Angela Rayner urged plans to raise the minimum wage for young people aged 18-20 to meet adult interest rates, although business groups warn that the move could leave young people unemployed.
The Deputy Prime Minister has asked the Low Pay Commission to propose a proposal to reduce the current minimum wage for young people aged 18-20 (£10) and the £2 an hour for 21 and over (£12.21). With the support of the union, the policy forms part of the Labor Party’s election commitment to “make a cheap past” and remove “discriminatory age groups.”
The move is also seen as part of Labor’s job hunting for young voters amid the voting gains of the UK’s reforms. Last month, Reiner also prescribed plans to lower the voting age to 16 before the next election.
Industry leaders say policy risks accelerate unemployment in youth in sectors that have been subject to increased employment taxes. Ukhospitality president Kate Nicholls said there have been 84,000 jobs in hospitality work over the past six months, partly due to the launch of £25 billion in employer state insurance last fall.
“We understand the government’s fair salary goals, but you can only get a fair salary if you have a job that you actually pay,” Nichols said. “It’s not the time to significantly increase employment costs.”
Bars, hotels and restaurants – the primary employers of young people – were “hammered” by tax changes, warning that new wage increases could ruin more entry-level jobs.
Jane Gratton, deputy director of policy at the British Chamber of Commerce, said nearly one million young people are currently in employment, education or training. “Employers want to help, but the rising employment costs make it very difficult for many companies,” she said. “If wages are too fast in this age group, it could mean fewer opportunities.”
Prime Minister Rachel Reeves decided to lower the threshold for employers’ national insurance contributions to £5,000, allowing more part-time workers to lower their tax range.
Nichols said the change had a disproportionate impact on youth employment and part-time jobs. “All warning signs in the labor market are flashing red. Now is the time to be cautious and don’t go too far,” she said.
Despite business issues, a new YouGov poll shows that the public is equal in minimum wages for those over the age of 18. Two-thirds (67%) of respondents believe that young people aged 18-20 should receive the same minimum wage as those aged 21 and above. Only 22% support lower interest rates, while 11% are uncertain.
Rayner insists that the policy will promote one-time revenue and growth. “This is the next milestone in our plan to get more money in the pockets of laborers, improve living standards across the UK and enable our economy to grow,” she said.
Now, the mission of the Low Pay Commission is to set a pathway that aligns with the minimum wage rates for youth and adults. If implemented, the change would raise wage increases to hundreds of thousands of young workers – but business groups warn that it could also reshape the youth job market.
