![\"Hospitality](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/05\/Hospitality-job-minimum-wage-e1779819126298.jpg\")
\t\tHospitality and retail account for a third of all minimum wage jobs\t<\/p>\n\t\t\tWednesday 27 May 2026 4:58 am
\n\t\t\t\t\t\u00a0|\u00a0\u00a0Updated:\u00a0<\/p>\n
\t\t\tTuesday 26 May 2026 7:13 pm\n\t<\/p>\n
\t\tHospitality and retail account for a third of all minimum wage jobs\t<\/p>\n
Rishi Sunak has confessed minimum wage hikes he oversaw were too high. But is raising wages during a cost of living crisis really so bad? We hear both sides of the argument in this week\u2019s debate<\/a><\/p>\n YES: Successive governments have used the minimum wage to get good headlines<\/p>\n Econ 101 states: don\u2019t be surprised that when you raise the price of something, demand goes down. Britain\u2019s national living wage is the highest in the G7 in absolute terms. It has risen by almost a third in real terms over the past decade. Since Labour has been in government the minimum wage for 19-year-olds has increased by 26 per cent \u2013 way above inflation. Now the bills associated with Labour\u2019s policy choices are starting to add up.<\/p>\n Retail and hospitality account for a third of all minimum wage jobs and nearly half of all employment for under-25s. Both sectors are leading the fall in vacancies and payroll numbers. They are withdrawing from the market. Youth unemployment is at an 11-year high, 16.2 per cent. For the first time, Britain has a higher youth unemployment rate than the EU average. And yet, nobody is questioning the policies creating this.<\/p>\n The minimum wage was designed as a floor. Successive governments turned it into a ratchet: easy headlines about giving Britain a pay rise, with the trade-off buried. But trade-offs do not disappear because politicians ignore them. The effects are clear as day. For every \u00a325 spent on young people on benefits, \u00a31 is spent on getting them back into work. When it costs the same to hire an 18-year-old with no experience as a 30-year-old with a decade behind the till, businesses make the rational choice.\u00a0<\/p>\n The solution: freeze the rates. Restore a meaningful youth differential so that hiring a teenager is not the same gamble as hiring someone with experience. Stop treating the minimum wage in isolation: stacked on top of the employer NI rise and the Employment Rights Act, it is part of a cumulative cost shock that is pricing the youngest and least experienced out of the labour market.<\/p>\n Joanna Marchong is head of communications at the Adam Smith Institute\u00a0<\/p>\n NO: Reducing the wage amid a cost of living crisis would be a disaster for low-paid workers<\/p>\n The minimum wage is one of a rare breed in modern Britain: a genuine economic policy success from the last 30 years. When it was introduced, more than a fifth of workers were stuck in low pay after two decades of worsening pay inequality. By its 25th birthday it had set pay inequality into reverse, boosted the pay of the nation\u2019s lowest-paid workers by \u00a36,000 a year, and reduced the number of workers in low-paying jobs.<\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tSunak calls for minimum wage quango to be abolished<\/a><\/p>\n When Tony Blair committed to follow other advanced economies by introducing a statutory minimum wage, he declared it was \u201cmerely the due claim of civilisation\u201d. It is still a vital instrument of social protection, maintaining the living standards of the UK\u2019s lowest-paid workers. With prices rising and another cost of living squeeze hitting households, this protection remains essential.<\/p>\n Of course, there are trade-offs. Businesses are feeling the squeeze of rising costs and minimum wage hikes have added to these pressures. A business owner anticipating tighter margins may feel forced to cut back on shifts or delay hiring plans. These decisions also impact workers\u2019 incomes, and younger workers are often the first to suffer from a hiring squeeze.<\/p>\n The minimum wage must be set with these trade-offs in mind. The policy\u2019s broad aim \u2013 to keep pay for low earners in line with the rest of the working population \u2013 is right. Raising the rate too quickly may prevent businesses from hiring, and ministers should be mindful of this risk. But under no circumstances should they seek to lower the rate. This would be a disaster for low-paid workers when they can least afford another hit to their living standards.<\/p>\n Joseph Evans is a research fellow at IPPR<\/p>\n THE VERDICT<\/p>\n Raising pay for the poorest workers \u2013 who could object to that? Quite. Such is why it\u2019s been so attractive a lever for Prime Ministers to pull, but not without cost \u2013 as former PM Rishi Sunak himself this week admitted. In an enlightening column<\/a> for The Sunday Times, Sunak, who oversaw a 9.7 per cent increase in the National Living Wage, said he regretted not being \u201cbraver\u201d when in office: \u201cI decided that for a multimillionaire chancellor to overrule the Low Pay Commission without any covering fire wasn\u2019t politically sensible.\u201d It may, however, have been economically so. <\/p>\n