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Industrial Relations Journal 38:5, 386–405
ISSN 0019-8692

Recruiting, paying and training 16- and
17-year-old school leavers
Jason Heyes
ABSTRACT
This article examines firms’ pay and employment practices in respect of school leavers
aged 16 and 17. The focus is on the manufacturing, hospitality, construction, hairdressing and retail sectors, which are notable for employing relatively large numbers
of young workers. Drawing on findings from a postal questionnaire survey of managers and interview data from 28 organisations, the article explores the reasons why
firms choose to employ school leavers, the types of jobs that they are considered for
and the pay and training they receive. The article also examines the considerations
that influence employers’ pay practices and the relationship between training activity
and average wage levels.

INTRODUCTION
On 15 March 2004, the British government announced its intention to introduce a
National Minimum Wage (NMW) for workers aged 16 and 17.1 The announcement
came five years after the introduction of NMWs for workers aged 18–21 and 22 years
and over. The delay in extending minimum wage protection to 16- and 17-year-olds
reflected concerns that resulting wage increases might reduce the willingness of firms
to employ and train young workers, while simultaneously encouraging a larger proportion of young people to eschew post-compulsory education in favour of seeking
paid employment. The Low Pay Commission (LPC), the body charged with making
recommendations to the government on the level and extent of minimum wage
protection, took the view that ‘16–17-year-olds form a distinct segment of the labour
market, preparing for working life, rather than being full participants in the workforce [. . .] and ideally all 16–17-year-olds should be receiving education or good
quality training’ (LPC, 2004: ix). The exemption of young workers from the NMW
was presented as a way of ‘supporting the training base’ (Bain, 1998: 21) by safeguarding opportunities for young people to gain qualifications, skills and experience
and ensuring that young workers would ‘not find themselves locked into low-skilled,
low-paid jobs—or, even worse, the cycle of low-paid work and unemployment’ (ibid.).

❒ Jason Heyes is Reader in Human Resource Management, University of Birmingham. Correspondence
should be addressed to Dr Jason Heyes, Birmingham Business School, University of Birmingham, Edgbaston, Birmingham B15 2TT, UK; email: j.heyes@bham.ac.uk
1
The new rate was introduced in October 2004.

© 2007 The Author(s)
Journal compilation © 2007 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main St.,
Malden, MA 02148, USA.

Recruiting, paying and training 16- and 17-year-olds

387

To argue that training opportunities can be preserved via exemptions is to imply
that training opportunities exist in the first place. Yet evidence subsequently put
before the LPC demonstrated that young workers are often employed in extremely
low-wage jobs offering little or no opportunities for training and development
(LPC, 2001a; 2001b; 2004). In its 2004 report, the LPC revised its earlier position
and recommended that wage protection be extended to 16- and 17-year-olds, albeit
at a lower level than that provided to workers aged 18–21 and 22 and above. The
LPC estimated that only 10 per cent of 16–17-year-olds in employment earned less
than £3.10 an hour in Spring 2003, but that around one-quarter earned less than the
‘development rate’ for workers aged 18–21, which at that time was set at £3.80 an
hour. However, the LPC decided to recommend that the ‘development rate’ for
16–17-year-old workers be set at £3.00 an hour, a substantially lower minimum
wage than that for 18–21-year-olds. The LPC justified what it described as its ‘cautious’ approach by suggesting that a higher minimum wage might tempt young
people away from full-time education or training. It also recommended that the
existing exemption from the minimum wage for apprentices under the age of 19
should be retained.
The treatment of young workers compared to older workers has been one of the
more contentious issues associated with the NMW and the work of the LPC. Trade
unions and youth organisations have been the most vociferous proponents of
minimum wage protection for young workers and have tended to argue against
age-related discrimination in respect of pay, particularly where young workers are
engaged in the same type of work as older workers. The views of employer organisations have tended to be more mixed. The Confederation of British Industry (CBI),
for example, while arguing that young workers tend to make little contribution to
output while they are undertaking apprenticeships, supported a minimum wage for
16–17-year-olds set at a ‘cautious level’ (LPC, 2004: 54). The British Chambers of
Commerce, in contrast, was opposed to the introduction of a minimum wage for
workers in this age group (ibid.).
The LPC has itself experienced difficulties in reaching a consensus on how young
workers should be treated. Its members have debated whether, and to what extent, the
low pay of young workers can be explained in terms of ‘lower productivity, or
inexperience, or employer prejudice, or lack of training, or job searching, and so on’
(Brown, 2002: 603). These issues form the point of departure for the present article,
which sets out to explore firms’ employment, training and pay practices in respect of
16- and 17-year-olds who are no longer in full-time education. Drawing on survey and
interview data provided by managers of firms in the hairdressing, manufacturing,
retail, hospitality and construction sectors, the article examines influences on employers’ pay decisions, the extent to which employers implement age-related pay differentials, their reasons for doing so (and not doing so) and the extent to which the
treatment of workers in different age categories can be explained in terms of the
training they receive. The following section discusses different approaches to analysing the relationship between skills, age and labour market opportunities and examines
trends in 16- and 17-year-olds’ participation in paid employment. The paper then goes
on to explore the types of work that 16- and 17-year olds perform, the firms’ reasons
for hiring them and the training young workers receive. This is followed by an
investigation of employers’ pay practices in respect of school leavers and the factors
that influence the wage-setting process. Particular attention is given to the issue of
how employees aged 16 and 17 are treated in comparison with those aged 18 to 21 and
© 2007 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2007

