[UK] Bank of England links minimum wage increase to youth unemployment

In the UK, Bank of England rate-setter Catherine Mann has cited an increase in minimum wages for younger workers as a contributing factor to the rise in youth unemployment, City AM reports.

Her comments follow new data showing that the nation’s jobless rate for young people has risen above the European average.

The unemployment rate for 18 to 24-year-olds was reportedly 13.7 per cent in the three months to November, up from 10.2 per cent three years earlier and the highest level since late 2020.

Broader OECD figures reveal that the rate for 16 to 24-year-olds has risen to around 15 per cent, overtaking the EU average for the first time since records began in 2000.

Over the same three-year period, overall UK unemployment has increased from 3.9 to 5.1 per cent.

Speaking with the Sunday Telegraph, Ms Mann reportedly said that the rise in youth unemployment reflected “disproportionately big increases in the minimum wage for that age group”, instead of signalling a more general collapse in the labour market.

“I think we have to be very careful in the storyline about youth unemployment being the canary in the coal mine for a deeper deterioration in the labour market,” she said.

“The accumulation over three years of the rise in the National Living Wage for that group has been manifested in unemployment for that category of workers. Very unfortunate, but it is true. It is a fact.”

The minimum wage for 21 to 22-year-olds has risen by 33 per cent over the past three years, bringing it in line with the £12.71 hourly national living wage that older workers receive.

The rate for 18 to 20-year-olds has increased by 46 per cent to £10 an hour and will rise again to £10.85 in April. The government has stated its ultimate intention to fully align the 18–20 rate with the adult rate.

Source: City AM

(Quotes via original reporting)

In the UK, Bank of England rate-setter Catherine Mann has cited an increase in minimum wages for younger workers as a contributing factor to the rise in youth unemployment, City AM reports.

Her comments follow new data showing that the nation’s jobless rate for young people has risen above the European average.

The unemployment rate for 18 to 24-year-olds was reportedly 13.7 per cent in the three months to November, up from 10.2 per cent three years earlier and the highest level since late 2020.

Broader OECD figures reveal that the rate for 16 to 24-year-olds has risen to around 15 per cent, overtaking the EU average for the first time since records began in 2000.

Over the same three-year period, overall UK unemployment has increased from 3.9 to 5.1 per cent.

Speaking with the Sunday Telegraph, Ms Mann reportedly said that the rise in youth unemployment reflected “disproportionately big increases in the minimum wage for that age group”, instead of signalling a more general collapse in the labour market.

“I think we have to be very careful in the storyline about youth unemployment being the canary in the coal mine for a deeper deterioration in the labour market,” she said.

“The accumulation over three years of the rise in the National Living Wage for that group has been manifested in unemployment for that category of workers. Very unfortunate, but it is true. It is a fact.”

The minimum wage for 21 to 22-year-olds has risen by 33 per cent over the past three years, bringing it in line with the £12.71 hourly national living wage that older workers receive.

The rate for 18 to 20-year-olds has increased by 46 per cent to £10 an hour and will rise again to £10.85 in April. The government has stated its ultimate intention to fully align the 18–20 rate with the adult rate.

Source: City AM

(Quotes via original reporting)