Andy Burnham's government is considering a slowdown in planned minimum wage rises for young workers. This comes amid concerns that increased employment costs are making businesses less willing to hire them.
Downing Street and the Treasury are examining whether the rapid increase in wages for under-21s has contributed to Britain’s youth jobs crisis. This review precedes the publication of a report on worklessness in the coming weeks.
This year, the minimum wage for workers aged 21 and over increased by 4.1 per cent to £12.71 an hour. However, the rate for 18 to 20-year-olds saw an 8.5 per cent jump to £10.85, and for 16 and 17-year-olds, it rose by six per cent to £8.
Ministers are investigating if narrowing the wage gap too quickly has made entry-level staff more expensive, particularly as nearly one million 16 to 24-year-olds are currently not working or studying. A government spokesperson stated that ministers remain committed to closing the gap between adult and youth wages but have asked the independent Low Pay Commission (LPC) to consider employment opportunities when recommending future increases.
Officials are also looking at the Netherlands, where the minimum wage decreases sharply with age. Former Labour cabinet minister Alan Milburn, leading the government’s review into youth worklessness, recently visited the Netherlands to study its approach. He suggested that his recommendations could include slowing or reversing planned wage increases to make it easier for companies to employ young people.