Rising Minimum Wage Sparks Job Crunch for Young Workers

The Bank of England’s policy adviser, Catherine Mann, warned that a steep climb in Britain’s minimum wage for younger employees has pushed up joblessness among 18‑to‑24‑year‑olds. Recent data show this group’s unemployment rate hit 13. 7% in the last quarter of 2023, a jump from 10. 2% three years earlier and the highest level since late‑2020. The overall workforce has also seen a rise, climbing from 3. 9% to 5. 1%.Mann believes the spike in youth joblessness is tied more to wage hikes than to a broader labor market decline. She cautioned against seeing young unemployment as an early warning sign of deeper economic trouble. According to her, the cumulative effect of raising the National Living Wage for 18‑20 and 21‑22 year olds—by 46% and 33% respectively—has translated into higher joblessness for those age groups. The government plans to match the minimum wage of 18‑20 year olds with that paid to older workers, but the recent increases have already made a dent in employment prospects for the youth. Mann’s past experience as an economist at the OECD and her recent opposition to BoE rate cuts over inflation concerns add weight to her analysis.