Business leaders have warned Labour against playing ‘political football’ with the minimum wage as Jeremy Corbyn pledges £10 an hour for young workers.
Party leader Mr Corbyn announced a new policy to extend the £10 minimum wage to 16- and 17-year-olds at a speech in Birmingham today.
He plans to abolish the ‘youth rate’, which currently pays workers under the age of 18 a minimum wage of £4.35 per hour, compared to £8.21 for those over 25.
Labour leader Jeremy Corbyn speaks at the Young Labour conference in Birmingham
But Matthew Percival, head of employment at the Confederation of British Industry (CBI), said youth rates should be retained as they help reduce youth unemployment.
He said: ‘The minimum wage is an important part of the UK labour market and must not be used as a political football.
‘It owes its success to the Low Pay Commission, which is an expert, independent body that brings together business and trade unions to guide the National Minimum Wage.
‘Youth rates play an important role in helping to reduce youth unemployment and should be retained.’
Jeremy Corbyn’s rucksack is removed as he arrives at the Young Labour conference in Birmingham
Mr Corbyn called for a baseline £10 an hour for all workers, which he said will ‘be nothing less than life-changing’ for young workers, who would earn £2,500 more each year.
He said: ‘Equal pay for equal work is hardly a controversial idea, so why are we discriminating against young people?
‘You don’t get a discount at the shops for being under 18. But if the person serving you on the other side of the counter is young, they could be on half the wage of their colleagues.
‘It’s time to end this discrimination. Young people’s work should be properly valued, not exploited by employers to cut their wage bill. If they’re doing the job, pay them the wage – the real living wage.’
Labour leader Jeremy Corbyn is applauded as he arrives in the speaking chamber at the Young Labour conference
Labour Party leader Jeremy Corbyn speaking at the CBI annual conference
Institute for Fiscal Studies (IFS) director Paul Johnson also raised concerns about the potential impact of the ‘really dramatic’ plan.
He told the BBC Radio 4 Today programme: ‘Clearly the risk, given the choice between doubling the wages you’re currently paying 16- and 17-year-olds or not employing them at all… the risk is you will have fewer 16- and 17-year-olds in work.’
Mr Johnson also said Labour needed to be clear how the policy would affect apprentices, and added employers would need to weigh up whether younger workers with less experience and who may need training were a good investment.
However, Labour MP Peter Dowd, shadow chief secretary to the Treasury, defended the plans, which he told the Today programme aimed to create fairness.
He said: ‘It’s not about saying this person has exactly the same experience, it’s about a minimum wage.
‘It’s not a question of saying everybody gets £10… if people want to pay more, that’s a matter for them, but we have got to be equitable in this situation.
‘At the end of the day, young people are entitled to be paid reasonable wages.’
When challenged on Mr Johnson’s concerns that the policy could encourage young people to leave education early or lead to fewer jobs for young people, Mr Dowd said he ‘didn’t accept’ that argument.
‘We’ve heard this clarion call time after time, how minimum wage will affect the economy, how jobs will go,’ he said, listing the history of workers’ rights being challenged by employers, including pay rises for mine workers in 1904 and farm workers in 1924, which did not result in economic trouble.
Mr Dowd highlighted how the system of tax credits to top up low wages had ‘ballooned’ from £1 million to £30 million, and said this was a sign wages had to rise.
He added: ‘We’ve got to have a system that reflects the needs of small businesses, but also has to reflect the needs of the people they employ, whether they are 16 or 60.’