Labour has been urged to break a manifesto pledge to scrap youth rates of the minimum wage amid a dramatic rise in the number of young people out of work and education.<\/p>\n
In a report sounding the alarm over a sharp increase in the number of 16- to 24-year-olds who are not in education, employment or training (Neet), the Resolution Foundation<\/a> urged Labour to change course to avoid them being \u201cpriced out\u201d of entry-level jobs.<\/p>\n It said the number of young people classified as Neet had risen by 195,000 over the past two years to reach 940,000 and the figure was poised to hit 1 million for the first time since 2012.<\/p>\n Labour promised before last year\u2019s general election to scrap \u201cdiscriminatory\u201d lower minimum wage rates for under-21s, so that all adults would be entitled to the same legal pay floor.<\/p>\n The chancellor, Rachel Reeves<\/a>, announced a phased approach in last year\u2019s autumn budget, kickstarting the process to equalise the minimum wage with a bumper rise in the legal pay floor for 18- to 20-year-olds.<\/p>\n The rate for 18- to 20-year-olds was increased by 16.3% in April this year to reach \u00a310 an hour, significantly above the 6.7% rise for those aged 21 and over, which now stands at \u00a312.21 an hour.<\/p>\n However, the Resolution Foundation warned Reeves that combating unemployment among young adults would require her to stop short the process of equalising the minimum wage.<\/p>\n \u201cAny increases in the rates would need to be especially cautiously considered in the current economic environment to prevent young people from being priced out of entry into the labour market,\u201d it said.<\/p>\n Labour market experts have warned that the UK is facing a growing crisis in youth unemployment amid the stark increase in Neet levels since the height of the Covid pandemic.<\/p>\n Business leaders have also said Labour has sapped hiring activity after the chancellor\u2019s \u00a325bn increase in employer national insurance contributions in last year\u2019s autumn budget, and complain that the rising minimum wage and changes to employment rights are driving up unemployment.<\/p>\n In analysis highlighting the scale of the challenge for young adults in the jobs market, the Resolution Foundation said rising levels of disability and ill health were fuelling the increase in the number of young people who are Neet.<\/p>\n The proportion of Neet young people who are inactive because of sickness or disability had more than doubled since 2005, with more than a quarter of 16- to 24-year-old Neets in this category.<\/p>\n In a report produced with the support of the Health Foundation thinktank, it said the reasons for being Neet had shifted notably in recent years.<\/p>\n It said two decades ago half of all young women who were Neet were out of employment because of family caring responsibilities. This has since fallen to just one-in-five. As a result, it said unemployment was now the single biggest reason for being Neet among men and women.<\/p>\n skip past newsletter promotion<\/a><\/p>\n Sign up to Business Today<\/p>\n Get set for the working day \u2013 we’ll point you to all the business news and analysis you need every morning<\/p>\n Privacy Notice: <\/strong>Newsletters may contain information about charities, online ads, and content funded by outside parties. If you do not have an account, we will create a guest account for you on theguardian.com<\/a> to send you this newsletter. You can complete full registration at any time. For more information about how we use your data see our Privacy Policy<\/a>. We use Google reCaptcha to protect our website and the Google Privacy Policy<\/a> and Terms of Service<\/a> apply.<\/p>\n after newsletter promotion<\/p>\n Ministers are increasingly pushing to tackle a breakdown in the critical years between school and work, amid heightened concerns at the top of government over rising youth unemployment.<\/p>\n Reeves used her speech to the annual Labour conference in Liverpool last month to announce a new \u201cyouth guarantee<\/a>\u201d, offering every young person access to education or training to help them find work.<\/p>\n