Is Labour pricing young people out of the job market?

Ministers may delay plans to equalise the minimum wage for all ages, as promised in the Labour manifesto. Keir Starmer today insisted the government will stick to its pledge but he didn’t commit to a timeline for the change.

The government’s aim is to bridge the minimum-wage age gap, so that 18- to 20-year-olds are paid the same hourly rate as older people. But it’s facing strong pushback from business groups, who say this would make it too expensive to hire young people.

Rising youth unemployment has become an increasingly pressing issue: one in six 18- to 24-year-olds are without a job, the highest level in just over a decade, according to Office for National Statistics figures released yesterday. The national unemployment rate is 5.2%, higher than it’s been for five years.

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What did the commentators say?

The government already announced an increase in the minimum wage for younger workers in last year’s Budget and there are fears that raising levels further would “result in businesses cutting the number of younger workers they employ”, said Oliver Wright in The Times.

“Labour has been its own worst enemy,” said the Financial Times’ editorial board. While global economic uncertainty, advances in AI and higher interest rates have all played a part in cooling the job market, “own goals” by the government, especially on national insurance contributions, are “adding insult to injury”. Britain’s latest jobs numbers, with “losses concentrated” in “sectors that disproportionately employ the young” look “grim” for a “party that prides itself on serving ‘working people’”.

Let’s not forget how AI is affecting the job market for young people, said City A.M.’s Saskia Koopman. “Hiring freezes” have now “overtaken mass layoffs”, making it difficult to get a foot on the employment ladder. If hiring – particularly in “AI-exposed areas” – continues to “stall”, the current “cyclical cooling could turn into something more persistent”.

It is particularly young men who are “bearing the brunt” of our “slumping job market”: “19% of men aged 16 to 24 are now unemployed, the highest rate since 2014”, said Tim Wallace in The Telegraph. For women of the same age, it's 13.1%. Hiring downturns, which always “fall hardest on the young”, also tend to affect the private sector, where men are more likely to work, more than the “female-dominated public sector”.

“The time has come for the brutal truth,” said Chloe Combi in The Independent. “Young people are being, and have been, failed.” Something has gone “profoundly wrong”, and it’s not young people’s fault: that lies “with the generations before them that created this no-hope landscape”. If changes aren’t made to give young people “a fighting chance”, they are in “serious danger” of being a lost generation.

What next?

In April, the minimum wage increases announced in the Budget will come into effect, raising the hourly rate for 18- to 20-year-olds from £10 to £10.85, and taking the National Living Wage for over-21s to £12.71.

Whether the government delays its promised age-band equalisation or not, it needs to act in other ways to help young people, said Combi in The Independent. We should be “pooling money into professional training and learning programmes”, which “would be an investment on so many levels”. Young people also desperately need a “sense of community” after the “catastrophic” Covid years: “affordable sports clubs” and “youth clubs” would help re-ignite “IRL socialising” and get the young “invested in the world around them”.