Sky News believes there may be a delay in plans to raise the minimum wage for 18- to 20-year-olds to the same level as other adults.
In its 2024 election manifesto, Labour committed to “removing discriminatory age bands so that all adults are entitled to the same minimum wage, which would raise wages for hundreds of thousands of workers across the UK”.
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But Sky News understands the government is considering delaying the pledge – although it remains committed to doing so eventually.
Reports suggest the potential delay is driven by fears that the high cost of employing young people could deter companies from hiring them and worsen youth unemployment.
New data released on Tuesday revealed Britain’s unemployment rate increased. The rate was 5.2% in October – December last year, the highest in almost five years – while the rate for 16- to 24-year-olds was 16.1%, the highest level since the beginning of 2015.
From July to September last year, nearly 950,000 people in that age group were not in employment, education, or training.
Speaking in Cardiff, the prime minister, Sir Keir Starmer, reaffirmed the government’s commitment to equalising the minimum wage for youth.
Good luck with the increase in minimum wage.
But companies say steps taken by the government, such as increasing employer national insurance contributions, have made it more expensive and risky to hire new staff in industries that would normally hire young people, such as hospitality.
Young people often work in industries such as hospitality. File photo: iStock
Tina McKenzie, chair of the Federation of Small Businesses, told Sky News: “If the government thinks small employers can handle the increased costs, they should also wish good luck with the increase in the minimum wage.”
“If you persist in raising employment costs and making it more challenging for small employers to recruit young individuals, the outcome will be a decrease in the number of young hires.”
Unions have warned against “intimidating” the government over delays in implementing the increase.
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Paul Novak, general secretary of the TUC, said youth unemployment is “an urgent issue and deserves real solutions”, like an ambitious job guarantee, ending insecure employment, and increasing the number of quality apprenticeships—not more scaremongering about the minimum wage.
He said, “Young workers also have bills to pay – and it’s absolutely right that they get a fair rate for the job. That’s why the government should stick to its goal of eliminating pay rates based on age, not on how much work people do.”
The unemployment rate for 16- to 24-year-olds is 16.1%, the highest in more than a decade. File Image: PA
Chancellor Rachel Reeves earlier dodged questions from reporters in south London over whether she was sticking to the commitment, saying, “We already have incentives to hire young people with minimum wage apprenticeship rates, but no national insurance contributions for the youngest workers.”
Recognising the challenges facing young people, he said, “As a government, we are determined to do everything possible to support them,” naming policies such as increasing apprenticeship places.
The minimum wage for workers aged 18 to 20 is £10 an hour, rising to £10.85 in April.
In comparison, the national living wage for workers aged 21 and over is £12.21 an hour, rising to £12.71.
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