Ministers may slow youth minimum wage rise amid UK unemployment fears
Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment.Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less.Government sources said equalisation remained the aim but the rise could come more slowly.At the current rates, those between 18 and 20 are paid a minimum of £10 an hour, rising to £12.21 an hour for those over 21.
Official figures show youth unemployment among 18- to 24-year-olds rose to a five-year high in the final three months of 2025.Experts said if the figures were changed to exclude the jump in youth unemployment during the pandemic, youth unemployment is the highest in 11 years.Ministers have expressed concern in recent months about the uptick and two government sources confirmed that they were examining slowing down the equalisation.Alan Milburn, the former minister and chair of the government’s young people and work review, which is due to report in the summer, said the rise in youth unemployment posed an “existential” risk for the UK and could put “a generation on the scrapheap”.“This is not a short-term phenomenon, it’s a long-term one,” he told the BBC.
“We’re seeing something dramatic changing in the labour markets,”From April, the combined cost of employing someone age 21 and over will have risen by 15% since 2024, according to the Centre for Policy Studies,But for 18- to 20-year-olds, the increase is 26%, or by £4,095, which can decrease the risk employers are prepared to take on younger employees,One Treasury source said a slower equalisation was “all but certain” but added the decision would ultimately be made by the Low Pay Commission,Ministers will submit evidence to that body – which advises on the national minimum wage – within the next few months.
The Low Pay Commission takes a range of evidence before it makes the decision, though ministers write a letter of advice.The slowdown would mean that Labour would break its manifesto target of equalisation before the next election.Kate Shoesmith, the director of policy at the British Chambers of Commerce, said: “Businesses want to see a delay in plans to lower the threshold for the national living wage.Over a third of firms (37%) have told us that this increase in pay for the youngest workers will deter them from recruiting.“On top of all the other costs that have been piled on business, and with youth unemployment already rising at an alarming rate, it would be a sensible move.
It would ease the pressure on firms and allow them to give young people a chance to get a foot on the career ladder.”Alex Hall-Chen, the principal policy adviser for employment at the Institute of Directors, said: “The move towards equalising the minimum wage for young people has damaged their employment prospects.“Our own research last year found that 13% of business leaders responded to the significant increases in the youth minimum wage rates by reducing the employment of 16- to 20-year-olds relative to other age groups.“Slowing down the equalisation of the minimum wage would be an improvement on the current approach, but a more impactful step would be to pause the equalisation and assess evidence of its impact before making a final decision as to the future of the policy.”But Andy Prendergast, the national secretary of the GMB Union, told BBC Radio 4’s Today programme the suggestion that equaling minimum wage rates would destroy jobs was “nonsense”.
He said: “Employers tell us that every single improvement in workers’ rights is going to cause a problem and time and time again they have been proved wrong,”The chancellor, Rachel Reeves, dodged the question when asked whether the government would stick to its plans to equalise the minimum wage between younger and older workers,Speaking at a supermarket in south London, reporters asked Reeves twice whether she would delay plans to increase wages for 18- to 20-year-olds,She did not deny a delay, saying: “We already have incentives to hire young people with the apprenticeship rate of the minimum wage, but also for no national insurance contributions for the youngest workers,“But we do recognise there are challenges and that is why we’re extending the number of further education college places, extending the number of apprenticeship places to help young people get the skills and the experience that they need to move into work.
”A government spokesperson said: “We are raising the national living and minimum wage so that low-paid workers are properly rewarded.”
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