Labour is facing calls to reconsider its commitment to eliminate youth rates of the minimum wage in response to an alarming increase in the number of young people who are neither in education, employment, nor training (Neet). According to a report from the Resolution Foundation, the Neet population has grown by 195,000 over the past two years, reaching 940,000, with projections suggesting it could exceed 1 million for the first time since 2012.
Prior to the last general election, Labour pledged to abolish lower minimum wage rates for individuals under 21, ensuring that all adults would be entitled to the same pay floor. In response to this, Chancellor Rachel Reeves announced a phased plan to equalize the minimum wage, which included a significant increase of 16.3% for 18- to 20-year-olds, raising their hourly wage to £10. This was above the 6.7% increase for those aged 21 and over, whose minimum wage now stands at £12.21.
However, the Resolution Foundation cautioned that current economic conditions may necessitate a reevaluation of this strategy to prevent young people from becoming priced out of entry-level jobs. Experts have indicated that issues such as rising disability and ill health rates contribute to the growing Neet figures, with more than 25% of Neets in this category.
The report highlights a shift in the reasons behind being classified as Neet, noting that unemployment has overtaken family caring responsibilities as the main reason for young men and women. Ministers are expressing an increased urgency to address the rising youth unemployment, with initiatives like Reeves’ “youth guarantee,” which aims to ensure every young person has access to education or training, introduced at the recent Labour conference.
The government’s ongoing initiatives also include new “trailblazer” schemes designed to assist young adults in securing employment. According to Louise Murphy, a senior economist at the Resolution Foundation, further efforts are required to facilitate the return of Neets to education or work experience, warning against the potential long-term implications for their living standards. A spokesperson for the government stated that strengthening the national living and minimum wage aims to support business growth and improve productivity.
Source: https://www.theguardian.com/society/2025/oct/21/labour-urged-to-rethink-scrapping-minimum-wage-youth-rates-amid-neets-rise