Consultation on the case for a National Minimum Wage for 16 and 17 year olds

- GMB Response -

 

21 October 2003

Introduction

GMB welcomes the Low Pay Commission’s recommendation in its fourth report that the case for a minimum wage for 16-17 year olds should be examined. We are pleased now to contribute to that exercise, and we do so in the context of a long-standing policy position in favour of minimum wage coverage for all under-18s and against any age-related differentials.

GMB’s 2003 Congress, the supreme policy-making body of the union,   reiterated these policy positions in two important motions:

“…The lower tier discriminates against young people. They have to work longer hours to earn the same pay as their fellow older workers over the age of 21…”

“…Congress believes that the … existence of the ‘cheap’ youth rate of the minimum wage has created a situation where young people are being bullied and exploited…The solution is simple: there should be one rate of minimum wage…”

GMB believes that minimum wage protection should be extended to address:

·         the inequity and damage to morale that arises when workers doing the same jobs are paid different pay rates

·         the multiple exploitation that exclusion from minimum wage protection implicitly sanctions

·         the lack of investment by employers in training and development of young workers

We believe that there should be no age rates within the minimum wage but that the development rate should be better promoted, and the link to accredited training better enforced.

Current employment patterns and reasons for employment

Two-thirds of the approximately 660,000 16 and 17 year olds in work combine their work with education. GMB believes that this can provide valuable experience and independence. However, too often young people are working long hours to support themselves and/or contribute to family finances, with a detrimental effect on their studies and their health.

The remaining third of young people in work may take opportunities later in life to return to education, or they may seek opportunities to train and develop through the workplace.

GMB believes it is not appropriate to try to use minimum wage policy as a tool to force young people into continuing in education. Furthermore we believe that the early labour market experiences of 16 and 17 year olds can play a significant role in the extent to which they feel valued and have a stake in society and the economy.

Gross exploitation of the kind that we have uncovered risks leaving young people socially excluded and disillusioned with the world of work, a factor which could explain high levels of economic inactivity in this age group.

We have concluded from consultations   with GMB officials and activists that workers in this age group are not employed in jobs with lower levels of skill and responsibility than their older counterparts, nor are they more likely to be receiving training, unless they are on an apprenticeship scheme. However, employers often turn to them where low pay rates, poor prospects and lack of training and development opportunities give rise to recruitment and retention difficulties.

For example, 16 and 17 year olds are often employed on shifts or at sites where employers have difficulties attracting older workers. This further serves to isolate and exclude young workers.

One GMB official organising in hotel and catering in Scotland said 16 and 17 year olds are employed in hotels as basic grade staff (tidying rooms, cleaning kitchens etc) on shifts outside the normal core − early mornings and late nights − and paid at £2 an hour.

The expansion in service sector opening hours has given rise to a large number of weekend, evening and early morning shifts in call centres, retail and other services. These are often predominantly staffed by young workers, especially students, including 16 and 17 year olds working alongside their older colleagues doing the same jobs for significantly lower pay rates.

A GMB national official has received evidence from independent care home companies that acute recruitment and retention difficulties have caused local home managers to employ 16 and 17 year olds in contravention of the national care standards. These stipulate that 16 and 17 year olds cannot work in personal care roles unless supervised at all times by an older worker. As such, staff in this age group must be supernumerary for the purposes of staffing ratios.

However, acute staff shortages are leaving home managers unable to cover shifts, and they are calling on 16 and 17-year old staff to fill in, unsupervised, including at night. In one case a young worker was asked to falsify rotas to hide this fact, and in others young workers have been told that they cannot raise a complaint because they are “illegal.”   And on the back of the fact that they have no rights in relation to the minimum wage, these workers have had holiday pay deducted having been told that they are not entitled to that either.

It is GMB’s concern that exclusion from minimum wage protection marks 16 and 17-year old workers out as “having no rights”, a misconception often shared by both employers and employees. This leads to multiple exploitation extending from pay to leave to working hours. It also encourages some employers to employ 16 and 17 year olds “off the books.” In some cases this stems from the fact that young people were employed prior to age 16, and the notion of ‘pocket-money jobs’ persists.

Effect of a minimum wage on demand for labour and provision of training

The arguments about the effect of a minimum wage on the demand for 16 and 17 year olds’ labour are likely to mirror those rehearsed when the national minimum wage was introduced.

