Stakeholders' Views

3.43 We sought written and oral evidence from employers and their representative organisations, trade unions, youth organisations and others in the preparation of this report. The vast majority of respondents said that there had been little or no negative impact. Most employers already paid workers of this age group substantially above £3.00 per hour. One exception was a company in the care sector which advised that it had ceased to employ 16 and 17 year olds as a result of the introduction of the minimum wage for this age group. No other respondent noted a change in employers' willingness to take on 16-17 year olds and none suggested any move by employers to substitute this age group in favour of older workers. The Association of Licensed Multiple Retailers advised that a survey of its members had indicated that the 16-17 year old rate had not affected the demand for labour or the provision of training in the sector and a similar point was made by other organisations, including Business in Sport and Leisure.

'So far there has been no discernible adverse impact of the National Minimum Wage on the participation of young people aged 16-17 years in education or training.'

Government evidence

3.44 There was a range of views expressed by respondents to our consultation regarding future increases to the 16-17 year old minimum wage rate. Employer organisations urged caution, taking the view that further time was needed to gather more evidence before making any significant adjustment to the rate. The CBI noted that the full effects of the initial 16-17 year old rate were not yet clear and that it was imperative that we did not offer incentives to young people to opt out of education or training. A few respondents suggested that the rate should be frozen in 2006, while others sought a modest increase. The British Chambers of Commerce stated that it would support an increase of approximately 3 per cent in 2006.

'SBC is pleased that the rate will not increase in 2005. Low skilled young people are already struggling to be attractive to employers.'

Small Business Council evidence

3.45 Some employer respondents expressed the view that the rate should be increased by a reasonable amount, but most wanted the differential between the 16-17 year old rate and the youth Development Rate to remain substantial. The Royal College of Midwives noted that a low minimum wage for this age group defeated the object of a minimum wage in preventing exploitation. However, it accepted that an overpriced National Minimum Wage for 16-17 year olds might encourage them to leave further education or training and that this would have to be taken into account when establishing a revised rate for this age group. It suggested a percentage increase of no less than the Retail Price Index.

'Most members pay 16 and 17 year olds above £3 an hour because of competition from other retailers and to retain the goodwill of a trained member of staff who may return to the store during university holidays etc. Pay rates range from £3.50 to the adult minimum wage rate.'

British Shops and Stores Association evidence

3.46 Of the fifty-two respondents to our consultation who offered a view on the 16-17 year old minimum wage, around a third sought for it to be substantially increased. These were mainly, but not exclusively, trade unions and other organisations representing workers. The Federation of Licensed Victuallers Association suggested that an increase to £3.50 would be acceptable. A joint response from the Children's Rights Alliance for England and the British Youth Council described the present arrangements as discriminatory and suggested that employers could use young workers as a source of cheap labour. They argued for parity with 18-21 year olds as a first step towards a single minimum wage rate for all workers. They suggested that such a rate would improve, not impair, the ability of young people to participate in education and training as it might result in them being able to afford to work fewer hours and dedicate more time to their studies. Such comments were echoed by most union respondents, all of whom stressed a commitment to the same rate of pay for the same work. The TUC called for the 16-17 rate to be increased by a series of steps above increases in average earnings in order to narrow significantly the gap between the rate for 16-17 year olds and minimum wage rates for older workers.

3.47 The Scottish Low Pay Unit welcomed the introduction of the 16-17 year old minimum wage, but thought it had been set far too low. It also suggested that a higher minimum wage would lead to better education outcomes as students would be better able to combine their education and part-time work if they could reduce their hours as a result of a higher rate of pay.

'Significant numbers of students are struggling with their studies because of their hours of work. If you take into account that the survey was done in September, these problems will exacerbate as exams approach, and many young people will do less well in their education because of the hours they are working.'

Usdaw survey of
16-17 Year Old Members

3.48 A number of organisations commented that the introduction of the minimum wage had been successful in halting the worse excesses of low pay. However, there was concern that awareness and enforcement needed to be strengthened. We consider this later in this Chapter.