Plan to increase youth minimum wage could be delayed

Plans to equalise wages for all adults by raising wages for 18-to-20-year-olds may be delayed due to a worsening youth unemployment crisis.

Youth unemployment in the UK has hit 16.1%, the highest level in more than a decade, and the first time on record that the UK average has been higher than the EU.

The hourly rate for 18-to-20-year-olds will increase from £10 to £10.85 in April. This is after a 16.3% rise in 2024. Meanwhile, the minimum wage for those aged 21 or above is set to increase by 50p to £12.71.

We all want to see wage growth for low-paid workers, but arbitrarily hiking wages while doing nothing to stimulate the economy is the wrong way to go about it

Robert Colvile

Labour committed itself in its 2024 manifesto to “remove the discriminatory age bands” by the time it leaves office in 2029, meaning it needs to close the gap by £1.86 over the next three years.

Two government sources have confirmed that Labour is considering slowing wage equalisation due to the growing youth unemployment crisis. A slowdown would likely mean the government breaks its manifesto target.

At an event in South Wales this Wednesday, Starmer stated that: “We’ve made commitments to young people in our manifesto and we will keep to those commitments, including the commitment that we would make sure that the living wage and minimum wage will go up this April, which we can absolutely confirm to you will happen.”

According to the Centre for Policy Studies, the cost of employing a full-time worker on the minimum wage has increased by £3,414 between 2024 and 2026. In comparison, firms have had to pay an additional £4,095 for workers aged 18-20. This is a 26% increase over 2 years.

Robert Colvile, Director of Centre for Policy Studies, a centre-right and free-market think tank, said: “We all want to see wage growth for low-paid workers, but arbitrarily hiking wages while doing nothing to stimulate the economy is the wrong way to go about it.”

Job losses under the Labour government have largely been concentrated in industries with a higher proportion of young workers, such as retail and hospitality.

The Head of Policy at Unison, Sampson Low, represents employees working at the NHS and other public sectors. He said “There’s no reason for younger workers to be paid less for the same work.

“Young, low-paid workers are likely to spend the extra cash where they live, helping their local economies.”