UK Minimum Wage Plans Under Scrutiny as Youth Joblessness Nears 1 Million
Ministers have been urged to reconsider plans to equalise the minimum wage, as the number of young people not in work or education edges close to 1 million, according to a new report.
The call comes from the Resolution Foundation, which warns that removing lower minimum wage rates for under-21s could “price out” young people from entering the labour market.
Last year’s budget saw Treasury chief Rachel Reeves announce plans to abolish age-related wage differences, describing them as “discriminatory”.
But the think tank’s latest findings suggest the move could inadvertently push young people further from jobs and training opportunities.
Research released on Tuesday highlights that around 940,000 young people are now classified as Neet, not in employment, education, or training, marking the highest level since the 2008 financial crisis.
The figure has risen sharply, by 195,000 over the past two years.
£6m is set to go back where it belongs: in workers’ pockets.
Nearly 500 employers have been named and fined over £10 million for failing to pay the National Minimum Wage https://t.co/mHhJysVlI6 pic.twitter.com/J7eJ1yQVN7
— Department for Business and Trade (@biztradegovuk) October 17, 2025
Sickness and disability account for much of the rise, having doubled over the past two decades and now representing more than a quarter of Neets.
Yet unemployment remains the main driver, affecting 47% of men and 32% of women in this group.
Louise Murphy, senior economist at the Resolution Foundation, said: “The Government should redouble efforts to reduce the number of Neets by making it easier for young people to return to education if they drop out, or to get their first experience of work.
Otherwise, we risk a cohort of young people slipping through the cracks into a lifetime of lower living standards.”
The report also reveals that nearly half of all Neets do not claim benefits at all, challenging the perception that disengaged youth are primarily dependent on welfare.
Low-qualified individuals are far more likely to be Neet than graduates, despite concerns about AI impacting the graduate labour market.
The Resolution Foundation is pushing for reforms beyond halting the minimum wage equalisation.
These include adjustments to the work capability assessment and the creation of a national “front door” to reconnect young people with education and training.
A recent survey by the Recruitment and Employment Confederation (REC) found employers seeking more Government investment to get young people into work.
Suggested measures include wage subsidies, tax credits, funded work trials, and support to overcome non-work barriers like transport and childcare.
Kate Shoesmith, deputy chief executive of the REC, said: “Uncertainty in the economy and high unemployment costs are holding back hiring – issues the Chancellor can absolutely address in next month’s Budget.”
A Government spokesperson emphasised their commitment to supporting young people: “Every young person should have the chance to thrive.
That’s why we’ve put in place the September guarantee, requiring local authorities to ensure all 16 and 17-year-olds receive an offer of a suitable place in education or training by the end of September each year.
As part of our youth guarantee, we’re also testing innovative new approaches through our trailblazer programmes, which have just received funding for another year.
This will ensure that every young person has the opportunity to earn or learn, so no one is left behind under our plan for change.”
On minimum wage, the spokesperson added: “By strengthening the national living and minimum wage for 3 million workers across all age bands, we aim to support business growth through reduced staff turnover and by helping to achieve higher productivity.”
With the autumn Budget approaching, pressure is mounting on ministers to balance fair wages with opportunities for young workers at the start of their careers.
