Key facts
- Andy Burnham is considering a rethink of Labour's minimum wage promises for young workers.
- The potential change stems from concerns that rising wages for younger workers may be making it harder for them to find jobs.
- Unemployment among 16-to-24-year-olds has risen to 16.2%, up from 14.2% a year ago.
- The adult minimum wage is £12.71 an hour, while the rate for younger workers is £10.85 an hour.
- Labour had previously promised to scrap the tiered minimum wage system.
- A potential option being considered is a tiered system similar to the one used in the Netherlands.
Andy Burnham is reportedly considering a significant shift in Labour's policy regarding minimum wage increases for younger workers, potentially retreating from a manifesto pledge to abolish age-based pay bands. This reconsideration is prompted by growing concerns that higher wages for younger staff may be hindering their employment prospects amid a rising youth unemployment rate.
Unemployment among 16-to-24-year-olds has climbed to 16.2%, an increase from 14.2% recorded a year prior. Government officials are reportedly examining whether the push to align younger workers' pay with the adult minimum wage is discouraging businesses from hiring them, particularly at a time when the job market is under pressure.
Labour's previous commitment was to end the tiered system, which allows employers to pay workers under 21 less than older staff. The current adult minimum wage stands at £12.71 per hour, while the rate for younger workers is £10.85 per hour. Ministers had been working to reduce the gap between these rates.
However, Whitehall officials are now exploring alternative approaches, including a system similar to the one in the Netherlands, where minimum wage rates vary significantly by age. This tiered structure aims to maintain incentives for employers to hire younger individuals while ensuring a minimum pay level.
Alan Milburn, a former health secretary, is preparing to release a report on youth worklessness in Britain, having studied the Dutch employment model. His interim report highlighted a worsening trend in young people not in employment, education, or training and noted Britain's poor performance compared to other developed nations. Milburn has called for a more stringent approach to young people on health and disability benefits who are capable of working.
Kemi Badenoch, the Conservative leader, has previously emphasized the importance of business concerns, stating that businesses, not government ministers, create jobs and that regulatory burdens should be eased.