Network Journal Issue 04

Usdaw continues to fight for young workers excluded from the NMW

This welcome development comes after intensive lobbying by Usdaw as it seeks to bring these young workers under the protection of the NMW.

A special survey by Usdaw also drew widespread media attention after it revealed the shockingly low pay rates on offer to this vulnerable group of workers.

On this page we look at part of Usdaw's written evidence submitted to the LPC. Deputy General Secretary John Hannett also gave oral evidence to the Commission at a formal hearing in London in November.

There are more than 628,000 16 & 17 year-olds in employment in the UK. Of these, 254,000 work in retailing, the industry where the existing NMW has had a major impact, and which is the biggest single sector employer of 16 and 17 year-olds.

Almost 80 per cent (209,000) combine retail work with full-time education, while the remainder working in retail (45,000) are not in full-time education.

It is clear the main beneficiaries of the protections offered if the Minimum Wage was extended to 16 and 17 year-olds, would be young workers in the retail sector, mainly female and predominantly in full-time education.

Usdaw's Survey of 16 and17 year-old Pay Rates

Usdaw took a close look at the going-rates for young workers by visiting Connexions (job shops) offices, across the UK, or to their various sites on the internet.

The information obtained was for 'Jobs with no Formal Training'. The normal reference was that the training was 'in-house'. Our survey therefore excludes the more formal training route of Modern Apprenticeships, NVQs or any other accredited training courses for which low pay or training rates occur.

In total, we found 110 wage rates for 16 and 17 year-olds paying anything from a shocking £1.25 to £2.85 an hour.

Our Survey proves conclusively the widespread existence of low pay among 16 and 17 year-olds in this country. We stopped our findings at just over 100. If we had carried on looking we would have found more.

Usdaw's claim - A Minimum Wage for 16 and 17 year-olds

We urge the Low Pay Commission to end the scandal of low teenage pay by recommending to the Government that Minimum Wage protection be extended to cover 16 and 17 year-old workers.

The Government has a duty to protect all its workers from abuse and exploitation and not, as at present, leave its youngest workers without any protection whatsoever. Once the principle, as we hope it will be, is accepted, we need to move on to look at the type and rate of the Minimum Wage for 16 and 17 year-olds.

Usdaw makes a difference

In the vast majority of agreements Usdaw has negotiated with retail companies, there is one 'under 18' rate rather than separate rates for 16 and 17 year-olds.

The one 'under 18' rate is that favoured by Usdaw and where, in recent years, we have had major success in securing agreements with retailers. Among those agreeing to this are Kwik Save, Somerfield, Tesco and the Retail Co-op Societies.

We believe that this is the best formula for a Minimum Wage among young workers because:

• There is often no difference between the job done by a 16 or a 17 year-old and we still believe in the rate for the job.

• Regardless of the Commission's response to this, we have to look at what sort of level we need to be considering when setting a NMW for 16 and 17 year-olds.

• Using Usdaw/company agreements, a figure of between 75 per cent and 90 per cent of the age 18 rate, for 16 & 17 year-olds, is the norm, with the average working out at 80 per cent.

• We believe that the Low Pay Commission should look closely at this average figure and set a NMW for 16 and 17 year-olds, not covered by a union agreement, at 80 per cent of the age 18 rate. In October 2004, this would mean a rate of £3.28 (based on 80 per cent of £4.10, next year's development rate for 18-21 year-olds).

Will it mean job losses?

Critics of extending the Minimum Wage to 16 and 17 year-olds will no doubt argue that it will lead to massive job losses. This does not surprise us. There were similar arguments put forward when the Minimum Wage was first being introduced. So what happened?

What we are saying is that it had no impact on an upward trend on employment that was already occurring. We believe that it would be a similar scenario with the extension of the NMW to 16 and 17 year-olds.

The job losses argument also fails to take into account the nature of employment in retailing. It is already based on minimal starting levels as it is, and there cannot really be any more serious cut-backs in labour levels.

Will companies close?

In a similar fashion, critics of the NMW argued that not only would jobs be lost, but that many retail companies would go out of business altogether. So what happened?

In the years after the NMW was introduced the following occurred:

Retailing Insolvencies

1999 - 1,254

2000 - 1,194

2001 - 1,119

The number of retailing businesses that were closing actually went down in the years after the NMW was introduced. We believe that the introduction of a NMW to 16 and 17 year-olds would result in a similar scenario of having no impact on a trend already evident.

Conclusion

We believe that the NMW has made a valuable contribution to combating the very low levels of pay and confronting some of the exploitative labour practices that existed for workers aged over 18.

However, the fact that it does not apply to 16 and 17 year-olds is a major loophole which significantly undermines the purpose of the NMW, which is to tackle poverty level pay by providing a statutory underpinning to wages.

This consultation exercise can help to change the situation. We urge the LPC, having taken on board the arguments advanced in this submission, to recommend to the Government that a NMW for 16 and 17 year-olds is needed, and that it be set at a level of 80 per cent of the age 18 rate.

In making this recommendation the LPC will be helping to get rid of some of the poverty level wages we have highlighted in our survey - wage rates that show what happens without NMW protection.

Did you know?

• The NMW was introduced by the Labour Government in April 1999.

• It is usually uprated in October.

• The level of the adult rate (for workers aged 22 and over) is £4.50.

• For workers aged 18-21 it is £3.80.

• In October 2004, the adult rate will rise to £4.85 and to £4.10 for the 18-21 age group.

• Workers who are penalised for claiming the NMW can take a claim to an employment tribunal from day one of their employment.

• The maximum penalty for an employer found guilty of not paying the appropriate NMW rates is £5,000.

• A confidential Government helpline is available on 0845 6000 678.

• You can make a written enquiry to NMW Enquiries, Freepost PHQ1, Newcastle, NE98 1ZH.

• Visit www.tiger.gov.uk.

The full report - National Minimum Wage - Statement of Evidence to the Low Commission - is available to download (Word format) or copies can be obtained from the Stationery Department at Central Office. Please quote ref GC 62/03.

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