A sharp increase in Britain’s minimum wage for younger workers over the past three years has contributed to a rise in unemployment among 18- to 24-year-olds, a senior Bank of England policymaker said on Sunday.
Bank of England Monetary Policy Committee member Catherine Mann said in an interview with the Sunday Telegraph that the surge in youth joblessness reflected disproportionately large increases in the minimum wage for young workers, rather than signalling broader labour market weakness.
Official labour data show the unemployment rate for 18- to 24-year-olds climbed to 13.7% in the three months to November, up from 10.2% three years earlier and its highest level since late 2020. Over the same period, unemployment for the wider workforce rose to 5.1% from 3.9%.
Mann, a former chief economist at the Organisation for Economic Co-operation and Development, said the minimum wage increases were a factor in youth unemployment but cautioned against interpreting this as a harbinger of widespread job losses across the entire economy. “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 told the newspaper.
Under current law, the minimum wage for 21- to 22-year-olds has risen by roughly 33% over three years, now matching the £12.71 ($17.35) hourly National Living Wage paid to older workers. The rate for 18- to 20-year-olds has increased by 46% to £10 an hour over the same period. The government has indicated it wants to bring youth pay into alignment with older workers.
The remarks come amid broader economic pressures, including predictions from the National Institute of Economic and Social Research that overall UK unemployment could reach its highest level in more than a decade in 2026, partly due to rising labour costs and employer taxes.
The Bank of England has been closely monitoring labour market conditions while balancing inflation risks, with some officials urging caution on further interest rate cuts and pointing to weaker wage growth and rising joblessness as factors in monetary policy deliberations.