388

Jason Heyes

whether the ‘development rate’ for workers in the latter age group has influenced the
pay received by those in the former.

YOUNG WORKERS IN THE LABOUR MARKET
Labour market participation rates for young people have declined in most countries
over the past two decades, with a corresponding increase in the proportion choosing
to remain in full-time education (ILO, 1999). The UK’s recent experience is in line
with this trend, although compared with other EU Member States the UK is unusual
in that the percentage of young people who enter the labour market at the age of 16
remains comparatively high while rates of participation in post-compulsory education
are lower than average (OECD, cited in Canny, 2001). It is widely accepted that
young workers often occupy particularly vulnerable positions in the labour market
when compared to older workers (e.g. Blanchflower and Freeman, 1996; ILO, 1999).
Their vulnerability and typically lower pay have been explained in a variety of ways.
According to human capital theory, for example, age-related differences in earnings
reflect the higher productivity of older workers when compared to younger workers,
which in turn is explained by older workers having invested to a greater extent in
productivity-enhancing education and training. Human capital theory predicts that
the lifetime earnings of individuals who start work immediately after completing their
compulsory education will be lower than those who enter the labour market having
undertaken post-compulsory education or training. Human capital theory also predicts that the wages received by apprentices and other trainees will be lower than those
received by young workers who are not undertaking training. According to Becker
(1975), individuals who undertake training directed at the creation of transferable
skills will incur the full cost of such training by accepting a wage lower than that which
they could receive from non-training employers. It is assumed that the skills they
develop will increase their productivity (and thus earning potential) in a variety of
employment contexts, thus providing the incentive for them to invest. In contrast,
Becker argues that workers have no incentive to incur the cost of training directed at
the creation of firm-specific skills and that firms will therefore either have to incur the
cost of such training or encourage workers to share the cost by accepting a wage
below that which they could receive from alternative employers in the present, in
return for a higher wage once training is completed.
The predictions of human capital theory are premised on a belief that wages are the
rewards individual workers receive for their personal contribution to output and that
they are determined by the intrinsic efficiency of the worker. An alternative perspective is provided by ‘segmented labour market’ (SLM) analysis, which explains the
operation of labour markets in terms of the contingent interaction of a range of
factors, such as the strategies pursued by employers and organised labour, product
market conditions and the nature of technology (for an overview see Rubery, 2006).
Researchers in this tradition have criticised human capital theory for neglecting the
distribution of power in the labour market and the social forces that result in the
labour power of certain categories of worker being consistently under-valued
(Sachdev and Wilkinson, 1998: 8). It is argued that attention should focus not only on
educational attainments, but also on the resource constraints, barriers to labour
market mobility, bargaining relationships and discriminatory behaviours (particularly in relation to hiring practices) that give rise to inequality.
© 2007 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2007

