SEVEN in 10 young workers are at risk of being left “hugely out of pocket” due to being paid a lower rate of the minimum wage, TUC analysis reveals today.

The union federation said more than 700,000 workers aged between 18 and 20 are being penalised by the “unfair” tiered rates system, which it says must be “overhauled.”

The minimum wage pay penalty facing young workers this coming year is an estimated £2,438 a year or £47 a week after next month’s extension to the minimum wage.

The main rate is currently £10.42 per hour for over-23s, £10.18 for 21-22-year-olds and just £7.49 per hour for 18-20-year-olds and £5.28 for under-18s.

The rate for 21-year-olds and over is due to rise to £11.44 after ministers accepted recommendations from the Low Pay Commission.

But the minimum wage workers aged 18-20 is rising to just £8.60 per hour — meaning they could then be paid almost £3 less an hour than their older peers.  

The analysis comes ahead of the TUC’s Young Workers Conference this weekend. 

TUC general secretary Paul Nowak said: “Everyone should be paid fairly for the job they do. 

“But too many young workers are still being left hugely out of pocket because of outdated youth rates of the national minimum wage. 

“More than 700,000 workers aged 18-20 face this pay penalty — they are getting less than older workers for doing the same job. 

“Young people up and down the country are being hammered by the cost-of-living crisis — like everyone else, they need more money in their pockets now.

“That’s why we’re backing Labour’s New Deal, which has pledged to introduce a real living wage for workers — as well as banning zero-hours contracts which blight the lives of many young workers. 

“It’s time to put an end to low-pay Britain.” 

The Low Pay Commission previously warned that the gap between youth rates and adult rates has widened and has said that there is a consensus on the commission that this should be addressed.  

In 2019, Labour announced it would give minimum wage workers an immediate pay rise of up to £6,000 and immediately introduce a £10-an-hour Real Living Wage for all workers over 16.

The party’s new leadership has kept this pledge and vow to remove discriminatory age bands.

Tom Kerridge, Policy and Research Manager at Centrepoint said: “In normal times it would defy logic to leave under 23s earning significantly less than older workers for the same job. At a time when inflation has soared and the price of everything from utilities and rents to everyday essentials has become unaffordable for many, it is appalling.

“Sadly, this is part of a wider, systemic inequality we see on a daily basis working with young people. Not only do under 20s and under 23s get less in wages, under 25s also receive far lower rates of benefits and the government needs to look at this too.

“Many young people - particularly those who are homeless or care experienced and don’t have the bank of mum and dad to fall back on - are already in financial trouble and, in some cases, at serious risk of homelessness.”