New figures released yesterday have revealed a troubling spike in youth unemployment, with the rate for 18- to 24-year-olds reaching 14% in the three months to December. This marks the highest level in nearly 11 years, excluding the pandemic period, raising urgent concerns about economic prospects for young people across the UK.
Manifesto Pledge Under Review
In response to these alarming statistics, ministers are reportedly considering abandoning a key Labour manifesto commitment to pay young workers the same national minimum wage as their older counterparts. According to a story in The Times, business groups have warned the government that increasing hiring costs through rises to the national living wage, expanded employment rights, and a tax hike on employers' national insurance is "pricing a generation of young people out of the workplace."
Currently, the national living wage, which the government uses to describe the full minimum wage, applies only to workers aged 21 and over. Those aged 18 to 20 receive a lower rate, officially termed the national minimum wage, with an even lower rate for under-18s. The government had pledged to equalise these rates by the next election, but this promise is now under review.
Political Reactions and Denials
Welsh Secretary Jo Stevens addressed the issue on the Today programme, stating that the report in The Times was based on an "unsourced briefing" and does not reflect government policy. She emphasised that the government's stance remains as outlined in their manifesto, recalling that similar concerns about the national minimum wage causing mass unemployment in 1998 proved unfounded.
However, sources indicate that while ministers may not abandon the goal entirely, they are contemplating slowing the pace of equalisation. This potential shift has already sparked controversy, with Andy Prendergast, the GMB's national officer, calling any delay or halt to equalisation "unacceptable." He argued that younger workers are not less productive and that businesses hire based on need, not age, criticising the move as a misguided solution to unemployment.
Broader Context and Future Developments
The debate unfolds against a backdrop of broader political activities. Keir Starmer, currently on a visit in Wales with Welsh First Minister Eluned Morgan, is promoting plans for rail investment, including the opening of seven new stations. Meanwhile, Robert Jenrick, newly appointed as Reform UK's Treasury spokesperson, is scheduled to deliver a speech later today.
As the government prepares to set its annual remit to the Low Pay Commission, which advises on national living wage increases, a decision on the youth wage rates could emerge within months. This development highlights ongoing tensions between economic policies aimed at supporting workers and business pressures amid rising unemployment figures.