Recruiting, paying and training 16- and 17-year-olds

389

The analytical value, and empirical justification, for distinguishing between youth
and adult labour markets has been a subject of debate in the SLM-influenced labour
economics literature. A nuanced analysis has been provided by Ashton et al. (1990)
who identify three possible modes of entry-point competition between young workers
and adults: first, situations where competition is restricted to young people (e.g.
competition for apprenticeship positions); second, situations where competition for
jobs is restricted to adults (i.e. positions for which young people are not considered
suitable); and third, situations where young people and adults are in direct competition for entry-level positions. With regards to the second of these possibilities, young
people may be considered less suitable than older workers for a number of reasons.
Employers may, for example, require applicants to have significant experience, skills
or qualifications that only an older person would have had the time and opportunity
to acquire. Health and safety considerations might also debar 16- and 17-year-olds
from being considered for certain jobs (if e.g. night shift working is required). It is also
possible that the exclusion of young people from consideration for some positions
might be explained by managers’ subjective assessments of the qualities of young
people in general and that age discrimination may be ‘crucial in determining the jobs
for which competition is restricted to young people, those from which young people
are excluded, and those for which young people can compete with adults’ (ibid.: 16).
While the ‘ageism’ debate has tended to focus on older workers (Snape and Redman,
2003), it is increasingly recognised that young workers also experience age
discrimination. Ahier and Moore (1999), for example, found that bank and retail
outlet managers often preferred to recruit older workers for jobs involving extensive
‘customer contact’ as it was believed that they would be more likely to possess the
required interpersonal skills. Similarly, the study of Loretto et al. (2000) concerning
students with work experience found that more than a third of students believed that
they had experienced age discrimination. Some claimed that they had been regarded
by their employer as less trustworthy than older workers and had consequently been
allowed less responsibility.
Age-related discrimination can also extend to pay, even where workers of different
ages are employed in comparable positions. Many firms that employ young workers
maintain age-related pay differentials (e.g. have ‘junior’ and ‘adult’ rates), although in
some cases, age-related differences disappear once young people have acquired experience or completed an initial period of training (Income Date Services [IDS], 2002).
Absolute and relative wage levels are, however, subject to a variety of organisationspecific influences, examples of which include custom and practice, formal negotiations, perceptions of what is ‘fair’ and a concern on the part of managers with
developing and maintaining orderly pay structures (Brown and Nolan, 1988; Gilman
et al., 2002; Rubery, 1997). Studies have suggested that age-related pay differentials
might be eschewed because employers think it ‘fair’ to pay the ‘rate for the job’, or
because wage offers are based on the experience and qualifications of recruits, irrespective of their age, or because of a concern that paying a lower rate might damage
employee motivation or result in recruitment or turnover problems (Heyes and Gray,
2004; IDS, 2002; Norris et al., 2003). In a similar vein, studies have found that few US
employers paid young workers a sub-minimum wage between 1990 and 1993
when the opportunity to do so was available to them (from 1990 until 1993) (Card
and Krueger, 1995). In a survey of fast-food restaurants, Katz and Krueger (1992)
discovered that almost two-thirds of employers believed they would have been
unable to attract young workers at the lower rate while a further fifth of
© 2007 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2007

