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Career Testing
SALARIES / JAN. 10, 2014
version 5, draft 5

Increasing the Minimum Wage Would Destroy UK Youth

UK chancellor, George Osborne warned that he would not support a rise in the minimum wage if it cost jobs. The Chancellor said it would be self defeating to increase the lowest salaries if it stopped firms from taking people on.

Ministers are under pressure to raise the amount - worth £6.31 an hour for adults - to tackle the cost of living crisis. Business Secretary Vince Cable has asked the Low Pay Commission to see if there’s case for a “significant rise” in the minimum wage. Treasury minister Sajid Javid said this week there was a “strong case” for a rise given the minimum wage was 10% lower in real terms than it was in 2008.

However, Osborne appeared to play down the idea of a, saying it should not be allowed to put the economic recovery at risk.

The New Employment Allowance

The chancellor also highlighted the forthcoming introduction of the new Employment Allowance, which will allow businesses to claim £2,000 a year off their employers’ National Insurance contributions (NICs).Mr Osborne said the move, announced in last year’s Budget and due to take effect on April 6, was effectively "cashback on the jobs tax" for every business in the UK”.

According to the chancellor "It takes £2,000 off the jobs tax of a business like this and it means a company can hire more people, invest more, do all the things we need to see as part of our long-term plan for Britain to increase jobs and bring economic prosperity to this country.

Will Small Firms be Able to Afford Pay Increases?

Huge pay increases would mean a death toll for many small firms, such as retailers, service sector industries or factories, for whom unskilled labour is a core part of their business and a large chunk of costs. In fact, some big companies would back a living wage to inflict disproportionate pain on their smaller rivals, as an anti-competitive device. It is not certain whether the new employment allowance of £2,000 would be enough for small enterprises to sustain and compensate their workforce.

The Increase of Minimum Wage Will Increase Youth Unemployment

In the past it turned out that the minimum wage rise resulted in pushing up youth unemployment. When the Government increased minimum wage in October 2011, there were concerns that the new rates would discourage some employers from taking on young people and give them a chance to access the workplace.

Research suggested that in difficult economic circumstances the level of the minimum wage may have had an impact on the employment of young people. In current economic conditions the minimum wage is supposed to be a safeguard against exploitation but just pushes more workers into the black economy.

It is not ethical to keep young people on the dole so that those in work are better paid. If the Government cares about youth unemployment it should get out of the way. The minimum wage denies UK’s youth the chance to get started.

The minimum wage has not been the best option because making people work till they are old, whilst, letting the young sit inactive makes no sense.

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