UK (Parliament Politics Magazine) – Founder of the Low Pay Commission, Sir George Bain, warns Labour’s plan to scrap the youth rate could spike youth unemployment and cost young people jobs.
As reported by The Telegraph, the founder of the minimum wage warns Labour’s plan to scrap the youth rate could raise youth unemployment.
What did Sir George Bain say about Labour’s plan to scrap the youth rate?
Sir George Bain says Labour’s plan to close the youth pay gap could
“undoubtedly make the employment position of young people worse.”
Labour’s manifesto plans to end “discriminatory age bands” in the minimum wage, raising pay for 18-20-year-olds closer to the £12.21 rate for older workers. Employers in hospitality, which depend on younger staff, warn that rising wages are increasing the cost of hiring entry-level workers.
Sir George, who played a central role in designing the 1998 minimum wage, said,
“There is a conflict between not discriminating against young people by paying them less and causing them unemployment.”
He warned that scrapping the youth rate could push more 16–24-year-olds out of employment, education, or training.
Nearly one million under-25s in Britain are now classified as NEETs, the highest number in the G7 and among the highest in the OECD.
Sir George said,
“The youth rate is being abolished and it will undoubtedly make the employment position of young people worse. One in eight young people are Neets and that figure will increase further because of this.”
According to him, the Low Pay Commission deliberately set a lower minimum wage for 18–20-year-olds when the adult rate started in 1999.
He added,
“All the evidence suggested, back then and before, that young people were more susceptible to unemployment. If employers had a choice, they would not employ an 18 to 21-year-old if they had a more mature candidate.”
Sir George stated,
“The evidence also suggests that an initial period of unemployment at the beginning of your career affects not only your initial years but also your later years because it’s so devastating.”
He continued,
“This is government policy. The Low Pay Commission has little option but to try and implement it by balancing the Government’s desire to abolish the youth rate with its concern for employment prospects for young people that is why the LPC this year recommended a smaller increase in the youth rate than last year.”
A government spokesman said,
“We are raising the National Living and minimum wage so that low-paid workers are properly rewarded, with evidence showing little or no significant impact on employment from past increases.”
How could minimum wage hikes and taxes hit young workers’ jobs?
On 26 November, Chancellor Rachel Reeves announced an 8.5% rise in the minimum wage for 18–20-year-olds to £10.85 an hour from April, more than double the increase for those over 21.
According to the Resolution Foundation, Labour’s plan to extend the National Living Wage to 18-year-olds could worsen youth unemployment.
Last year’s rise in employers’ National Insurance by the Chancellor has disproportionately hit young workers, experts say.
Major youth employers in hospitality and retail warn that rising business taxes could force job cuts or a hiring freeze.
The Low Pay Commission, established in 1997 under former Prime Minister Tony Blair, was tasked with introducing Labour’s national minimum wage and now advises the government yearly.
The latest figures show youth unemployment at 15.3% for 16–24-year-olds in the three months to September, compared with 5% across the UK.
What does the Low Pay Commission do, and how does it advise on wages?
The Low Pay Commission is an independent advisory body established in 1997 to advise the UK government on the levels of the National Minimum Wage (NMW) and the National Living Wage (NLW).
It is composed of nine commissioners selected to represent a tripartite structure, including members with employer, trade union, and independent academic backgrounds. Each year, the government gives the LPC a set of goals and economic factors to consider to guide its recommendations.