390

Jason Heyes

managers believed it would have been unfair to offer younger workers a lower
rate.
The ability of firms to maintain age-related differentials may also be influenced by
labour market conditions. Where employers are mainly recruiting from the local
labour market, recruitment and pay practices may be influenced by acknowledged
‘going rates’ for particular occupations, the local supply of labour and the range of
alternative employment opportunities. Heyes and Gray’s (2004) study of recruitment
and pay practices among small private service sector firms, for example, found that
some firms were able to pay young workers a lower wage than older workers performing the same tasks because of high levels of youth unemployment. In local
economies where labour was considered to be in short supply, however, employers
were more likely to be concerned with the competitiveness of their wage offers and
have less scope to pay young workers lower wages than those paid to older workers
(also see Adam-Smith et al., 2003).
The NMW represents a further potential influence on age-based wage differentials.
Since 1999, workers aged 18 to 21 have been entitled to receive a minimum ‘development rate’ (£4.60 an hour from October 2007) below the level of the full ‘adult’
minimum wage. Since 1 October 2004, protection has been extended to 16- and
17-year-olds, albeit at an even lower level (£3.40 an hour from October 2007).
However, even before the latter rate was introduced, some organisations were found
to be benchmarking their wage offers for 16- and 17-year-olds against the development rate for 18–21-year-olds (IDS, 2002). The introduction of the NMW has encouraged a fresh wave of research on firms’ pay practices and the considerations that
influence them (see e.g. Adam-Smith et al., 2003; Gilman et al., 2002; Heyes and Gray,
2004; Lucas and Langlois, 2003). A number of these recent studies have examined
how younger workers are treated relative to older workers (see in particular Langlois
and Lucas, 2005). However, little specific detailed attention has been given to 16- and
17-year-olds who, having previously been exempt from the NMW, and now being
covered by their own lower rate, to some extent represent a distinct group of young
workers. This article addresses this gap. The project from which the article is derived
was commissioned by the LPC to assist in its assessment of the case for a minimum
wage for workers aged 16–17. The research had four aims: first, to examine employers’
reasons for hiring 16- and 17-year-olds and the types of jobs for which they are
recruited; second, to investigate firms’ pay practices in respect of 16- and 17-year-olds
and how they compare to those relating to older workers; third, to explore the extent
and nature of training opportunities for these workers; and finally, to assess the
potential impact of a minimum wage on employers’ propensity to hire and train
workers under the age of 18.
RESEARCH METHODS
A multi-method research strategy comprising two main elements was used for the
study. The first element consisted of a survey of managers with responsibility for pay
and recruitment decisions. The survey was based on a random sample of firms in the
manufacturing, construction, retail, hospitality and hairdressing sectors. These
sectors were chosen because of their relative importance as sources of employment for
young workers (LPC, 2004). In the case of manufacturing, the sample included firms
in industries associated with low wages (textiles and clothing; footwear and leatherwear; food, drink and tobacco; and furniture production). A random sample of 800
© 2007 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2007

Recruiting, paying and training 16- and 17-year-olds

391

Table 1: Establishments employing 16–17-year-olds by sector
Sector

N

% of establishments

Manufacturing
Construction
Hairdressing
Retail
Hospitality

30
38
21
45
25

43
42
75
48
63

159

49

Total

firms in the Yorkshire and Humber region, stratified along industry lines, was
obtained from Dun and Bradstreet. The survey was conducted using telephone and
postal survey methods and 322 usable responses were received (a response rate of 40
per cent). Most establishments covered by the survey were small (three-quarters of
them employed fewer than 26 workers). The present study is primarily concerned with
firms’ practices in respect of the 16- and 17-year-olds they employed at the time of the
fieldwork. Half of the establishments in the sample (159) employed 16- or 17-year-old
workers at that time. As shown in Table 1, the proportions of establishments that
employed 16- and 17-year-olds ranged from 42 per cent in the case of the construction
sector to 75 per cent in the case of the hairdressing sector. However, when considering
managers’ views on the potential impact of the minimum wage for 16–17-year-olds
(discussed in the Pay Practices section), all 322 establishments are included.
The second element of the research design consisted of interviews with 28 of the
managers who replied to the survey. The intention had been to conduct interviews
with managers in six establishments in each of the five sectors. However, in the case
of manufacturing it was only possible to obtain access to four establishments. An
effort was made to ensure a spread of organisations in terms of their ownership
characteristics, size and product and labour market contexts.
EMPLOYMENT OF YOUNG PEOPLE
The cost of young workers relative to older workers is often assumed to be
an important determinant of firms’ propensity to employ them, particularly where
firms are small and operating in competitive product markets (Ashton et al., 1990).
Most of the surveyed establishments fit this description, yet only 12 per cent of the
respondents (18 establishments) referred to the cost of young workers when asked to
give their reasons for employing them. Moreover, it does not follow that all of these
organisations were paying sub-minimum wages: more than four-fifths of those who
gave ‘relative labour cost’ as a reason for employing 16–17-year-olds paid workers in
this age category at least the £3.80 an hour minimum wage ‘development rate’ for
18–21-year-old workers and almost two-thirds provided some kind of training
(although in only two cases was the training accredited). The implication is that these
employers regarded the freedom to pay 16–17-year-olds less than older workers as
more important than the freedom to offer wages below the level of the NMW.
The most common reason for employing young workers (mentioned by 48 per cent
of respondents) was that they were taken on to meet a demand for trainees. As shown
in Table 2, large proportions of respondents from the hairdressing and construction
© 2007 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2007

