UK minimum wage for young people: The Recruitment and Employment Confederation (REC) has called on the Low Pay Commission to halt the process of closing the gap between the national minimum wage and the national living wage, arguing that additional increases could make it difficult for young people to find work.
In its submission to the commission, the REC stated that the lower youth wage rates would enable firms continue to recruit younger, less experienced workers at a time when youth unemployment was increasing and the government was trying to reduce economic inactivity among young people.
The panel is anticipated to deliver its recommendations on minimum wage rates in October, with new rates normally disclosed around the Budget and coming into force the following April.
Shazia Ejaz, the REC’s head of campaigns said employers sought prudence after “huge rises” in the minimum wage over the past few years.
“Minimum wage is a very controversial topic and with firms struggling with rising costs across the board, and youth unemployment rising, businesses want caution from government,” she said. “Recent upratings have squeezed margins and impacted investment and training opportunities, with some firms opting for ready-made experience rather than growing new talent.”
She warned that young workers will find it harder to get a first job if their pay rate continues to rise faster than that for adults, raising the risk of long-term worklessness.
The REC also revealed results of a poll of 237 UK employers, carried out by Whitestone Insight in May, that found almost half (45.9%) reported moderate or considerable increases in business costs as a result of National Minimum Wage hikes over the last three years. A further 25.5% said costs had risen little and just over one in five (21.4%) said they had not gone up at all.
More than a quarter (26.8%) of firms who stated they had been adversely affected indicated they had cut recruiting or staffing, and 26.2% had scaled back expansion or investment plans. About one in five reported insufficient staff training and development (20.8%) or withheld salary rises from other employees (20.8%).
Ejaz said the results revealed that the high expenses of the minimum wages were affecting employers’ recruitment and workforce strategies.
“Our employer survey shows that companies are having to adapt in ways which impede the UK labour market’s opportunity to change gears,” she said. “One in five businesses are cutting back on training or holding back on wider pay rises, which undermines skills development and slows pay progression.”
She said: “Modest increases are needed to help fuel hiring and support a path to economic growth.” She warned that removing youth pay rates might hinder the government’s objective to bring more youngsters into work.
Key Highlights
- Recruitment and Employment Confederation (REC) has urged the Low Pay Commission to pause further increases in youth minimum wage rates.
- Employers argue that maintaining lower youth wage rates helps businesses recruit younger and less experienced workers.
- REC warns that rapid wage increases could make it harder for young people to secure their first job.
- A survey of 237 UK employers found that nearly 46% experienced significant increases in business costs due to National Minimum Wage rises.
- More than one-quarter of affected businesses reduced hiring or staffing levels and delayed expansion plans.
- Employers say moderate wage increases would better support recruitment, skills development, and economic growth.
Conclusion
The debate over the UK minimum wage for young people continues as employers balance rising labour costs with the need to recruit and develop new talent. The REC believes that slowing future increases in youth wage rates could help businesses create more employment opportunities while supporting the government’s wider economic and employment goals. The Low Pay Commission’s recommendations, expected later this year, will play a significant role in shaping the future of youth employment across the UK.