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Newspage RawSource: Kate Underwood, Kate Underwood HR & Training

Ministers consider slowing minimum wage rises for under 21s with almost a million young people out of work: relief for small employers, or a pay cut for the young?

ended 15. September 2026

Downing Street and the Treasury are examining whether fast minimum wage rises for under-21s have priced young people out of work. The Low Pay Commission has been asked to weigh job prospects in future recommendations. https://news.uk.cityam.com/story/2457028/content.html

This year the rate for 21s and over rose 4.1% to £12.71 an hour. The 18 to 20 rate rose more than twice as fast, up 8.5% to £10.85, and the 16 to 17 rate rose 6% to £8. https://www.gov.uk/national-minimum-wage-rates

Almost a million 16 to 24-year-olds are neither working nor studying. Ministers are eyeing the Dutch model, where an 18-year-old gets €7.50 against €14.99 for those over 21, and 4.8% of young people are out of work or training, compared with 13.6% here.

The Low Pay Commission said earlier this year it had seen no robust evidence that higher youth rates were to blame.

Tomorrow's ONS labour market figures land at 7 am. https://www.ons.gov.uk/releases/uklabourmarketseptember2026

Cheaper young staff is a discount at the till, paid for by the person serving you.

Small employers should say plainly whether a lower youth rate would make them hire, or just make the same hire cheaper.

Tell us: 

  • Would a lower youth minimum wage actually make you hire more young people, or not? 
  • Is this a sensible fix for youth unemployment, or balancing the books on the lowest paid? 
  • Protect the young worker's pay packet or protect the entry-level job. Which matters more? 
  • Should an 18-year-old doing the same job be paid less than a 25-year-old, full stop? 
  • What is actually stopping you from hiring someone under 21 right now?

 

6 responses from the Newspage community

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Kate UnderwoodVerified
Founder & Chief People Strategist at Kate Underwood HR & Training
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Let's be honest about what's on the table here. Government is asking whether young people cost too much, when the Low Pay Commission has already said it can't see the evidence. I've never met a small business owner who turned down a brilliant 19 year old over 60p an hour. They turn them down because they haven't got the time or the cover to train anyone, and nobody is helping with that. If you want young people in work, fund the training and the supervision. Cutting their wages just shifts the cost onto the person who can least afford it. Small firms deserve a better offer than cheap labour.
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Matt CoulsonVerified
Founder at Heron Financial
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For most small firms the barrier to hiring a young person is the time and risk of training someone with no experience, far more than the hourly rate. So a lower youth wage would trim costs without doing much for hiring, and the Low Pay Commission's own finding of no robust evidence that higher youth rates cost jobs backs that up. We've taken on apprentices for years, and what the good ones needed was a chance and proper support rather than a discount on their pay. If we're serious about the near-million young people out of work, the lever is making it easier and less risky for small businesses to train them, through apprenticeship support and the like. On fairness, if an eighteen-year-old does the same job to the same standard as an older colleague, it's hard to justify paying them less, though a gap makes more sense where there's genuinely more training behind it. Help firms train young people and the jobs follow. Cut their pay, and mostly you just cut their pay.
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Tony SanchezVerified
Founder at Bridging Loan Directory
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As a small business owner, reducing the minimum wage for young people wouldn't suddenly make me employ someone under 21. The bigger question is whether there is a genuine role and whether the business has the capacity to train and support someone starting their career.

I understand why rising employment costs can make small employers think twice, particularly once National Insurance and other costs are included. But making a young person cheaper doesn't necessarily create a job.

I also struggle with two adults doing the same job to the same standard being paid differently simply because one is 19 and the other 25.

I'd rather see measures that reduce the cost and risk for small employers taking on and training young people, without asking the young employee to fund that incentive through lower pay.
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Paul DenleyVerified
CEO at Oakham Wealth Management
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The evidence doesn't support blaming the minimum wage for Britain's youth unemployment; the Low Pay Commission has found no robust evidence of it. But economics is clear that young, inexperienced workers are the first to lose out when the wage floor gets ahead of their productivity, and steep age cliffs do bite: in Denmark, youth employment falls by a third the day wages jump 40% at 18.

Would a lower youth rate make firms hire more? At the margin it probably just makes the same hire cheaper. Employers should admit that.

Even so, for many starting out, the first line on the CV matters more than maximising the first payslip. Experience brings references, skills, & bargaining power, and firms that underpay will lose good people to firms that don't. That isn't licence to exploit; it's the market working.

The real question isn't whether an 18 year old deserves the same rate as a 25 year old. It's whether insisting on it reduces the chances of that all important first rung on the ladder.
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Harvey DhillonVerified
Founder & CEO at Zmartly
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No, a lower youth minimum wage wouldn't make me hire more young people, it would just make the same hire cheaper, because the discount for hiring young already sits in both the minimum wage bands and the tax system. Hire someone under 21 on minimum wage pay and the employer's National Insurance rate on those wages is zero, while at 21 or over that rate is 15 per cent on pay above a weekly threshold, unless a relief applies. The saving stays with the employer, and it never reaches the young worker. Paying the young less is a wage answer to a jobs problem, not a sensible fix, and it balances the books on the lowest paid because a wage cut's saving is their pay. If I have to pick, protect the pay packet: the cost of a job can be cut in the tax system, where the Treasury carries it rather than an 18-year-old. And no, someone of 18 doing the same job as a 25-year-old shouldn't be paid less for being younger.
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Todd DavisonVerified
Managing Director/Founder at Purbeck Insurance Services
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A lower youth minimum wage wouldn’t make a difference for my business – it would all be about the candidate, their skills and at that age, their attitude to working/learning and how well they would fit into our culture. We need to encourage more younger people into work and provide jobs/careers for them to grow and develop. It makes better sense to look at NICs or reliefs available to small businesses to encourage young people into work i.e. tax revenue would drop as a result of lower salaries so this difference could be used in more meaningful ways for businesses to incentivise to young people to get into work. Saying that, pay should be based on the merits of the individual rather than purely their age. We have taken on an apprentice and will continue to hire through this route so that they have education/training as well as learning the job itself.