392

Jason Heyes
Table 2: Reasons for employing 16- and 17-year-olds
All

Wish to
have
trainees
Relative
labour
cost
Temporary/
seasonal
cover
Other
reasons

Manufacturing

Construction

Hairdressing

Retail

Hospitality

N

%

N

%

N

%

N

%

N

%

N

%

77

48

7

23

33

87

20

95

16

36

1

4

18

11

3

10

0

0

1

5

8

18

6

24

59

37

13

43

3

8

1

5

24

53

18

72

17

11

7

23

1

3

0

0

4

9

5

20

sectors stated that 16- and 17-year-olds were employed for this reason. In contrast, in
the hospitality and retail sectors, a requirement for temporary cover or additional
workers to meet seasonal peaks in demand were more frequently mentioned reasons.
It was normal for people aged 16 and 17 to be employed in the case-study establishments and they often performed the same sort of work as older people. However,
in some cases, there were activities from which they were barred. In the hospitality
sector, for example, young people under the age of 18 are, by law, not permitted to
work behind a bar. In the construction sector, health and safety regulations constrain
the work activities of young people by, for example, specifying whether or not
apprentices can use particular tools or operate particular pieces of machinery. Yet
even where there were no legal or regulatory barriers to the employment of young
people, there were positions for which 16- and 17-year-olds were generally thought
unsuitable and for which older workers were preferred. In particular, 16- and 17-yearolds were rarely hired for positions involving supervision of workers or processes. A
brewery, for example, employed young workers in its public houses but not in its
brewing operation as young people were regarded as too ‘immature’ to exercise the
care and attention that the brewing process was said to require. In addition, some
firms, particularly those in the retail sector, exercised caution in the extent to which
they allowed young employees to interact with customers. A kitchen and bathroom
retailer, for example, preferred not to employ 16- and 17-year-olds in sales positions
as it was believed that they tended to lack interpersonal skills. Similarly, a garden
centre placed older recruits on its checkouts sooner than younger new recruits as the
manager believed that the latter tended to lack confidence and the ability to interact
with customers.
A number of managers claimed either that their establishment had experienced
difficulties in finding ‘good quality’ job applicants or that their 16- and 17-year-old
recruits often lacked the ‘right attitude’. Managers in the construction and hospitality
sectors explained the difficulty in terms of an alleged failure by schools to promote
career opportunities in these sectors. Managers in other sectors believed that many
young workers viewed their period of employment as a temporary prelude to further
education or a ‘better job’. Nevertheless, despite the alleged shortcomings of young
© 2007 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2007

Recruiting, paying and training 16- and 17-year-olds

393

workers, few establishments were moving away from recruiting 16- and 17-year-olds
in favour of older people. In most cases, managers viewed 16- and 17-year-old
employees as full members of the workforce and 88 per cent of firms employing 16and 17-year-olds encouraged at least some of these workers to remain with the
organisation in the longer term. The proportions encouraging young non-student
employees to stay were large across all sectors, ranging from 75 per cent of the
hospitality establishments to 100 per cent of the construction firms. A number of the
firms that provided accredited training had developed career paths to enable young
workers to progress within the organisations. However, many of the smaller firms
could not offer opportunities for promotion or career development and instead
sought to retain workers by providing ‘good vehicles’, a ‘good working environment’,
pay increases or by relying on the firm’s reputation as a ‘good employer’.

