The UK's job market is facing a daunting challenge as record numbers of young people are out of work, education, or training. A recent study by the Resolution Foundation warns that scrapping employment tax rises and slashing the minimum wage for under-21s would be a misguided attempt to boost youth employment, and could even have unintended consequences such as lower living standards.
While business groups argue that higher taxes are stifling hiring, the thinktank's analysis suggests that most under-21s don't pay employer National Insurance Contributions anyway – rendering any reversal largely symbolic. Furthermore, cutting NICs would be costly, estimated at £5.1 billion to scrap them for under-25s, while only creating approximately 38,000 extra jobs.
Instead of a piecemeal approach, the Resolution Foundation proposes targeted support for businesses that hire young people, such as increasing funding for apprenticeships and expanding youth job grants. This would create more tangible benefits for both employers and employees alike. The report highlights that the NEET population – currently over one million strong – is at risk of long-term disadvantage if decisive action isn't taken to address this issue.
Business lobby groups, including the Confederation of British Industry, have previously argued that tax rises introduced by Chancellor Rachel Reeves would inflate employment costs for younger workers. However, the Resolution Foundation's research contradicts these claims, suggesting that reversing tax rises and slashing minimum wage increases for under-21s would be 'wasteful and ineffective'.
The thinktank's recommendations aim to create more jobs and improve living standards, rather than just papering over the cracks with symbolic gestures. By investing in apprenticeships and supporting businesses that hire young people, we can help create a more sustainable solution for this generation of workers.