Pause minimum wage convergence or risk youth jobs, warns REC

Amid national concern about the need to get more young people into work, the Recruitment and Employment Confederation (REC) argues for a pause to the narrowing of the gap between the National Minimum Wage with the National Living Wage.

The REC is calling on the Low Pay Commission to maintain difference in youth wage rates. Abolishing youth rates will only make the government’s aim to get nearly one million young people into work even harder, warns the REC, by lessening the incentive of businesses to hire younger, less experienced workers.

The LPC typically makes its decision and submits recommendations in October each year, with the final rates announced shortly after (late autumn) and implemented the following April.

Shazia Ejaz, Director of Campaigns at the REC, said:

“With firms struggling with rising costs across the board, and youth unemployment rising, businesses want caution from government when it comes to minimum wage. After huge rises in the last few years, moderation in rises across all rates is now called for, including ending the period of faster rises for the youth rates, as so many young people are struggling to find work. Recent upratings have squeezed margins and impacted investment and training opportunities with some firms choosing ready-made experience over developing new talent. That makes it harder for young people to get a foothold in an already uncertain labour market, increasing the risk of longer spells out of work and the very cycle of inactivity that the government is trying to tackle.”

REC commissioned Whitestone Insight to survey 237 UK employers online in May 2026, about the impact of increases to the National Minimum Wage over the past three years on their business costs, to inform its submission to the LPC. It found that 10.1% of respondents reported significantly increased costs, 35.8% moderately increased costs, 25.5% said slightly increased costs – with just 21.4% reporting no increased costs.

Those who answered they were negatively impacted, were then asked what adjustments, they have made in response to these cost increases:

• Reduced recruitment or headcount – 26.8%
• Scaled-back expansion or investment plans – 26.2%
• Held back pay increases for other staff – 20.8%
• Limited staff training or development – 20.8%
• No adjustments made – 20.2%
• Cut employee benefits or bonuses – 14.1%
• Other – 4.5%
• Don’t know – 3.9%
• None of these – 13.4%

Shazia Ejaz said:

“Our employer survey shows firms are having to adapt in ways that hamper the UK labour market’s chance to shift gears. Around one in five businesses are cutting back on training or holding down wider pay rises, which weakens skills development and slows pay progression. Some are also reducing working hours. Others have yet to act, but that suggests they are absorbing costs for now, which will not hold. Rising National Minimum Wage costs are reshaping hiring and workforce development, with clear consequences for employment and skills. Moderate increases are needed to help fuel hiring and support a path to economic growth.”