National Minimum Wage increases must be managed to avoid reducing opportunities for young people entering work, says REC

Employers are warning that moving too quickly towards a single adult minimum wage rate could undermine opportunities for young people entering the workforce, according to a new survey by the Recruitment and Employment Confederation (REC).

The findings suggest many businesses are concerned that further reductions in minimum wage differentials could increase employment costs at a time when confidence remains fragile and hiring intentions subdued.

The concern comes ahead of the Low Pay Commission’s recommendations to the government expected later this month on minimum wage rates, including the government’s ambition to move towards a single adult rate for workers aged 18 and over.

In the survey of 235 employers from across the UK, almost half (48%) of employers said they would face increased costs if the pay gap between younger workers and those aged 21 and over narrowed further, while only 13% expected a positive effect. By comparison, 39% said it would have no impact on their organisation.

The findings indicate that employers are particularly concerned about the impact on entry-level recruitment and workforce development at a time when businesses are already absorbing higher employment costs.

When asked how a further narrowing of the wage gap could affect their workforce decisions, employers most highlighted concerns around the affordability of hiring, training and retaining younger workers:

• A total of 25% of employers said it would increase the costs of retaining existing young workers.
• 21% said it would increase the costs of creating entry-level roles.
• A total of 29% said it would increase the costs of investing in training and development for younger workers.
• 18% said it would increase the costs of offering work experience placements.
• A total of 22% said it would increase the cost of offering apprenticeships.
• 21% said it would increase the cost of recruiting 18- to 20-year-olds.

REC supports the ambition of better pay for younger workers. But if increases outpace what employers can absorb, the unintended consequence is fewer entry-level opportunities, apprenticeships and routes into work.

Shazia Ejaz, REC’s Director of Campaigns, said:

“The National Minimum Wage must not become a disincentive to hire younger jobseekers. If the cost of employing younger workers rises too quickly, some employers will inevitably create fewer entry-level roles, apprenticeships and training opportunities.

“Better pay for young people is an important objective, but policymakers must ensure that rising wage floors do not unintentionally reduce the number of opportunities available to those taking their first steps into work.

“Our survey suggests many employers are worried that further cost increases could make it more expensive to recruit, retain and train younger workers. For firms already managing higher wage bills, increased National Insurance contributions and wider regulatory costs, there is a genuine concern that some entry-level opportunities could become harder to sustain.”

A separate survey of 237 UK employers of different sizes and sectors, undertaken by REC/Whitestone in June 2026, found more than 71% of respondents said the increase in the NMW over the past three years has pushed up business costs. And, of those respondents who reported an impact on business costs, it had led 27% to reduce recruitment or headcount, 26% to scale back expansion or investment plans and 21% to hold back pay increases for other staff.

Shazia Ejaz added:

“The labour market is showing some early signs of improvement, but confidence remains fragile. The Low Pay Commission and the government should continue to take a cautious, evidence-led approach that protects both pay growth and job creation.”

The recovery in the job market is fragile, with the latest REC/KPMG Report on Jobs published this month showing permanent placements and temp billings both increased marginally and vacancy numbers fell, albeit at the softest rate since August 2024. But employer sentiment remains weak and negative. The REC’s most recent Jobs Outlook report shows employer confidence in hiring and investment decisions has remained in negative territory since mid-2025, while confidence in the wider economy has been in negative territory since autumn 2021.

Notes to editors

The online survey of 235 employers was undertaken by Whitestone Insight from 14 to 21 September 2026. The employers were from across the UK, of different sizes and sectors.