Youth unemployment figures prompt government rethink on Minimum Wage pledge

Ministers could ditch Labour’s manifesto pledge to pay 18 to 20-year-olds the same National Minimum Wage as older workers amid record-high youth unemployment.

ONS data published yesterday revealed unemployment among people aged between 16 and 24 was at 16.1%, its highest in more than 10 years.

UKHospitality warned the situation risked “locking a generation out of vital opportunities to gain skills, experience and a foothold in the workforce”.

According to the Times, ministers have been urged by business groups to rethink their pledge to equalise National Minimum Wage by the time of the next election and that an official decision could be made “within months”.

Earlier today, chancellor Rachel Reeves reportedly side-stepped a question on whether the government was planning to delay equalising the youth rate for the Minimum Wage, having said to press: “We already have incentives to hire young people with the apprenticeship rate of the minimum wage, but also 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.”

Currently, workers aged over 21 are paid a minimum of £12.21 an hour, while those between 18 and 20 receive £10 an hour.

From April, the National Living Wage for those aged over 21 is set to rise again by 50p to £12.71 per hour, while the Minimum Wage for 18 to 20-year-olds will jump to £10.85 per hour, a higher-than-expected increase of 8.5%.

In March 2024, the Low Pay Commission, the independent body that advises the government on rises to the National Living Wage, recommended gradually lowering the age of eligibility for the National Living Wage from 21 to 18 as the existing disparity was considered “excessive and unfair by many stakeholders”.

The Low Pay Commission declined to comment.