National Minimum Wage

National Minimum Wage
82
In future all 16-17 year old workers in England will be receiving training or education, but
they will be entitled to quite different minimum wages according to whether their training
or education takes the form of an apprenticeship or not. Care will be needed to ensure that
the distinction between apprentices and others remains sufficiently clear, and to avoid
unintended incentives for either employers or workers in those instances where there is
similarity between apprenticeships, and the education and training received by young nonapprentices.
We are pleased that officials from the Department for Business, Innovation and
Skills (BIS) and the Department for Education have met our Secretariat to discuss this.
3.30 In research that we commissioned for this report, Crawford, Greaves, Jin, Swaffield and
Vignoles (2011) analysed the impact of labour market conditions in general, and the minimum
wage in particular, on the education and labour market outcomes of young people in the UK.
The conclusions of this research generally confirmed the findings of previous work
commissioned by us and from elsewhere, that a young person’s academic ability and family
background are the most important determinants of their education and labour market
participation decisions, while local labour market conditions play a much smaller role.
3.31 Using data from the Longitudinal Study of Young People in England, the research found that
during and immediately after the 2008-2009 recession local youth wage rates did not affect
the main education or labour market activities young people undertook between the ages of
16 and 19, suggesting that marginal changes in the youth rates of the NMW would be
unlikely to directly affect the main activities young people undertake.
3.32 This conclusion was supported by further analysis of the impact of the introduction of the
16-17 Year Old Rate in October 2004 using data from the LFS, which found the 16-17 Year
Old Rate had little effect on the probability of staying in FTE, the probability of being NEET,
or the probability of working for those 16-17 year olds not in FTE.
3.33 The research did, however, find evidence of a statistically significant positive effect of the
16-17 Year Old Rate on the probability of working among full-time students in low-wage
areas relative to high-wage areas. This suggests that while young people’s main outcomes
between education and work were not affected by the introduction of the 16-17 Year Old
Rate, the more marginal decision of whether to take a part-time job while studying appears
to have been positively affected by the increase in the expected return to part-time work
in low wage areas.
3.34 This research also confirmed our findings presented in Figures 3.5 and 3.6, that there has
been a major shift in young people’s education and labour market choices over the last ten
years. Of particular note, they found that education participation increased dramatically
among 16-17 year olds without a Level 2 qualification (equivalent to five GCSEs at grades
A*-C) during the recession, suggesting that this group may have been choosing to stay in
education longer than they otherwise would have done in order to avoid the prospect of
becoming NEET.
3.35 Further research, from Bryan, Salvatori and Taylor (2012), used individual data to assess the
impact of the minimum wage on employment, unemployment and hours. They found some
evidence of a negative effect on the number of hours worked among young people (aged