Opinion

Should lower wages for under 20s be abolished? The student view vs the business perspective

Low Pay Commission has recommended abolition of sub-minimum rates of pay for younger workers but businesses are opposed

ESRI research published in November 2023 showed that while all employees aged 15–19 could legally be paid a sub-minimum youth rate, just under one-quarter are actually paid this rate. Should those lower rates be abolished altogether? Photograph: Agency Stock
Jamie Mac Giolla Bháin
Neil McDonnell
Tue Sept 17 2024 - 06:26

Jamie Mac Giolla Bháin – Yes: Tying productivity to age is ageist and unfair

Young people can leave school at 16, drive at 17 and vote at 18. Yet Central Statistics Office data from 2020 tells us that as many as 10,000 under-20s were being paid less than their colleagues for no reason other than their age – or around one in five of those who had a job. This undermines the principle of “equal pay for equal work”, and puts a disproportionate financial strain on young workers. As a student who sees the financial struggles students face daily, I believe that it is time to rethink the arguments for paying younger workers less than their older colleagues.

Rather than encouraging businesses to treat young workers as cheap labour, the Government should prioritise reducing the costs faced by businesses

Beyond the moral arguments are the economic ones. Students are among the worst-affected by the cost-of-living crisis. Many students in full-time third-level education have no other option but to work to be able to afford the cost of college. The average part-time monthly wage is €1,016 (if you are on the full rate minimum wage). Research from Technological University Dublin shows that if you live at home while in third-level education, the average monthly cost of living is estimated to be €701. This figure includes utilities, college fees, food, travel, and other expenses. It’s worse if you are a student living away from home, with the average monthly cost more than doubling to €1,565 a month, which would leave a student on the minimum part-time wage €549 in the red, before tax. Rent for student accommodation accounts for the largest portion of this cost at €685 per month, followed by utilities, food, travel, and other expenses.

These figures are based on someone earning the full minimum wage (currently €12.70 an hour): imagine the hardship some students face if they are 18, paid below the minimum wage, with no financial support from their family.

The National Youth Council of Ireland points out that the current bands do not provide an adequate income. According to the council, an 18 year old earning €9.04 per hour in a full-time job working 35 hours a week makes less than half of what is needed to meet a minimum essential standard of living. Then there is the fact that Ireland is one of very few EU countries (just six out of the 27) to still have age-based rates for young adult workers.

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The main argument made by those who are against abolishing sub-minimum rates is that businesses are struggling with higher costs and cannot afford higher wages. But rather than encouraging businesses to treat young workers as cheap labour, the Government should prioritise reducing the costs faced by businesses in other areas. The Economic and Social Research Institute says that abolishing the sub-minimum wage rates would have a “low” impact on labour costs.

The Low Pay Commission published its report on sub-minimum youth rates in March of this year and made two recommendations: to abolish sub-minimum wage rates for those aged 18 and 19 no sooner than January 1st, 2025, and to abolish the same rates for under-18s, with a feasibility study to be conducted after two years on the adverse consequences, if any, of such measures. As a young person, I believe that it is in the best interest of the Government to accept these recommendations and bring an end to an ageist scheme that ties productivity to age, and leaves thousands of students and young people at a disadvantage.

Jamie Mac Giolla Bháin is an economics, politics and law student at Dublin City University and a sustainable development-focused youth activist

Neil McDonnell – No: There is no rational reason why someone legally regarded as a minor should be entitled to an adult rate of pay

This is the time of year when the Low Pay Commission considers its recommendation to Government on the national minimum wage, which is generally announced sometime after budget day. The commission has also recommended the abolition of sub-minimum rates of pay for workers below the age of 20.

Many arguments can be made in favour of the abolition of sub-minimum rates. The “equal pay for equal work” argument has a veneer of common sense about it, but is ultimately simplistic. The “equal work” argument falls flat when the law itself restricts the terms of employment for workers under the age of 18. The Protection of Young Persons (Employment) Act provides for working limits, time off, and breaks for young workers that are more restrictive than those for adults. They cannot work before 6am, or after 10pm at night. They must have two consecutive days off every seven days. They cannot work more than eight hours a day or 40 hours a week. They cannot sell alcohol.

It would be perverse if the law were to suggest a right to the same rates of pay on equality grounds, when it does not exist on operational grounds.

Just one in every 140 employees earns a sub-minimum youth rate. Typically, this is in their first employment and is probationary

We also oppose removal of sub-minimum rates because it is clear that they are not being abused. Economic and Social Research Institute (ESRI) research published in November 2023 showed that while all employees aged 15-19 could legally be paid a sub-minimum youth rate, just under a quarter are actually paid this rate. The remaining three-quarters earn a higher wage. Just one in every 140 employees earns a sub-minimum youth rate. Typically, this is in their first employment and is probationary.

We have always recognised the need to reward acquired skill and experience in the workplace. The current Civil Service executive officer pay scale has 14 points, with a pay premium of 62 per cent for the worker on the top of the scale over the worker at the bottom. Pay scales are paid in annual increments, and are directly analogous to years of service and therefore age. They have yet to be found to be discriminatory on age grounds.

The Low Pay Commission ignores the unemployment effects for young people as a result of removal of sub-minimum rates through reliance on an ESRI study which noted the unemployment effect to be “insignificant, or very small if positive or negative”. We don’t doubt that this is true in an economy that is effectively at full employment. It will not be true when our economic growth stalls, and labour demand loosens. We are already seeing this in the strained hospitality sector, where businesses are cutting back to a four- or five-day week, letting their part-time (ie younger) workers go, and concentrating operations on their full-time workers.

European law does not prohibit sub-minimum rates of pay, rather it requires that they must “respect the principles of non-discrimination and proportionality” and should “pursue a legitimate aim”. There is in fact and in law no criticism that can be levelled at sub-minimum rates of pay that does equally apply to incremental pay scales for the same job. While employers would be willing to look at a rationalisation of the three-band structure for sub-minimum wage rates, and despite the arguments of the commission to the contrary, there is no rational, logical, objective, or legal reason to suppose that a person the State regards as a minor should be entitled to an adult rate of pay.

The sub-minimum rates are not discriminatory; in the same way, voting age, age-related control of alcohol and tobacco, driver licensing, service-related pay increments, and the requirement to be 21 years old to stand for election as a TD are not discriminatory on age grounds. The Irish Small and Medium Enterprises Association (Isme) recommends retention of sub-minimum rates of pay for younger workers, even if in simplified form.

Neil McDonnell is chief executive of Isme