The minimum wage may be extended to 16 and 17-year-olds, reveals evidence submitted to the Low Pay Commission.
Ministers have dropped their opposition to statutory pay rates for the country's youngest workers and are believed to be considering including an extension of the minimum wage in the Labour Party's next election manifesto.
The new teenage minimum wage is likely to be less than the present £3.80 an hour rate for workers aged between 18 and 21, although no decision has yet been made on its level.
The Government's change of heart will be welcomed by trade unions who have long campaigned against exploitation of young workers but it is likely to anger some in the business community.
When Labour introduced the minimum wage after the 1997 election it decided to exclude 16 and 17-year-olds because ministers were worried that higher wages might encourage some teenagers to prematurely drop out of education. The Trade and Industry Secretary, Patricia Hewitt, restated that position last March.
But evidence submitted by the Department of Trade and Industry to the Low Pay Commission's review of the minimum wage indicated a funda- mental shift in thinking. The Government's evidence emphasised the danger of exploitation of young workers. "The Government introduced the national minimum wage to end exploitation through low wages and as part of its policies to make work pay. It would be wrong to allow 16 and 17-year-olds in employment, the young-est workers, to be exploited through low wages," it said.
The Government said it had introduced a variety of policies designed to encourage 16 and 17-year-olds to stay in education and had therefore decreased the risk of a teenage minimum wage encouraging higher school drop-out rates.
The Low Pay Commission has already said that, in principle, it favours an extension to 16 and 17-year-olds. It will finish its review by the end of February and will submit it to ministers for a final decision.
A spokesman for the Trades Union Congress (TUC) welcomed the shift of the Government's position. The TUC estimates more than 500,000 16 and 17-year-olds have jobs and more than 100,000 are earning less than £3.50 an hour. If the Government set a minimum wage of £3 an hour, the TUC estimates 65,000 would benefit.
But Matthew Knowles, principal policy adviser for the British Chamber of Commerce said: "If the Government does this, there will be three levels of minimum wage to run and that will be a nightmare."
A spokesman for the DTI stressed that no decision had yet been made by ministers. "There was some evidence given that we were minded to look at this but that is a long way from anything being done tomorrow. It is an option but any decision would be subject to consultation."
The full adult minimum wage was increased from £4.20 to £4.50 an hour in October.