Rachel Reeves's decision to hike the minimum wage is now shutting young people out of jobs, the head of one of Britain’s leading business organisations will warn.
Cressida Hogg, chairman of the Confederation of British Industry (CBI), is set to raise concerns about the impact of rising employment costs on youth hiring during a speech on Thursday.
Youth unemployment has risen to 16 per cent, exceeding levels seen during Covid lockdowns and reaching its highest point in more than a decade.
The overall unemployment rate stands at around five per cent.
Nearly one million 16 to 24‑year‑olds are now not in education, employment or training, with young men making up the majority.
Ms Hogg is expected to say: “For too many young people, the cost of doing business has become a bar on the door of opportunity.”
The national living wage is £12.71 per hour for workers aged 21 and above, while those aged 18 to 20 receive £10.85.
Labour’s 2024 election manifesto included a commitment to remove age‑based pay bands for adults.
CBI boss Cressida Hogg warns Labour minimum wage policy could harm youth employment
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She is expected to argue that abolishing lower youth rates would make it harder for firms to hire young workers.
“The fact is, the Government’s long‑term ambition to abolish minimum wage youth rates would make it harder still for firms to offer a first chance to young people,” she will say.
Youth rates, she will argue, “reflect a simple reality: investing in a young person often takes more time, more training and more resource.”
Ms Hogg is expected to say that higher employment costs mean businesses prioritise existing staff over new hires.
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She will describe this as a core responsibility to current employees, adding: “That is their duty.”
Ms Hogg will continue: “Choices to expand or hold back. Choices to recruit or wait. Choices to offer that first chance or not.”
The business chief is expected to warn that the policy is “a policy with good intentions but that will create worse outcomes and fewer jobs for young people.”
A Labour spokesman said ministers are supporting young people into work through a £2.5billion employment package aimed at helping nearly one million people and creating up to 500,000 opportunities combining work and training.
Officials added that the Low Pay Commission has been instructed to prioritise employment prospects when making future wage recommendations.
Ms Hogg’s comments come a day after Keir Starmer defended the policy in the Commons, saying it shows the Government is “choosing to provide security in an increasingly dangerous world”.
The remarks reflect ongoing debate between business leaders and ministers over the impact of employment reforms on hiring and economic growth.