Last night I realised our costs will increase by 15% in 2025. Bad news. On top of last year’s 18% increase. Very bad news.
Actually the costs for our flagship programme, the SuperSquad, have increased by a whopping 63% since we first ran one in 2022. Terrible news?!
Well yes and no.
The chancellor will announce later a change to the minimum wage for 16 & 17-year olds from £6.40 to £7.55.
*** NOTE we work with student from 13+, and although you can work from 13, the min. wage does not kick in until 16.
So how does this affect us?
We have committed to offer paid work experience. We don’t have to, we choose to. A true experience of work means an experience of the financial side of things.
All our students therefore get an understanding of
- Payroll and crucially what bank details to share and what not to share
- How to track and record their hours
- What the current min. wage rate is
More importantly, they begin to understand the value of their time. The world of work is changing. Gig economy and side hustles are the norm for young people so they need to be able to place a value on their time.
So we pay all students, even the youngest, the min. wage. When the £135 is transferred into their accounts at the end of the Squad, they know this equates to 24 hours of work.
Beyond this, paying them gives them an enormous confidence boost. We have buckets of evidence on that.
Back to the recent increases in min. wage. I am supportive of increases, I acknowledge the adjustments are part of a commitment to socially responsible economic growth. The chart shows that the rate stayed low for too long, barely increasing from 2010 to 2018, with the average over that period being £3.86. This is pocket money level pay. I remember my first “Saturday” job in 1993 paid £2.50 an hour. For “Saturday” jobs it probably worked.
But what if 16 year olds have left school, what about apprentices? If you are working full time, 40 hours a week on £3.86 that is £154.40 a week. It needed to rise.
But the significant increases in min. wage over the past 2 years will hurt some businesses. Already on the news today, some employers are saying that the increase in the apprentice rate will hit them hard; hairdressers for example where apprenticeships are the main career pathway.
I worry that it will put businesses off giving opportunities to teenagers. A “Saturday” job employing a 16-year old for 6 hours a week costed a business around £1,400 a year in 2022, next year it will cost £2,355. It might be more attractive to transfer those hours to an existing employee.
What happens if you work with 10 teenagers, or like us with 5,000! It begins to add up.
As a champion of young people, I celebrate increases in min. wage. As a business owner though, I have some work to do on how we respond to a significant shift in our unit economics.
