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Under 21’s are not included in the wage increase: is it fair?

This October the minimum wage will rise by 1.8% for everyone but people under the age of 21. So what does this mean for young people who have to get by while the cost of living keeps on growing?

Vince Cable, who announced the new minimum wage figures, also stated that “raising the youth rates would have been of little value to young people if it meant it was harder for them to get a job in the long run”. The Unions think that raising the minimum wage wouldn’t affect youths’ employability; Brendan Barber, the TUC secretary general has said: “[…] there is no evidence that the minimum wage has had an adverse impact on jobs”. The cost of living has shot up 3.6% this year.

The reality that faces young people is that they are falling behind on inflation without a guarantee of job increases. There is no doubt that it is easier for the government to hold back increases to younger people, the smaller demographic, as it is less likely to cause an outrage, but it also begs another question. How does this affect the employability of over 21’s? Is the minimum wage increase enough to make employers more likely to employ younger, less experienced workers over older, more expensive ones?

The lack of increase for under 21’s only was not the best decision for the government. There are many negative implications in their choice; if the wage freeze is an incentive to employers to hire a younger person that means older people, ones with families and perhaps more of an immediate need, might lose out on jobs. Overall, there is apparently no evidence that the lower wages will help increase jobs. The decision could leave youths marginalised by the government’s decision to treat their income needs as less pressing than the rest of the older portion of the population’s, no matter how small the increase is. If the lower wage doesn’t help increase youth jobs then that means there is likely to be less money in circulation as disposable income and therefore less money to contribute to economic growth.

These are tough times and the recession is still hitting many hard, so it’s not whether the freeze is fair or not that bothers me so much (although my answer on that part is ‘no, it’s not fair: plain and simple.’) but whether it’s smart. I haven’t graduated from Harvard as an economist, and I don’t think I ever will, but this just doesn’t seem to me to be a good choice.

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