Yahoo Finance Cost of living: Minimum wage rates leave under 21s out of pocket by £2.5bn
Almost 1 million under-21 year-olds have been left “hugely out of pocket” due to unfair minimum wage rates, an industry body has warned as the rising cost of living continues to bite.
According to new analysis from the Trades Union Congress (TUC), the minimum wage pay penalty facing this age group has been an estimated £2.5bn this year.
This works out at an average of £2,800 in lost wages for every worker under-21 paid less than the full minimum wage.
The main minimum wage currently sits at £9.50. However, it is £9.18 for 21-22 year olds, £6.83 for 18-20 year olds and just £4.81 for under 18s.
This means that those aged 18-20 continue to be paid 28% less than the minimum wage, and for those aged under 18, the minimum wage is 49% below the main rate.
Read more: Pensions dashboard: Savers to get inflation warning
An overwhelming majority of workers aged under 21 (70%) receive less than the full minimum wage.
Although these rates are going up in April to £10.42, £10.18, £7.49 and £5.28 respectively, following recommendations to the government from the Low Pay Commission, the TUC is calling for an overhaul of the tiered-rates system.
It is also urging a boost to a £15 minimum wage as soon as possible to put an end to low-pay Britain.
Watch: How to save money on a low income
The UK is experiencing the longest and harshest wage squeeze in 200 years – and it is on course to face two lost decades of living standards.
The research comes at the end of the TUC’s young workers’ month, which is aimed at promoting trade unions to young workers.
“A fair day’s work deserves a fair day’s pay. But too many young workers are being left hugely out of pocket because of outdated youth rates of the national minimum wage,” TUC general secretary Frances O'Grady said.
"Young people up and down the country are being hammered by the cost-of-living crisis – like everyone else, they need more money in their pockets now."
Read more: Will Santa gift investors with a stock market rally?
She added: “It’s time to end this glaring injustice so that all workers are entitled to the same minimum wage.
“And it’s time for ministers to deliver a plan for a £15 minimum wage so that we can put an end to low-pay Britain for good.”
Watch: How to prevent getting into debt