The fact that the minimum wage and subsequent upratings have not led to the job losses predicted by opponents ­– either generally, in relation to younger workers, or in relation to small businesses – should   serve to make the Commission treat these arguments with some caution.

The sectors which are big employers of young workers such as retail, hotels and catering are less subject to international competition than manufacturing. And, as we have indicated, these employers are turning to young workers in the first place because they are having difficulty recruiting and retaining staff, so a marked shift to employing older workers is not likely to be feasible.

Nor would it be desirable. Young workers will not cease to be attractive to employers simply because they are no longer such a cheap option. Employers will continue to have a range of other reasons including the need to reflect and attract a young customer base, and the wish to harness energy, adaptability and aptitude for technology.

However, removing the incentive to employ young people as cheap labour should encourage some employers to invest in training and retention of young workers, and to offer them prospects for progression within their employment.

GMB’s lead official for the social care sector points out that young workers represent an opportunity for companies to ‘grow their own’ qualified care staff by offering training programmes and career paths. Yet the exploitation suffered by many young workers means they will not stay in these companies.

A member of GMB Young Members Committee from the South West writes that bringing 16 and 17 year olds into minimum wage coverage:

“…may prove to be an avenue for training, helping those who are best suited to vocational qualifications…Further and higher education may not always be the best choice for all students, although I welcome the policies of the UK and Welsh Assembly Governments to encourage more students to remain in education. Those who choose to leave should be protected by the law against rogue employers with the option of real   training and education opportunities.”

 

Relationship with Government policies on continuing education

GMB welcomes the Education Maintenance Allowance scheme, but means testing inevitably leaves many with genuine needs the wrong side of the income cut off.

We do not believe that the prospect of a minimum wage job, even at the adult rate, is likely to be sufficient to tempt many out of continuing education and training. What it will do, though, is enable young people to work fewer hours and devote more hours to their studies.

We would like to explore with the Commission, the relevant government departments and employers’ organisations ways of making employers take a greater interest in, and responsibility for, the overall hours of work and study time of their young workers, particularly in relation to whether these in combination exceed the 48-hour limit set by the working time regulations. After all the 48-hour limit is designed to protect workers’ health and safety.

Apprenticeships

GMB is greatly concerned about the apprenticeship exemption in general, and about the current position of 16 and 17 year olds within it. We have received anecdotal evidence of drop-out rates of up to 70% among construction industry apprentices, together with reports that 16 and 17 year olds have been receiving rates as low as £1 or £2 an hour and working as many as 44 hours a week. Eighteen year old apprentices are reported to be receiving rates as low as £2.74 an hour.

Extremely low rates of pay for 16 and 17 year olds under apprenticeship schemes may be acting as a disincentive to young people to complete their apprenticeships.

And we would extend this point more generally to the apprenticeship exemption. It is too often being used by employers to secure cheap labour – hours advertised are often extended, as in the construction industry example, to the point where employers are effectively recouping the day release time they give apprentices to attend college.

Yet apprenticeships are a vital plank in the Government’s policies to foster credible vocational alternatives to sit alongside expanding higher education initiatives.

Appropriate level for a minimum wage

As we stated in the introduction, GMB is opposed to age-related rates. So we believe that it would be very damaging to introduce a second age-related tier within the minimum wage structure. This will give rise to confusion, and make awareness raising more difficult.   While stamping out the worst abuses which take place now,   it will institutionalise another tier of unfairness in workplaces between workers aged 16 and 17, workers age 18 to 21 and those 22 and over, most of whom, are doing the same work. It will also run counter to the general trend for employers to phase out age rates, as documented by Incomes Data Services, among others.

All of the arguments that we have advanced in relation to 16 and 17 year olds in this submission apply equally to workers aged under 22. GMB believes that all age-related rates should be removed in favour of a better promoted and enforced development rate. The argument that young workers are more likely to be receiving training is not generally supported by the evidence, however where they are, the development rate can deal with this. Where the development rate does not apply, all workers aged from 16 to 22 should receive the adult minimum wage rate.

The apprenticeships exemption should also be removed and wrapped up in the development rate so that apprentices receive the development rate for the first six months of their apprenticeship, just like any other worker receiving accredited training.