Age for Statutory Minimum Wage lowered: more costs for employers

Age for Statutory Minimum Wage lowered: more costs for employers

Minimum youth wage

As of July 1, 2017, the age for the Statutory Minimum Wage (SMW) is being reduced from 23 to 22. As of that date people aged 22 and above will receive full adult pay rather than the minimum youth wage.

At the same time, the SMW for people aged from 15 to 21 is raised. The pay of these young people will be rising step by step towards the adult minimum wage so that age no longer plays a major role in the decision on employing people in this age group.

Compensation for costs of employers with youth wage allowance

This will entail an additional cost item for employers. Employers will be compensated for this in the form of the minimum youth wage allowance. The youth wage allowance is expected to be introduced on 1 January 2018. The procedure for the youth wage allowance will be similar to that for the low income allowance. This implies that employers will be eligible for compensation for each hour that is subject to a maximum. The amounts in question will be paid in 2019.

Change to minimum wage and minimum youth wage

The amounts of the minimum wage will be indexed annually on 1 January and 1 July. The youth wage is based on a percentage of SMW for each age category. The percentages will also be changing on 1 July 2017. The amounts are not yet known. It is however certain that the amount for people aged 22 will be increased. It is notable that there will be no percentage-based rise in the minimum wage for the age category of 15 to 17.

Percentage Statutary Minimum Wage for Minimum Youth Wage

1 Jan 2017 1 July 2017
23 years 100.0%
22 years 85.0% 100.0%
21 years 72.5% 85.0%
20 years 61.5% 70.0%
19 years 52.5% 55.0%
18 years 45.5% 47.5%
17 years 39.9% 39.5%
16 years 34.5% 34.5%
15 years 30.0% 30.0%

 

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