Young workers 'getting raw deal' as pay lags behind living cost rises, TUC says

The pay of younger workers has not kept pace with rising living costs despite increases in minimum wage rates, a study has found.

The National Living Wage and minimum wages go up from today, which the Government said would benefit more than two million of the UK's lowest-paid workers.

Ministers urged workers to check they were receiving the new hourly living wage of £7.50 - up by 30p - for over 24-year-olds.

The national minimum wage will increase by 10p to £7.05 for those aged 21 to 24, by 5p to £5.60 for those aged 18 to 20 and by 5p to £4.05 for those aged 16 and 17.

The TUC said the minimum wage for 16 to 20-year-olds was worth less in real terms than it was in 2008.

TUC general secretary Frances O'Grady said: "Young workers are getting a raw deal, especially those stuck on the minimum wage. As prices rise, their pay simply hasn't kept up.

"More and more people rely on the minimum wage, but the pay rates aren't increasing fast enough. The government's target of £9 by 2020 now seems a fantasy. The minimum wage needs a serious boost in the coming years, especially for younger workers."

The Resolution Foundation said pay for workers on the living wage will rise nearly four times faster than for a typical worker over the course of this Parliament.

The think tank said the government should focus on supporting sectors facing steep wage bill increases to adjust, while stepping up the work of enforcement agencies to ensure employers are paying the legal minimum.

Policy analyst Conor D'Arcy said: "The National Living Wage is set to provide a huge and very welcome boost to low-paid workers throughout the Parliament.

"Today's rise continues the important work the bold policy has achieved since April last year and means that a full-time worker on the National Living Wage will enjoy a real terms boost of £220 to their pay packet, making a real difference for low earners."

Business minister Margot James said some workers will receive a pay rise of £600 a year as a result of today's increases.

"Every worker in the UK is entitled to at least the National Minimum Wage or National Living Wage and we are determined that they get it.

"From today, my clear message to everyone is to check your pay, talk to your boss and report underpayment to Acas," she said.

Mike Cherry, chairman of the Federation of Small Businesses, said: "The average FSB employer will pay an extra £2,600 this year as a direct result of Government decisions.

"This is due to the combined impact of today's increase in the National Living Wage, consequential National Insurance costs, and pensions auto-enrolment contributions.

"Most small business owners absorb the cost of wage increases by taking lower profits."