Minimum wage rises increase employment costs by over £4,000

Summarised from 2 outlets · 3 reports · Updated 4 Nov, 04:33 · Archive

The cost of employing a worker aged 21 and over has risen by £4,462 between 2024 and 2027, a 20 per cent increase, according to analysis by the Centre for Policy Studies. For 18-to-20 year-olds, the cost has risen by £4,859, or 31 per cent. These rises include both higher minimum wage rates and a sharp increase in employer national insurance contributions. The increases came after the Labour government took office in 2024 and aimed to equalise wages between young people and other adults.

Inflation over the same period has added up to 10 per cent, meaning employment costs have risen at three times the rate of inflation. The Centre for Policy Studies argues that making it more expensive to hire people, especially young people, means fewer will be hired. The think tank points to recent falls in job vacancies and rises in unemployment as evidence of this effect.

The government has justified the minimum wage rises by arguing that higher wages are good for employees. Unions have called for consideration of living pressures facing young people. However, employer groups including the Confederation of British Industry urged the Low Pay Commission, the independent body that sets wage rates, to consider costs for employers when deciding how far pay should rise for low-income workers.

At the last Budget, Chancellor John Healey raised the minimum wage for under 21-year-olds by the same amount as the national living wage for adults. The government cited concerns about youth unemployment and the need to balance 'trade-offs' between jobs and pay as reasons for this approach. Minimum wage rates are set to rise again in 2027.

How it is being reported

• Cost of employing young people up by three times the rate of inflation under Labour - causing jobs slumpHigher taxes and sharp increases in the minimum wage mean that taking on a worker aged 21 and over costs 20 per cent more. For 18-to-20 year-olds, the cost is up by 31 per cent.Daily Mail · 4 Nov, 02:05
• Cost of employing young people up by three times the rate of inflation under Labour - causing jobs slumpHigher taxes and sharp increases in the minimum wage mean that taking on a worker aged 21 and over costs 20 per cent more. For 18-to-20 year-olds, the cost is up by 31 per cent.This is Money · 3 Nov, 22:00
• Minimum wage hikes push up cost of employing a single worker ‘by over £4,000’Minimum wage increases brought forward by the Labour government have pushed up the annual cost of employing a single worker by over £4,000, new analysis has shown, adding to a mountain of cost pressures facing businesses. Estimates by the Centre for Policy Studies, a free-market think tank, found that between 2024 and 2027 the annual [...]City AM · 3 Nov, 22:00

In this story: Labour government · Centre for Policy Studies · Rachel Reeves · John Healey · Confederation of British Industry · Low Pay Commission

This summary was written by AI from the headlines and standfirsts above, and states as fact only what at least two outlets report. How we use AI · Report a problem · Corrections log