National Minimum Wage

National Minimum Wage
78
Figure 3.4: Proportion of Jobs Held by 18-20 Year Olds, by National Minimum Wage
Rate, UK, 2006-2011
Distribution of 18-20 year olds by pay band (per cent)
40
35
30
25
20
15
10
5
0
2006
2007
2008
2009
April of each year
2010
2011
40
35
30
25
20
15
10
5
0
At adult rate
Above YDR and
below adult rate
At YDR
Below YDR
Source: LPC estimates based on ASHE, 2007 methodology, standard weights, including those not on adult rates of pay, UK, April 2006-
2011.
3.17 Incomes Data Services (IDS) (2012) also found that some employers were making increased
use of the youth rates. IDS analysed pay rises across a range of sectors between 2007 and
2011 and found that some employers, particularly in the fast food, pub and restaurant sector,
had moved to paying their younger workers the youth rates of the NMW. They also found
instances where organisations only raised pay rates for workers on the applicable minimum
wage, resulting in pay freezes for those above the statutory minimum. However, the research
did also find some instances, mainly in the food retail sector, where organisations had either
significantly increased the starting rate for younger workers, or scrapped the use of youth
rates of the NMW, and moved to paying all workers at least the adult rate of the NMW. IDS
concluded that the behaviour of the employers included in its research depended largely
upon how they had fared during and after the recession.
3.18 Dickerson and McIntosh (2012) built on their previous research (Dickerson and McIntosh,
2011) that investigated the relationship between productivity, earnings and age, with a focus
on the early years of work. Their previous results suggested that the introduction of the
National Minimum Wage had not affected age-earnings profiles and that the age-productivity
profile was estimated to be similar to the age-earnings profile, albeit a little steeper. They
concluded that young workers were overpaid relative to their productivity compared with
workers in their 30s. The introduction of the minimum wage did not seem to have affected
wage growth relative to productivity growth for young workers as relative productivity had
increased for young workers between 1999 and 2007.