Workers under the age of 25 are not “productive” enough to warrant being paid the new National Living Wage, according to Government Minister Matthew Hancock.
In this summer’s budget, Chancellor George Osborne announced a new minimum wage for over 25s would come into force from next April, starting at £7.20 an hour and increasing to £9 by 2020.
But those under 25 will be on the old minimum wage rates, meaning they are entitled to £6.70 an hour, down to £5.30 for 18 to 20 year olds and £3.87 for under 18s.
Trade union Unison said the remarks showed the Government was "out of touch", while Labour claimed Mr Hancock had let "the cat out of the bag".
A Survation poll for the Huffington Post published last week showed the majority of Britons – 66 per cent - believe the new higher rate should be given to under 25s.
Speaking at a fringe event at the Conservative Party conference in Manchester this afternoon, Mr Hancock defended the different rates.
He said: “This was an active policy choice. Youth unemployment, whilst falling quite sharply, is still a long way above the unemployment rate for the over 25s.
“Anybody who has employed people knows that younger people, especially in their first jobs, are not as productive, on average.
“Now there are some who are very productive under the age of 25 but you have to set policy for the average. It was an active choice not to cover the under 25s.”
The National Living Wage was enthusiastically welcomed by the Tories when it was announced in June, with Mr Osborne going further than Labour’s election pledge to raise the minimum wage to £8 by 2020.
However, the Institute for Fiscal Studies calculated that three million families would be more than £1,000 a year worse off thanks to the changes to child tax credits, despite the increase in the minimum wage.
IFS director Paul Johnson said in June that “the key fact is that the increase in the minimum wage simply cannot provide full compensation for the majority of losses . . .[ because] that is just arithmetically impossible”.
Reacting to the remarks this afternoon, Unison General Secretary Dave Prentis said: "Remarks like this show just how out of touch the government is. Young people are every bit as productive as older workers, and can have just the same responsibilities as their more mature workmates.
"A young home care worker, for example, has to do exactly the same stressful job as the older colleagues on their team, and probably isn't even getting the minimum wage as many aren't paid for their travel between appointments.
"Younger workers under 25 with families face a double whammy. First they are denied a pay rise and then they get hit hard by the planned cuts to tax credits.
"Thanks to the meanness of this government, under 25s with one child doing a 35 hour week on the national minimum wage won’t get the £910 a year pay increase next April, but they will still lose £1,754.20 from the tax credit changes.
"Ministers should think again on tax credits, and on their decision to deny young workers the pay rise others are getting."
TUC General Secretary Frances O’Grady said a lower minimum wage could actually harm productivity among under 25-year-olds.
She said: “21-24 year olds are already paid the adult National Minimum Wage and there is no reason to exclude them from the new higher rate - indeed employment rates for this group are currently growing twice as fast as those of older adults.
“If those beginning their careers are given the impression they are worth less this can only be bad for their motivation and productivity.
"Rather than leaving younger workers behind we need a recovery that works for everyone."
Owen Smith, Labour’s Shadow Work & Pensions Secretary, said: "The Minister has let the cat out of the bag on the Government's decision to exclude under 25's from the new higher rate minimum wage.
"The Tories have clearly got something against young people. It's insulting and divisive to make sweeping suggestions that under 25s are under productive. Surely it's not right to ask a 24 year old, perhaps with a family at home, to do the same job as the 26 year old stood next to them, for different rates of pay.
"This is yet another examples of haphazard Tory policy making.”
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