Rayner backs pay rise for 18-year-olds as Labour targets young voters

UK Deputy Prime Minister, Angela Rayner is pushing forward with plans to increase the minimum wage for 18 to 20-year-olds, despite concerns from business groups that the move could lead to fewer job opportunities for young people.

At present, workers aged 21 and over must be paid at least £12.21 per hour, while those aged 18 to 20 receive a minimum of £10.

Rayner wants to remove the current £2 gap, describing the age-based bands as “discriminatory.” She has asked the Low Pay Commission (LPC), which reviews and recommends wage rates to the government each year, to come up with a plan to equalise pay across age groups.

This move is part of Labour’s broader strategy to appeal to younger voters, especially as Reform UK, led by Nigel Farage, gains ground in the polls. Last month, Rayner also announced plans to lower the voting age to 16 before the next general election, which she said would help strengthen democracy.

The LPC has now been tasked with outlining a roadmap to bring the minimum wage for younger workers in line with the adult rate. Ms Rayner said this effort shows Labour is working to “make low pay a thing of the past.”

However, business leaders are concerned that further increases to employment costs could lead to fewer roles for young people. They argue that the government’s previous tax policies, particularly a £25bn rise in National Insurance contributions introduced last year, have already made it more expensive for firms to hire staff.

Kate Nicholls, chair of UKHospitality, said that another increase to the minimum wage could result in even more job losses in sectors that commonly employ young people.

“We understand the Government’s objective of fair pay, but you can only have fair pay if you have got a job that actually pays,” she said.

“At the moment, those jobs are being taxed out of existence due to changes in the NIC [National Insurance contributions] rate.”

Sectors like pubs, restaurants and hotels, where many young people find their first jobs, have been particularly affected by the tax changes. Ms Nicholls noted that 84,000 jobs have already been lost in the hospitality industry over the last six months.

“Now is not the time to make big jumps again in employment costs, when we have already seen 84,000 jobs lost in the hospitality sector over the last six months.

“You need to look at it in the context of the overall employment market, and of the economic environment. Now is not the time to be imposing significant additional costs,” she said.

Jane Gratton from the British Chambers of Commerce added that close to one million young people in the UK are currently not in employment, education, or training. She said businesses are willing to help, but the rising cost of hiring staff is a growing problem.

“There are almost one million young people who are not in employment, training or education and it must be priority to engage them with the world of work,” she said.

“Employers want to help but the rising cost of employment, following on from the National Insurance rise in April, is making that very difficult for many firms. Any changes to the age threshold of the National Living Wage must take this into account. If wages rise too fast in this age group, it could lead to less opportunities and jobs for young people entering the labour market.”

In its last election manifesto, Labour promised to “remove the discriminatory age bands, so all adults are entitled to the same minimum wage, delivering a pay rise to hundreds of thousands of workers across the UK.”

Nicholls argued that circumstances have changed significantly since then. “The context has changed out of all recognition [since then] because of the change in the threshold on NICs, which is impacting on youth employment in particular and part-time work,” she said.

Earlier this year, Chancellor Rachel Reeves reduced the salary threshold at which employers begin paying National Insurance to £5,000. This has widened the tax net to include more part-time roles, which employers say adds to their costs and makes hiring more difficult.

“All the warning signals on the labour market are flashing red. Now is the time for caution, not going too far,” Ms Nicholls added.

Despite the concerns, Rayner defended the policy. “This remit is the next milestone in our plan to get more money in working people’s pockets, raise living standards in every part of the UK, and get our economy growing,” she said.

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