Labour Retreats on Youth Minimum Wage Pledge as Youth Unemployment Hits Five-Year High

On the morning Rachel Reeves was asked — twice — whether the government would stick to its manifesto commitment to equalise minimum wage rates for younger and older workers, the Chancellor of the Exchequer chose her words with the care of someone who already knew the answer. She talked about apprenticeship places. She talked about further education. What she did not do was say yes Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly..

That non-denial, delivered at a supermarket in south London on Tuesday, confirmed what Treasury insiders had already signalled to reporters: Labour's promise to abolish age-based differences in the national minimum wage system is being quietly shelved. A senior Treasury source told The Guardian that a slower equalisation was "all but certain," though the formal decision would rest with the Low Pay Commission, the independent body that sets minimum wage rates Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly.. Ministers will submit evidence to the commission in the coming months — evidence that, by all accounts, will argue for caution. The slowdown would mean that Labour breaks its manifesto target of equalisation before the next election Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly..

The backdrop is stark. Official figures show youth unemployment among 18-to-24-year-olds rose to a five-year high in the final three months of 2025 . Experts said that if the figures were changed to exclude the jump in youth unemployment during the pandemic, youth unemployment is the highest in eleven years Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly.. Ministers have expressed concern in recent months about the uptick, and two government sources confirmed they were examining slowing down the equalisation Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly..

Labour's 2024 manifesto had pledged to equalise the minimum wage before the next general election. The policy was framed as a matter of fairness: at current rates, those between 18 and 20 are paid a minimum of ten pounds an hour, while those over 21 receive twelve pounds twenty-one pence an hour Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly.. The argument carried moral simplicity and electoral appeal. But the intervening eighteen months have delivered an economy that refuses to cooperate with manifesto ambitions.

The Centre for Policy Studies provides a telling illustration of the cost pressures. From April, the combined cost of employing someone aged 21 and over will have risen by fifteen per cent since 2024 Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly.. For 18-to-20-year-olds, the increase stands at twenty-six per cent, or by four thousand and ninety-five pounds per worker — a differential that can decrease the risk employers are prepared to take on younger employees Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly.. That gap represents the line between a manageable cost increase and one that fundamentally changes hiring calculus, particularly for small businesses operating on thin margins in hospitality, retail, and food service — sectors that disproportionately employ young people.

The business community has not been subtle about the consequences. Kate Shoesmith, director of policy at the British Chambers of Commerce, reported that over a third of firms have told her organisation that the increase in pay for the youngest workers will deter them from recruiting Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly.. "On top of all the other costs that have been piled on business, and with youth unemployment already rising at an alarming rate, it would be a sensible move," she said. "It would ease the pressure on firms and allow them to give young people a chance to get a foot on the career ladder" Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly..

Alex Hall-Chen, principal policy adviser for employment at the Institute of Directors, pointed to her organisation's own research, which found that thirteen per cent of business leaders had responded to significant increases in youth minimum wage rates by reducing employment of 16-to-20-year-olds relative to other age groups Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly.. "Slowing down the equalisation of the minimum wage would be an improvement on the current approach," she said, "but a more impactful step would be to pause the equalisation and assess evidence of its impact before making a final decision as to the future of the policy" Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly..

Alan Milburn, the former Labour minister who chairs the government's young people and work review, offered perhaps the most alarming assessment. He told the BBC that the rise in youth unemployment posed an "existential" risk for the UK and could put "a generation on the scrapheap" Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly.. "This is not a short-term phenomenon, it's a long-term one," he said. "We're seeing something dramatic changing in the labour markets" Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly.. His review, due to report in the summer, is expected to propose structural reforms well beyond minimum wage policy — a recognition that the problem runs deeper than any single lever of government.

Not everyone agrees that the minimum wage is the villain. Andy Prendergast, national secretary of the GMB Union, dismissed the suggestion that equalising minimum wage rates would destroy jobs as "nonsense" Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly.. "Employers tell us that every single improvement in workers' rights is going to cause a problem and time and time again they have been proved wrong," he said Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly.. The union perspective highlights a genuine tension in the data: youth unemployment has been climbing for some time, driven by structural factors that predate Labour's wage pledge — the post-pandemic reshuffling of the labour market, the growing mismatch between young people's skills and employer needs, and the rise in economic inactivity among the young.

The political dynamics are uncomfortable for Starmer's government. Walking back a manifesto commitment — particularly one framed in the language of fairness and equality — invites accusations of betrayal from the left and charges of economic incompetence from the right. Reeves herself, when pressed, pivoted to existing incentives: the apprenticeship rate of the minimum wage, no national insurance contributions for the youngest workers, and expanding further education and apprenticeship places Starmer urged to stick to manifesto following reports lifting of youth minimum wage may be delayed – UK politics livetheguardian.com·SecondaryRachel Reeves, the chancellor, has recorded a pooled clip for broadcasters. Asked if the government was planning to delay equalising the youth rate for the minimum wage with the full adult rate, she did not directly answer – but she did not deny this was being considered. We already have incentives to hire young people with the apprenticeship rate of the minimum wage, but also no national insurance contributions for the youngest workers.. The chancellor recognised there were "challenges" but did not deny that a delay was being considered Starmer urged to stick to manifesto following reports lifting of youth minimum wage may be delayed – UK politics livetheguardian.com·SecondaryRachel Reeves, the chancellor, has recorded a pooled clip for broadcasters. Asked if the government was planning to delay equalising the youth rate for the minimum wage with the full adult rate, she did not directly answer – but she did not deny this was being considered. We already have incentives to hire young people with the apprenticeship rate of the minimum wage, but also no national insurance contributions for the youngest workers..

For the opposition, the retreat validates long-standing warnings. Conservative and business-aligned voices had argued from the outset that mandating equal pay for workers of vastly different experience levels would price young people out of the market. The fact that Labour is now effectively conceding the point — while insisting it is not — gives critics a powerful line of attack ahead of local elections and raises broader questions about the government's economic stewardship.

The deeper question is whether slowing the equalisation will actually help. If youth unemployment is being driven primarily by structural shifts — automation, the gig economy's erosion of traditional entry-level roles, and a generation increasingly disconnected from formal employment — then tinkering with wage bands is treating a symptom rather than the disease. The Low Pay Commission will weigh the evidence when ministers submit it in the coming months, but the commission operates within a narrow mandate that does not extend to the broader labour market transformation Milburn has warned about.

A government spokesperson offered a line that captured the administration's uncomfortable position with inadvertent precision: "We are raising the national living and minimum wage so that low-paid workers are properly rewarded" Ministers may slow youth minimum wage rise amid UK unemployment fearstheguardian.com·SecondaryGovernment considering delay to equalising national minimum wage after jump in youth unemployment Ministers are considering a slower rise in the minimum wage for younger workers, amid fears over rising youth unemployment. Labour had promised in its manifesto to equalise national minimum wage rates by the time of the next election, saying it was unfair younger workers were paid less. Government sources said equalisation remained the aim but the rise could come more slowly.. True enough — but conspicuously silent on the question of when, and for whom.

What is clear is that Britain's youngest workers are caught between two forces neither they nor any government fully controls: an economy that is generating fewer of the entry-level positions they need, and a political system that promised them equal treatment it may not be able to deliver. The manifesto pledge sounded like progress. The retreat sounds like reality.