TRAINING
While data limitations make estimating the total number of 16–17-year-olds working
in extremely low-paid full-time jobs that offer little or no training a difficult task
(LPC, 2004: 56), it is clear that many young people work in elementary and sales
occupations with limited skill requirements and in sectors such as retail and hospitality, which include large numbers of small, often non-training, firms (LPC, 2006:
63). The retail and wholesale sectors account for the largest shares of 16–17-year-old
employees, while the hospitality and construction sectors are also becoming increasingly important sources of employment for young workers who are not in education
(LPC, 2004). In contrast, the proportion of young people employed in the manufacturing sector, which has traditionally been a particularly important source of employment for young men and which has offered young people opportunities to acquire a
trade through an apprenticeship, is shrinking (Canny, 2001).
The survey questionnaire asked those firms that were employing 16- and 17-yearolds whether young employees were provided with training, other than that relating to
health and safety. Additional training was provided in 76 per cent of the cases,
although there were notable differences across the sectors. A minority of firms in the
hospitality sector provided additional training, whereas almost all of those in the
construction and hairdressing industries made opportunities available. As noted in
the Employment of Young People section, the most common reason for employing
16–17-year-olds was to meet a demand for trainees. All but one of the establishments
that gave this as their main reason provided additional training, although in almost
one-fifth of cases trainees were not provided with opportunities to gain qualifications.
Overall, only 47 per cent of establishments employing 16- and 17-year-olds provided
employees in this age category with accredited training (see Table 3).
In 88 per cent of the cases where opportunities to train towards a vocational
qualification were available, the training was linked to an apprenticeship programme.
Apprenticeships were most in evidence in the construction and hairdressing sectors
and training was normally provided through a combination of college-based and
on-the-job methods. The training provided by the case-study construction sector
establishments led to the award of a Level 3 National Vocational Qualification
(NVQ), and wages increased as apprentices progressed through their training
programme. Much of the training provided for apprentices in the hairdressing sector
took place on-the-job, although this was typically combined with day release for
© 2007 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2007

394

Jason Heyes

Table 3: Establishments providing 16–17-year-olds training other than health and
safety training
Establishments providing
any form of additional
training to 16–17-year-olds

Manufacturing
Construction
Hairdressing
Retail
Hospitality
Total

Establishments providing
accredited additional
training to 16–17-year-olds

N

%

N

%

22
37
20
31
10
120

73
97
95
69
40
76

8
32
20
12
3
75

27
84
95
27
12
47

college attendance. In general, trainees were expected to have obtained a Level 2 NVQ
within two years of the start of their training.
The training provided by employers in the retail and hospitality sectors, in contrast,
tended to be unaccredited, of short duration and provided entirely in-house, although
half of the hospitality sector case-study organisations did encourage new permanent
employees to train towards an NVQ. Among the retail establishments, young employees tended to receive only very basic product, checkout, customer service and health
and safety training, and opportunities for further training were generally very limited.
The propensity of the retail firms to offer unaccredited training was not necessarily
related to their size and resources. The training offered by a multinational cosmetics
retailer, for example, consisted of new recruits being shown videos on topics such as
health and safety, receiving information about products and being shown how to
operate the tills. Further training normally took place only when a new product was
introduced. The only retailer to enrol 16- and 17-year-olds on a Modern Apprenticeship scheme was a kitchen and bathroom store, which provided opportunities for
young employees in administrative roles to train towards NVQ Levels 2 and 3 in
Business Administration.
PAY PRACTICES
Young workers’ pay
A key objective of the study was to discover how much 16- and 17-year-olds were paid
in comparison with older workers and particularly those aged 18–21, who at the time
of the fieldwork were entitled to a minimum ‘development’ wage of £3.80 an hour.
The questionnaire asked whether most of the 16- and 17-year-olds employed by
establishments were paid less than the development rate, more than the development
rate or exactly the development rate. The findings indicated that the minimum development rate for 18–21-year-olds was also the wage received by most 16- and 17-yearolds in a quarter of establishments employing workers in this age range. In a further
two-fifths of the cases, most 16- and 17-year-olds were paid a wage greater than £3.80
an hour. As shown in Table 4, hourly wages below the level of the ‘development rate’
© 2007 The Author(s)
Journal compilation © Blackwell Publishing Ltd. 2007


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