Cost of hiring young workers set to jump nearly £5,000 a year under Labour as taxes hammer businesses and hit job market
Comment now Next BOSSES face paying nearly £5,000 more a year to hire young people under Labour as taxes hammer businesses and hit the jobs market. The annual bill for employing an 18- to 20-year-old full-time will reach £20,511 in April 2027 — up from £15,652 in 2024, according to The Centre for Policy Studies (CPS). The cost of hiring young people is set to soar by more than £5,000 a year Source: SolStock It comes after Chancellor John Healey confirmed another minimum-wage increase Source: Getty Advertisement That is an extra £4,859 per worker, or a whopping 31% increase in three years.
It comes after Chancellor John Healey confirmed another minimum-wage increase , with the new rates kicking in from April 2027. Sign up for the Money newsletter Thank you! Email address Please provide a valid email. Your info will be used in accordance with our Privacy Policy You'll now receive top stories, breaking news, and more, straight to your email. Workers aged 21 and over will see their legal minimum hourly pay rise by 3.9% to £13.21.
For 18- to 20-year-olds, the rate will climb from £10.85 to £11.27 — an extra 42p an hour. READ MORE IN MONEY HO HO NO Viewers slam John Lewis ad as 'dreadful' and ‘the worst' - what do YOU think? WAR ON CASH HSBC hikes fees for depositing physical cash just days before Christmas That means more money in workers’ pockets — but a bigger wage bill for bosses. Daniel Herring, CPS Head of Fiscal and Economic Policy, said: “ John Healey deserves some credit for slowing the rise in the youth minimum wage.
“However, this Labour government has continued to increase pressure on businesses during an incredibly difficult period for them. “This week’s announcement of an increase follows a decade of above-inflation rises in the cost of employing someone on the minimum wage. Since 2024, the cost has increased by 20%, while inflation has been just 10% over that period.” Advertisement Most read in Money JACK POT Paris Jackson & siblings demand $600m from dad's estate 17yrs after his death HACK CHAOS Hackers hit UK freezers after Europe chaos as spy chief warns Brits to stockpile CASH IN Best savings account with huge 5.3% pays out £1,380 interest - are you eligible?
CRACKING DEALS Bonfire Night freebies you can claim worth £113 including £30 Asda voucher It comes as The Sun launches its Jobs Army campaign to help Britain’s “lost generation” get their first foot on the career ladder. Some 981,000 young people aged 16 to 24 are not in employment , education or training, according to ONS figures cited by the campaign — roughly one in eight. Now The Sun is calling on businesses big and small to give youngsters a chance by offering work shadowing and experience.
And it is not just young recruits getting more expensive. The think tank puts the annual cost of employing a full-time minimum-wage worker aged 21 and over at £26,900 from April 2027 — £4,462 more than in 2024. Advertisement For apprentices, the annual bill is set to climb by £3,476 to £15,124 over the same period. The rise in the cost of hiring young workers is down to higher minimum wages, rather than an increase in employers’ National Insurance bills .
Employers pay no National Insurance on under-21s’ earnings below £50,270 a year. Older minimum-wage workers, by contrast, can attract employer contributions. The CPS says successive increases have left Britain with the seventh-highest minimum wage relative to median earnings among OECD countries that have a statutory minimum. Advertisement It added that frozen income tax thresholds are bringing minimum-wage earnings closer to the higher-rate tax band.
A full-time minimum-wage earner’s annual pay is now around half the level at which higher-rate income tax starts, the CPS said. RECOMMENDED STORIES This is compared with roughly a fifth in 2000. The think tank warns that making staff more expensive risks shutting people out of work, arguing that rising costs help explain falling vacancies and higher unemployment. Comment now
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