Ministers are considering a slower rise in the minimum wage for young workers, amid fears over rising youth unemployment.
Labor promised in its manifesto to equalize national minimum wage rates by the next election, saying it was unfair to pay young workers less. Government sources say mobilization remains on target, but growth may come more slowly.
At current rates, those aged between 18 and 20 are paid at least £10 an hour, rising to £12.21 an hour for over 21s.
Official figures show unemployment among 18- to 24-year-olds hit a five-year high in the last three months of 2025. If the figures are adjusted to exclude a rise in youth unemployment during the pandemic, youth unemployment is at an 11-year high, experts said.
Ministers have expressed concern in recent months about the increase, and both government sources have confirmed they are considering slowing the mobilization.
Alan Milburn, a former minister and chair of the government’s youth and work review, due to report in the summer, said the rise in youth unemployment posed an “existential” risk for the UK and could leave “a generation in the lurch”.
“It’s not a short-term phenomenon, it’s a long-term one,” he told the BBC. “We’re seeing something dramatically change in the labor markets.”
As of April, according to the Center for Policy Studies, total spending on hiring those 21 and older will increase by 15% through 2024. But for 18- to 20-year-olds, the increase is 26%, or £4,095, making employers less willing to take on younger workers.
A Treasury source said slow equalization was “all but certain”, but the decision would ultimately be made by the Low Pay Commission. Ministers will give evidence to the body that advises on the national minimum wage in the next few months.
Although ministers write an advisory letter, the Low Pay Commission takes a number of factors into account before making a decision.
A slowdown could mean Labor breaks its manifesto target of equalization ahead of the next election.
Kate Shoesmith, policy director of the British Chambers of Commerce, said: “Businesses want to see a delay in plans to lower the threshold for the National Living Wage. Over a third of firms (37%) told us that this pay rise for younger workers would deter them from recruiting.
“On top of all the other costs piled on business, and with youth unemployment already rising at alarming levels, this is the right move. It will ease pressure on firms and give young people a chance to get a foot on the career ladder.”
Alex Hall-Chen, Principal Policy Adviser for Employment at the Institute of Directors, said: “The move towards equalizing the minimum wage for young people has damaged their employment prospects.
“Our own research last year found that 13% of business leaders responded to significant increases in youth minimum wage rates by reducing employment of 16 to 20-year-olds compared to other age groups.
“Slowing the leveling of the minimum wage would be an improvement on current policy, but a more effective step would be to pause the leveling and assess the evidence of its effectiveness before making a final decision regarding the policy’s future.”
But Andy Prendergast, national secretary of the GMB union, told BBC Radio 4’s Today program that the suggestion that equalizing minimum wage rates would destroy jobs was “absurd”.
He said: “Employers have told us that every single improvement in workers’ rights has caused a problem and they have been proven wrong time and time again.”
The chancellor, Rachel Reeves, dodged the question when asked if the government would stick to its plans to equalize the minimum wage between younger and older workers. Speaking at a supermarket in south London, Reeve was twice asked by reporters if he would delay plans to raise wages for 18- to 20-year-olds.
She did not deny the delay, saying: “We already have incentives to hire young people at an apprenticeship rate of the minimum wage, but also no national insurance contributions for younger workers.
“But we recognize there are challenges and that’s why we’re expanding the number of further education college places, expanding the number of apprenticeship places to help young people get the skills and experience they need to go into work.”
A government spokesman said: “We are raising the National Living and Minimum Wage so that low-paid workers are fairly rewarded.”
