‘Younger workers must be treated fairly. It is wrong to leave 21 to 24 year olds out: they face the same expenses as other adults and are highly productive. Not paying them the full minimum wage will demotivate younger adults, who will get less pay than their colleagues for the same work.”
Speaking about the adult national minimum wage, O’Grady added: ‘The government’s tax credit cuts will mean many minimum wage workers face big drops in their household incomes, even when pay rises kick in. The government’s target of a £9 adult minimum wage by 2020 is achievable, but without decent in-work benefits many low earners will still be far worse off than they are now.’
• The Resolution Foundation said yesterday on the tax credit cuts that ‘If the government is serious about providing more help to working families, its only option is to reverse the cuts.’ David Finch, senior economic analyst at the foundation, said ‘tweaks’ to the £4.3 billion working tax credits cut would be expensive and still leave millions of families worse off.
Finch added: ‘Many proposals have been suggested to soften the impact of the changes – from further tax cuts, to a phasing-in of the reforms – but none of them make much of an imprint into the scale of losses being imposed on low income working families. If the government is serious about providing more help to working families, its only option is to reverse the cuts.
‘Fortunately there are plenty of ways to fund this move – such as cancelling tax cuts targeted at better-off households. And with a surplus of close to £12bn pencilled in for the end of the Parliament, the Chancellor can afford to cancel the tax credit cuts and still eliminate the deficit.’
