Young workers in line for 8% pay rise in Budget – Financial Times

Report on UK Minimum Wage Policy and its Alignment with Sustainable Development Goals

Introduction: Advancing Decent Work and Reducing Inequalities

A forthcoming UK government budget decision on the national minimum wage represents a critical policy juncture for advancing several Sustainable Development Goals (SDGs). This report analyses recommendations from the Low Pay Commission (LPC) concerning wage increases, with a particular focus on their implications for SDG 8 (Decent Work and Economic Growth) and SDG 10 (Reduced Inequalities). The proposed adjustments aim to create a more equitable wage structure, directly contributing to the 2030 Agenda for Sustainable Development by addressing poverty and promoting fair employment practices.

Low Pay Commission Recommendations and SDG 8 (Decent Work and Economic Growth)

The LPC, an independent advisory body, has submitted recommendations designed to enhance wage floors, a key component of ensuring decent work for all. These proposals are central to achieving the targets outlined in SDG 8.

1. National Living Wage (Workers over 21): A proposed increase of approximately 4.1 per cent, raising the hourly rate to around £12.71.
2. Youth Minimum Wage (Workers aged 18-20): A significant recommended increase of over 8 per cent from the current £10 per hour rate.

These measures directly support SDG Target 8.5, which calls for full and productive employment and decent work for all women and men, including for young people, and equal pay for work of equal value. However, concerns have been raised by business stakeholders regarding the potential impact on youth employment, highlighting a crucial challenge in balancing wage growth with the goal of reducing the number of young people not in employment, education or training (NEET), as per SDG Target 8.6.

Addressing Age-Based Disparities: A Focus on SDG 10 (Reduced Inequalities)

The substantial increase proposed for the youth minimum wage is a direct policy action aimed at fulfilling SDG 10, which seeks to reduce inequality within and among countries. The initiative is designed to eliminate what the governing party’s manifesto described as discriminatory age-based pay tiers.

• Policy Goal: The long-term strategy is to establish a single minimum wage for all adult workers, with a target for full equalisation by April 2029.
• Direct Impact: This policy is projected to affect approximately 88,000 young workers, directly contributing to SDG Target 10.2, which aims to empower and promote the social and economic inclusion of all, irrespective of age.
• Implementation Strategy: The LPC has considered various pathways to achieve this goal, including a gradual, across-the-board increase for all 18- to 20-year-olds, which is the option preferred by employers to mitigate economic shocks.

Socio-Economic Considerations and Stakeholder Perspectives

The policy decision must be contextualised within the current economic climate, which includes rising unemployment, particularly among younger demographics. Official data indicates a national unemployment rate of 5 per cent and 946,000 young people classified as NEET.

• Business Sector Concerns: Industry leaders express apprehension that narrowing the wage gap between experienced and inexperienced workers could disincentivise the hiring of young people. This poses a direct risk to youth employment opportunities, a key consideration for SDG 8.
• Government Deliberation: The government faces the complex task of balancing the imperative to reduce inequality (SDG 10) and ensure decent wages (SDG 8) against the potential for adverse impacts on youth employment rates.
• Link to SDG 4 (Quality Education): The LPC’s remit includes ensuring that wage policies do not create disincentives for young people to remain in education or training. The final policy must be carefully calibrated to support, rather than undermine, lifelong learning opportunities.

Conclusion: Balancing Economic Growth with Social Equity

The recommended adjustments to the UK’s minimum wage structure represent a significant policy initiative at the intersection of SDG 1 (No Poverty), SDG 8 (Decent Work and Economic Growth), and SDG 10 (Reduced Inequalities). By increasing the earnings of the lowest-paid workers, especially the young, the government can make substantial progress toward these goals. However, a successful outcome requires careful monitoring of the labour market to mitigate any negative consequences for youth employment and to ensure the policy aligns with the broader objectives of sustainable and inclusive economic growth for all.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 1: No Poverty – The article discusses increasing the minimum wage, which is a direct policy tool aimed at ensuring a basic level of income and preventing in-work poverty.
• SDG 8: Decent Work and Economic Growth – The core of the article revolves around wage rates, youth employment, labor market conditions, and the rights of young workers, all of which are central to SDG 8.
• SDG 10: Reduced Inequalities – The article explicitly addresses inequality by focusing on the proposal to eliminate different minimum wage rates based on age, which is described as “discriminatory.”

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.
   • The article directly relates to this target by discussing the government’s plan to move towards a “single minimum wage for all adults,” which addresses the principle of “equal pay for work of equal value” by removing age-based distinctions. It also highlights concerns about the policy’s impact on youth employment.
2. Target 8.6: By 2020, substantially reduce the proportion of youth not in employment, education or training.
   • The article explicitly mentions the number of “young people not in education, employment or training,” directly linking the discussion on youth wages to this critical target concerning youth engagement in the economy.
3. Target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality.
   • The recommendation by the Low Pay Commission and the government’s decision on minimum wage rates are examples of adopting wage policies to achieve greater equality. The article details the plan to “close the gap with over-21s by April 2029,” which is a progressive policy implementation aimed at reducing age-based income inequality.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• For Target 8.5 (Decent work and equal pay):
  • Indicator: Minimum wage rates for different age groups. The article specifies the rates: “£12.71” for workers over 21 and “£10 an hour for workers aged 18-20.” The proposed increases (“4.1 per cent” for over-21s and “more than 8 per cent” for 18-20s) are direct measures of progress.
  • Indicator: The number of people affected by the youth minimum wage. The article states that the Low Pay Commission “estimated that 88,000 people were on the youth minimum wage.”
• For Target 8.6 (Youth not in employment, education or training – NEET):
  • Indicator: The proportion/number of youth NEET. The article provides a precise figure: “There are 946,000 young people not in education, employment or training.”
• For Target 10.4 (Adoption of policies for equality):
  • Indicator: The ratio of youth minimum wage to the adult minimum wage. The article implies this by discussing the plan to “close the gap” and achieve a “single rate for all over-18s” by 2029. The gradual increases of “around 90p, or 5 to 9 per cent, in each of the next four years” serve as a measure of this policy’s implementation.
  • Indicator: Youth unemployment rate. The article mentions that the “sharpest rise in joblessness [was] seen among younger workers,” which is a key indicator of the economic inclusion and equality of young people.

4. Summary Table of SDGs, Targets, and Indicators

Source: ft.com