POLITICS

Government's 'Living Wage' Leaves Under 25s £11,000 Worse Off Than Older Colleagues, Claim Lib Dems

02/11/2015 12:09 GMT | Updated 02/11/2015 12:59 GMT

Under 25s will miss out on £11,000 in pay compared to older colleagues under Tory minimum wage plans, according to the Lib Dems.

Chancellor George Osborne announced a so-called National Living Wage in his July budget for 25-year-olds and over from April 2016.

While those on the new Living Wage will see their hourly rate rise from £7.20 next year to £9 by 2020, those on the Minimum Wage are likely to be on just £7.38 per hour in five years time.

The Lib Dems have calculated under 25s on the minimum wage through the whole period will have earned £11,047.89 less than an older colleague.

Today London Mayor Boris Johnson took a dig at Mr Osborne’s plans, referring to the voluntary Living Wage for London as the “proper one” as he announced it was increasing by 25p to £9.40 an hour.

At the Tory Party Conference last month, Cabinet Office Minister Matthew Hancock justified excluding under 25s from the higher wage by claiming they were, on average, not “productive” enough.

Today, Lib Dem leader Tim Farron said: "The Tories are hurting young people who are starting out in their careers.

“The Chancellor's sleight of hand will mean thousands of hard working people will lose out, yet again.

"This makes a mockery of their claim to be the workers’ party."

The Lib Dem research claims that a 20-year-old starting in a minimum wage job today will earn £11,047.89 less by 2020 than someone who is 25.

The figures, published at the start of National Living Wage Week, show the gap in pay will reach almost £3,500 per year by 2020 for someone working 40 hours a week.

A Survation poll for the Huffington Post published in September 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 last month, 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 Lib Dem’s calculation assumed a 45p per year increase in the over 25 rate, which is the average rise needed to hit the £9 per hour by 2020 announced by the Chancellor.

The Lib Dems also assumed a 1.57 per cent rise in the under 25 rate, which is based on the average increases seen in that between 2011 and 2015.