Young workers ‘will be the ones to suffer’ as the cost of employing them rises by more than £4,000 under Labour, according to new analysis.
A steep hike in the minimum wage for 18-20 year-olds means those joining the workforce full-time at that rate will be paid £19,747 a year from next April, up from £15,652 in 2024.
The Centre for Policy Studies, a right-wing think tank, said the £4,095 increase over two years was an ‘extraordinary and damning statistic’.
It came as a separate poll revealed the majority of business leaders will hire fewer workers as a result of policies announced in the Budget.
And Allan Leighton, boss of supermarket chain Asda, took aim at Labour’s running of the economy, saying ‘the country is stuck in reverse’ and the government was doing nothing to help boost growth or productivity.
Economists and business leaders warn that above-inflation minimum wage rises for young people will mean bosses have less incentive to take a chance on them.
The minimum wage will rise sharply for 18-20 year olds in April
That threatens to worsen a youth joblessness crisis – at a time when nearly a million are already languishing outside the education system or workplace and when under-25s are bearing the brunt of the rise in unemployment under Labour.
CPS director Robert Colvile said: ‘We all want to see wage growth for low-paid workers but arbitrarily hiking wages while doing nothing to stimulate the economy is the wrong way to go about it.
‘Younger workers, or those looking to move back into employment, will be the ones to suffer.’
Chancellor Rachel Reeves announced the latest increase in the minimum wage in the run-up to this week’s Budget.
For those aged 21 and over it will rise by 4.1 per cent to £12.71 from 1 April. The cost of employing them, including employer national insurance, will be £3,414 a year higher compared with 2024.
Younger age bands currently have lower minimum wages though the government is aiming to bring the 18-20 group into line with older workers to create a single adult rate.
The latest sharp increase will lift the minimum wage for this group by 8.5 per cent to £10.85 per hour from next April. For 16-17 year olds it will go up by 6 per cent to £8.
But many fear that there will be even fewer jobs to go around for young people as a result of the increase. Recent figures show 946,000 people aged 16 to 24 are now not in employment, education or training (NEET) – around one in eight of those in the age group.
Overall unemployment has climbed to a four-year high under Labour with nearly half of the jobs shed being among under-25s.
The CPS said: ‘The Government argues that higher wages are good for employees.
‘But it is an obvious truth that making it more expensive to hire people, especially young people, means fewer will be hired – hence the recent falls in job vacancies and rise in unemployment.’
Meanwhile, a snap poll for consultancy WPI Strategy showed that 56pc of business leaders say there will be fewer hires than previously planned, because of the Budget.
It also revealed that 67 per cent of business leaders fear they will be targeted with further tax rises in the near future.
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