UK

Abolish Minimum Wage For Young People, Says Institute of Economic Affairs

02/04/2014 07:55 BST | Updated 02/04/2014 09:00 BST

A right-of-centre think tank has been attacked for calling for the national minimum wage to be abolished for apprentices and under-18s.

The Institute of Economic Affairs (IEA) said the statutory rate had failed to reduce poverty since it was introduced 15 years ago, and actually hit job opportunities for the young and unskilled.

The minimum wage, which is supported by all sides of industry, has led to employers becoming "choosier" in employment, the group claimed.

minimum wage

The minimum wage, which is supported by all sides of industry, has led to employers becoming "choosier", the thinktank said

Mark Littlewood, IEA director general, said: "For too long the Government has been preoccupied with the idea of guaranteeing a living wage without looking at the facts.

"Youth unemployment is still precariously high and the best way to combat this is to make young, unskilled workers more attractive to employers. An ever-increasing minimum wage creates a wealth of unintended consequences and the result is that among the group of people the measure aims to help, very few actually feel any benefit at all."

But Brian Strutton, national officer of the GMB union, said: "The axe-grinding Institute for Economic Affairs, as usual, starts with its prejudiced conclusions and argues back, against all the evidence, to criticise the national minimum wage.

"If they had their way, poverty pay would be the norm and benefit dependency would be even greater than it is already.

"The minimum wage has not had the detrimental effect on employment that right-wing lobbyists like the IEA predicted and they should admit that.

"Their negative comments towards young unemployed people are particularly distasteful."

According to the IEA report - The Minimum Wage: Silver Bullet Or Poisoned Chalice? - rises in the minimum wage have had adverse effects, including an increase in zero-hours contracts and unpaid internships.

The IEA claimed significant reform of the tax credit system was needed to reduce unemployment and alleviate poverty.

Suspending the minimum wage for those under 24 and out of work for over a year would encourage skills acquisition and long-term employment, the group said.

Martin Freedman, director of economic strategy and negotiation at the Association of Teacher and Lecturers, said: "The Institute of Economic Affairs has produced a risible report unfairly blaming the £2.68 an hour minimum wage for apprenticeships for pricing a million young people out of jobs on the grounds employers can't afford to pay it.

"If the Government followed the IEA's advice to scrap minimum pay protection for young people, taxpayers would end up subsidising exploitation wages through tax credits."

Kevin Courtney, deputy general secretary of the National Union of Teachers, said: "In a civilised society it is entirely wrong to be suggesting that one way to reduce unemployment is to allow employers to pay staff as little as possible.

"The idea that getting rid of the minimum wage for under-24-year-olds will be a benefit to everyone is utter nonsense. All it will do is encourage the exploitation of young people and a race to the bottom for wages."

A Business Department spokesman said: "The national minimum wage is a legal requirement and strikes the careful balance between fair pay for workers without costing jobs.

"Enforcing the national minimum wage is a Government priority.

"No credible research or analysis has ever indicated that the employment opportunities for young people and apprentices have been adversely affected by upholding the law."